Do Irish Landlords check the credit history of their prospective tenants?

Mrs OBumble

Do landlords here do credit checks in prospective tenants? These are something I pay for with a new tenancy at home, but haven't seen mentioned here (except by people outraged that I would be cheeky enough to check a person's credit-worthiness before handing them keys to an asset worth several hundred thousand!)

murphaph

Mrs OBumble wrote: »

Do landlords here do credit checks in prospective tenants?

No. Generally not, but they should. A credit rating tells a potential landlord a lot about a prospective tenant. In Germany you get a simply % score. Below 90% - 95% and nobody will rent anything to you. For the best properties the LL will only rent to 98%+ candidates. The Irish system is not as simple to navigate as this. The LL has to interpret the entries in the ICB report himself, rather than being presented with an overall score as is the norm in Germany (and I think the US and other places).

The_Conductor

Mrs OBumble wrote: »

Do landlords here do credit checks in prospective tenants? These are something I pay for with a new tenancy at home, but haven't seen mentioned here (except by people outraged that I would be cheeky enough to check a person's credit-worthiness before handing them keys to an asset worth several hundred thousand!)

Depends really. Its very unusual for Irish credit bureau to receive queries from landlords- however, its far more common with certain types of lettings (notably high specification units- aimed at expats etc). The Irish, in general, don't have a conscious recognition of Experian/Equifax/Callcredit (UK), Bradstreet/Egan Jones etc (US) - though this might very well change. We are not constantly bombarded by advertising advising us to check and correct our records- which may be a good or a bad thing, depending on your perspective.

djimi

The problem for tenants with credit checks, asking for bank statements, pay slips etc is that most people are not comfortable with handing over that sort of sensitive information to private individuals that they do not know, especially when there are so many horror stories of the kind of cowboys that are playing landlord in this country at the moment. I know its far from ideal from a landlords point of view, and in a healthier rental market it might be more acceptable, but as a tenant I am not going to give personal information such as my bank statements to someone who I only know as a name and a mobile number from Daft.

The_Conductor

I've split off this into its own thread- which I think is the best way of discussing it as a discrete topic in its own right.

Shedzafew

I was asked to provide a letter from my bank when signing a lease for my latest place. It was a generic "we do not think this customer would enter into a contract without the full intent of satisfying their financial obligations". Did the trick.

I would not provide any payslips or bank statements to a LL. I can't imagine a situation where this would benefit the tenant. If LL sees that you are only on a basic salary and may struggle to pay rent then they may not accept you and if they see you are earning a large amount then they have an advantage with negotiating the rent.

I do not have a credit rating as I have never taken a loan from a financial institution. Would this be a help or a hindrance when being assessed? Are people who have taken out loans and paid them/ are still paying them back looked upon more favourably than those who have never needed to take out a loan?

witchgirl26

Personally I wouldn't be too happy handing over bank statements or payslips to a landlord. For the most part, when I was last looking to rent, it was private individuals renting one unit as opposed to a more professional landlord. I just got a letter from work saying that I was employed on permanent basis there & that was ok for my current landlord.

murphaph

Nobody in Ireland has a credit rating per se. The Irish system isn't that comprehensive. The ICB just records instances of interest to financial institutions. It's up to those institutions to interpret these entries themselves.

gaius c

Mrs OBumble wrote: »

Do landlords here do credit checks in prospective tenants? These are something I pay for with a new tenancy at home, but haven't seen mentioned here (except by people outraged that I would be cheeky enough to check a person's credit-worthiness before handing them keys to an asset worth several hundred thousand!)

If this was going to become standard practice in Ireland, it should probably incorporate the landlord's own credit rating too considering that amount of BTL's that are likely to be in arrears causing the tenants to fall into legal limbo when bank rent receivers move in.

djimi

gaius c wrote: »

If this was going to become standard practice in Ireland, it should probably incorporate the landlord's own credit rating too considering that amount of BTL's that are likely to be in arrears causing the tenants to fall into legal limbo when bank rent receivers move in.

