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I have a vacant space below a block of flats. It was rented by a barber shop for 2 years. I now have a potential tenant that wants to rent the space as a hair salon.I have looked at the potential tenant on Company's House, they have been going for 5 years and they have a few other hair salons they operate - all looks good. However, the letting agent I used, used a company called Rent4Sure to reference check them, which they failed. The tenant was disappointed and asked us to reference them again. The agent then used The Lettings Hub - they failed the reference checks with them too.It seems as though both Rent4Sure and The Lettings Hub check the rent affordability by looking at the tenants company's 'Experian Credit Limit'. This is where is all goes a bit crazy:-I have looked at the last 3 years company accounts provided by the potential tenant, each year they make a net profit after tax of close to £100,000 per year. -According to standard (residential) rent affordability calculation this company should be able to afford an annual rent of £3333pcm (£100k / 30), which is more than enough to cover the rent!-However, according to Experian their Credit Limit is £4,300. This means (according to Experian) the company can only afford £358 per month!-I cannot see any CCj's or anything of the sort against this companyAre there referencing companies out there that look at the actual company's profits rather than looking at Experian Credit limit? It seems to me that the 2 above mentioned referencing companies don't know how to ref check a company. I need this tenant to pass referencing so I can get rental cover insurance. It is hard to find tenants for this space, so I don't want to loose the tenant. Thanks
This matter must be of concern to your potential tenant too. I think they'd be well advised to contact Experian and pay for advice on improving their score if necessary.
If referencing is a problem but they are that profitable, why dont you either ask them for a rent deposit if 3 or 6mths, and If its a Ltd Co ask for one or several directors to be a guarantor.
With commercial its much easier to get bad tenants out & If you already own the space and its sitting empty you have nothing to lose. With the rent deposit they are in effect guaranteeing themselves and If the terms of your agreement say rent paid quarterly in advance you have plenty of time to act and are unlikely to be caught out.
Stewardson Developments Ltd.
Burson Land Ltd. & Jennings & Gilchreaste Ltd.
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Thanks for that. Does any one know of a referencing agency that actually looks at company accounts rather than (in my opinion, lazily) logging into Experian and just looking at the Credit Limit?
But If you get hard cash as a rent deposit why even bother with the credit reference/RGI?? You have something better than insurance, the money is already in your account.