Proper tenant vetting prevents late rent and evictions

The property rental market is booming for landlords and investors, but finding the right tenant who will pay their rent on time can be a challenge, especially for novice investors, according to rental agents from the Seeff Property Group.

Ending up with the wrong tenant can be costly for any landlord or investor. It is also not just about the late rental payment, or even non-payment, but you could have a real challenge on your hands if you need to evict the tenant, say the agents.

Ensuring you undertake a thorough vetting of the agent upfront is vital to avoiding these costly challenges, and directly mitigates against potential financial and legal risks. Internal data from Seeff’s rental division for example shows that a lack of formal evictions which would require legal intervention is directly attributed to proper vetting of tenants, legally compliant documents, and processes such as quick actions when a tenant defaults.

The demand for rental accommodation is high, especially in urban areas as people continue flocking to the cities and towns for better economic opportunities. Data from mortgage originators, ooba, for examples shows that buy-to-let investment properties have risen to 12% of all home loan applications this year, up from 10.9% in 2023 (a market high at the time).

This is good news as the market is in need of more stock, say the agents. Rental investments have also been rewarding for landlords. PayProp data for example shows that national year-on-year rental growth rate is around 5% for this year, ahead of both inflation and house price growth.

At the same time, tenant arrears have been fairly manageable and quite low in certain areas. Seeff says the rental market averages are a further boost for buy-to-let investments, but investors and landlords must ensure that operational risks are effectively managed.

Thorough tenant vetting processes protects the property investment, and sets the foundation for a positive and stable relationship with the tenant. A single bad tenant choice can lead to significant financial loss and a costly, lengthy eviction process.

The process of verifying a potential tenant’s income, employment stability, and credit history ensures the tenant’s ability to consistently meet their rental obligations. This would reduce the likelihood of late or missed rent payments. Reliable tenants are also more likely to take care of the property, comply with the lease terms, and minimise the need for costly repairs beyond normal wear and tear. 

A rental property is a significant investment, says Seeff. Finding a responsible tenant protects the long-term value of the asset and ensures a stable income stream. Properly vetted tenants who treat the property with respect are also more likely to stay long-term, which reduces the costs associated with high tenant turnover such as the needed for extra cleaning, marketing, and re-screening costs.

Seeff says proper vetting and screening also protects the tenant as it ensures that they do not over extend themselves financially, and are able to find more secure rental accommodation. Generally, prospective tenants need to be aware that they require a good credit and behaviour record when applying for a rental property. There are simply too many onerous legal compliance issues for this aspect to the overlooked, and it protects both the landlord and the tenant.

Issued by Gina Meintjes