Thats a fair shout actually. You hear stories of tenants falling being clamped or even locked out of the building; suffering the consequences of landlords falling behind on their management fees etc. If its okay for one side to ask for bank statements then its only fair that the other side should be able to do likewise to ensure that there will be no such issues down the road.

gaius c

djimi wrote: »

Thats a fair shout actually. You hear stories of tenants falling being clamped or even locked out of the building; suffering the consequences of landlords falling behind on their management fees etc. If its okay for one side to ask for bank statements then its only fair that the other side should be able to do likewise to ensure that there will be no such issues down the road.

The German system mentioned in the second post would make something like this very simple to manage. Current systems sounds messier than BER's (and that's saying something).

murphaph

Landlords are not going to show their credit history to prospective tenants. The landlord is the weaker party once the tenancy commences. The LL only has "power" before the tenancy commences, so that's the only time he can exercise it. As more landlords realise the law is stacked against them, we're going to see more of this power being exercised before a LL risks letting a dodgy tenant into his place (multiple months deposit, credit checks-the usual stuff you see in Germany etc.)

djimi

The problem is Murph that there dodgy landlords out there as well as dodgy tenants. For every tenant who might not pay their rent, there is the potential for a landlord who is behind on their maintenance fees, or hasnt the funds to carry out necessary repairs on the property etc. Tenants are not going to be willing to allow it be all give and no take; if landlords want to see a tenants financial details then they have to be prepared to hand over their own details. It has to work both ways. You have the risk that I might not be able to afford the rent, I have the risk that I might find my car clamped or my key fob deactivated, or that when the boiler goes Im going to have a month long struggle on my hands just to get the heating working again.

Ireland does not have a healthy rental market. This kind of thing might work in other countries, but there is no trust here on either side, and too much risk on the part of the tenant as to who they are handing sensitive information over to.

murphaph

Honestly the rental market here is not some sort of utopia. Landlords unfairly withhold deposits here too. Landlords delay fixing things here too. They still require credit scores and several months deposit before letting to anyone though because on the whole, tenancy law, like in Ireland, favours the tenant. German LLs are just more careful about who they let to than Irish ones IMO, but that is changing.

gaius c

murphaph wrote: »

Landlords are not going to show their credit history to prospective tenants. The landlord is the weaker party once the tenancy commences. The LL only has "power" before the tenancy commences, so that's the only time he can exercise it. As more landlords realise the law is stacked against them, we're going to see more of this power being exercised before a LL risks letting a dodgy tenant into his place (multiple months deposit, credit checks-the usual stuff you see in Germany etc.)

Trying to have your cake and eat it too Murph.

There have been threads here on people having to vacate their accommodation because the landlord wasn't paying their own obligations. Leases are no protection against such an eventuality and as a result, the tenant is in a vastly weaker position. Their deposit is also up in the air.

If the normal protection of a lease and part IV was extended to tenants in the case of a receivership, I'd agree with you but because it isn't I'd politely suggest that you need to take your landlord hat off and be reasonable in that Irish tenants are currently very vulnerable to landlords not fulfilling their own financial obligations.

Because tenants are so vulnerable, it's not unreasonable that landlords should do a quid pro quo if they are going to look for credit worthiness checks.

murphaph

At the end of the day I know my finances are sound and any property I have for rent is mine to rent to whomever I choose or to leave vacant. I only have 1 residential unit let in Ireland, the rest is light industrial/commercial so it's not something that really affects me but if and when the residential unit comes up for rent I'll be adopting a Teutonic attitude and will seek detailed information about the tenant's ability to pay. I'll also require 2 months rent as a deposit and will let unfurnished (insofar as Irish law allows). I will not be offering the prospective tenant the opportunity to see my credit report or my bank balance in return. If any prospective tenant is unhappy with those conditions then they need not apply. I will make it all clear in the ad.

The_Conductor

Seems fair enough to me.
It really depends on where the unit is- but I don't foresee this causing any major difficulties- its whats happening in lots of places (mostly central Dublin but also recently Galway) already.

