Tuesday, 2 August 2011 3:24 PM
A major estate agent has warned that non-homeowners throughout the UK are now having to launch themselves onto an increasingly challenging 'rental ladder'.
Cluttons has reported that, due to a lack of stock and ever-growing number of people wanting to rent property, landlords are able to be increasingly selective when it comes to choosing who to let their home to. This is particularly the case in London, where some tenants have to pay an entire year's rent up front in order to persuade the landlord that they're the best tenant out there.
Even away from the capital, tenant referencing companies are making their criteria stricter, routinely insisting that prospective tenants' annual salaries are 30 times the monthly rent. For example, a renter wishing to live somewhere costing £2,000 per month would need to earn at least £60,000 per year. According to Cluttons, if a tenant earns less than 30x their monthly rent, they will often be asked to provide the difference up front.
Those who rely on commission or bonuses for the bulk of their salary could find themselves struggling to gain approval from referencing companies, and six-month contracts – which are common for people working in the City of London – are not generally accepted as adequate proof of ongoing employment.
Landlords are also asking for bigger deposits on rental properties than ever before: six weeks' rent is the current standard.
Lynn Hilton, partner for Cluttons' Residential Lettings division, said: "Credit referencing companies are there to protect the landlord, but the strict criteria which is now standard is forcing many tenants to find a year's rent up front in order to secure the property they want.
"Landlords have the option of taking the risk on a tenant if they don't meet the requirements, but there are so many tenants competing for each property that they very seldom have to.
"Three or four years ago, less than five per cent of tenants failed the referencing process, but now this is closer to 20 per cent – and of those that fail, around half are then opting to pay the year's rent up front in order to satisfy the landlord and tie up the contract."