Every Landlord is aware of the volume of information you need to collect from new tenants. Often proof of income can be forgotten particularly when you have already confirmed their employment and run the appropriate checks.
Here’s why you should always look for proof of income and what to do if your new tenant cannot prove a traditional source of income.
You Need Proof of Income:
No one becomes a landlord to lose money. Likewise, no one becomes a landlord just to have to deal with avoidable disputes.
Having a solid proof of income, which is in line with the rent you charge reduces the risk of losing money due to costly landlord/tenant disputes. It also ensures the tenant can afford their rent and not end up risking the loss of their tenancy.
Rise of the Gig Economy
An unwritten rule for landlords is generally to only take on tenants if their gross annual salary is at least 3 times the rent you intend to charge.
The rise of the gig economy:
The rise of the gig economy has presented a new challenge for landlords, as about 10-15 percent of the population had “other work arrangements” in 2018.
Examples of some other difficult verification of income situations include:
Self-Employed:
Potential tenants who own their own business may have no references regarding employment. Bank statements can provide evidence of stable income in this situation.
Recently Retired:
Retirees will have other types of income you can check such as state and personal pensions.
Students
many students will be relying on only part-time work & student grants or loans, making it difficult to gather all the information required.
Methods of Proof of Income
As a registered landlord you are permitted to request the following of your potential tenants:
- PPS No. (this is required for the registration of the tenancy with the Residential Tenancies Board) (www.rtb.ie)
- A reference from your previous landlord
- A reference from your current employer
- Photo I.D. such as a driving license or passport
- Evidence of residency
- Recent bank statements
- Payslips
Using these documents you should be able to establish with some degree of certainty the risk or non-risk of progressing with the rental.
Proof of income is very important in protecting all parties involved. Use all the data available to you and make a well-informed decision in the best interests of both parties.
