Residential Tenancy Risk Analysis
Residential Tenancy Risk Analysis
Residential Tenancy Risk Analysis
2. Ability to pay is generally determined using a 30 per cent rent to income ratio as an
affordability benchmark, whereas ability to care is often based on less quantifiable
assessments.
3. For instance, as the rental property in question is earmarked at N650,000 per year,
the relevant income threshold will be N 180,553 per month.
RELEVANT CONSIDERATIONS
1. being resourceful,
2. having adequate financial resources,
3. reputable and capable,
4. possessing appropriate social capital (including appropriate references),
5. having an understanding of what is entailed in applying for tenancy in the private
rental market, and demonstrating an ability to care for the rental property.
6. Other factors that reflect positively upon the applicant at the time of allocation
include:
a. having all relevant documents available,
b. offering to pay rent in advance (in practice, some landlords request for a post-
dated cheque bearing value at a future date) or accept special conditions of
tenancy, and
c. presenting oneself appropriately.
7. Beyond expecting that applicants will have adequate income to pay rent, the
expectations that tenants demonstrate that they are capable of managing their
financial resources effectively, and conducting themselves in a way that presents no
risks of damage to the property or annoyance to neighbours., e.g. smoking habits.
1. Inability to demonstrate frequent income that will satisfy the threshold and the
associated uncertainty about the level and stability of income;
2. Large family size, cultural practices, the presence of several children in the
household (perceived as causing more wear and tear, and potential damage to the
property);
3. Experience of domestic violence and the perceived ongoing potential for damage to
property;
4. Marital breakdown (and associated instability); and
A rental agreement should establish, in clear terms, the duties and responsibilities of the
owner/landlord and the tenant. The following items should be considered for inclusion in
the standard rental agreement, depending on the circumstances:
Maintenance and Upkeep: The rental agreement should establish that tenant will
be responsible for general upkeep such as trash pickup, repairing broken steps, clearing
weeds around the compound, etc.
Indemnification Clause: The agreement should include a provision holding the
owner/landlord harmless for any negligent acts or omissions by the tenant during the term
of the lease.
VETTING CRITERIA
Vetting includes:
Procedures have to be adopted to apply some level of diligence to the process. Best practice
in this area should reveal the bad payers and the high risk tenants. This is the process that
will be followed-
1. Application form
2. Viewing
For two reasons it is essential for a prospective tenant to view the property.
Firstly, it is clearly unwise to let to a tenant who has not actually seen the property,
its location and amenities. Whilst a tenant may be committed to proceed following a
recommendation from a friend or relative, they may find the property does not meet
their expectation; this may lead to a troublesome let and potential for non-payment
of rent. It also makes pre tenancy ID more of a problem and any agreement to let in
these circumstances, must be subject to verification of the tenants identity when
they arrive.
Secondly, the viewings are a valuable part of the referencing process and this should
be an intentional vetting point for the lawyer. A prudent lawyer will observe the
prospective tenant at the viewings and during informal conversations ask questions
about the tenant’s situation, which can later be verified on the completed
application form. A lawyer’s skills and personal experiences are a huge asset in
making a judgement about the suitability of a tenant.
3. Interviewing
4. References
We can take up references from employer, previous landlord, personal and others.
We will request names and postal addresses, in addition to email and telephone, for
each referee. Specific questions to the referees are essential. We will write and post
or email a letter of request explaining that the applicant has applied to rent a home,
specify the proposed period and the annual rent. We will avoid general questions
which invite evasiveness, and be specific and ask:
5. ID
We will insist on photo identification for all tenants. A passport or driving licence is
acceptable; We will copy this and check it is still valid.
6. Change of identity
Where a tenant has had a name change, we will ask for proof such as a Deed Poll or
marriage certificate, otherwise where the ID and history is in the previous name,
we will use both names on the tenancy agreement – i.e. Rowena Okoro (previously
known as Rowena Akintunde)
7. Proof of address
Copies of utility bills and land line phone bills are useful for proving the addresses
match up and proving residency.
8. Income
Where there is uncertainty about income or where it is difficult to verify the facts,
we will request the applicant for sight of bank statements for a minimum of three
months. Check the bank details match the banking information already supplied and
examine the applicant’s cash flow and pay day (you might want to link the rent
payment day to a couple of days after the salary goes in).