Gandhi

I have a rental property here (in the US) and my letting agent always runs credit checks. Just as well, as some people look like butter wouldn't melt in their mouths, and you then find out that they have never paid a bill in their lives. And others who look like they have never paid a bill in their lives, usually also turn out to have never paid a bill in their lives.

I have never heard of someone asking to run a credit check on a landlord. Not sure what that would achieve. When someone rents from me, I am handing them the keys to an asset worth around a quarter of a million dollars, in exchange for regular payment for its use. I need to see that they have a record of paying bills in full and on time, which is what a credit check does. There is no check you can run on a landlord that tells you whether he is really fast at fixing plumbing issues or squeaky door hinges. The fact that a landlord has never been late with his electric bill really does not tell you much.

Having said that, there are a few things here which may be different:

1. Far more things are public record in the US. For example if I am delinquent on property taxes, or if the bank is preparing to foreclose on the property, or there is a lien on the property from the gas company, that can be seen by anyone with just a few mouse clicks. Further, in Philly at least, a landlord's failure to "financially maintain a property", like the examples in the first sentence, is grounds to terminate a lease early.
2. Rental leases survive house sales (I think that includes foreclosures). The tenant could go from a landlord who wants them there to a landlord who wants them out, but the common practice in that case is to bribe them out rather than force them out.
3. Deposits must be kept in a separate account, and I have to regularly send statements for that account to the tenants. Does not prove a landlord won't weasel out of returning a deposit, but at least proves that the money exists.

gaius c

Gandhi wrote: »

I have a rental property here (in the US) and my letting agent always runs credit checks. Just as well, as some people look like butter wouldn't melt in their mouths, and you then find out that they have never paid a bill in their lives. And others who look like they have never paid a bill in their lives, usually also turn out to have never paid a bill in their lives.

I have never heard of someone asking to run a credit check on a landlord. Not sure what that would achieve. When someone rents from me, I am handing them the keys to an asset worth around a quarter of a million dollars, in exchange for regular payment for its use. I need to see that they have a record of paying bills in full and on time, which is what a credit check does. There is no check you can run on a landlord that tells you whether he is really fast at fixing plumbing issues or squeaky door hinges. The fact that a landlord has never been late with his electric bill really does not tell you much.

Having said that, there are a few things here which may be different:

1. Far more things are public record in the US. For example if I am delinquent on property taxes, or if the bank is preparing to foreclose on the property, or there is a lien on the property from the gas company, that can be seen by anyone with just a few mouse clicks. Further, in Philly at least, a landlord's failure to "financially maintain a property", like the examples in the first sentence, is grounds to terminate a lease early.
2. Rental leases survive house sales (I think that includes foreclosures). The tenant could go from a landlord who wants them there to a landlord who wants them out, but the common practice in that case is to bribe them out rather than force them out.
3. Deposits must be kept in a separate account, and I have to regularly send statements for that account to the tenants. Does not prove a landlord won't weasel out of returning a deposit, but at least proves that the money exists.

Those differences are rather key. Until tenants get some form of protection in the case of a delinquent landlord, they are as entitled to ask for the landlord's credit record as the landlord is theirs (in Ireland only for those specific reasons).

Of course, they won't get it because the landlord will tell them to take a hike knowing that supply is tight and they'll have to take what they can get and this is really what the whole thing is about. Turn those screws while the tenants are under the cosh baby!!!

The_Conductor

Delinquent landlords?
The law is stacked in favour of tenants- almost wholly in favour of tenants.
The big reason- worldwide, why landlords check tenants credit records- is to try to ensure they have a tenant who is going to pay their rent.

In Ireland-

We historically assume the deposit to be 1 month's rent (on the Continent and in the US- its far from unusual to pay 3 months deposit)
Akin to our cousins in the UK- we have a habit of letting 'furnished property' and even have minimum furnishing levels specified in the legislation.

If a tenant decides to abuse the situation- and a minority do, it can take over a year to evict them- during which time the landlord is without rent altogether, and god only knows what damage the tenant may be doing to the property.

Far more common- is for the tenant to do a legger without paying utility bills.

We don't know how predominant these things are- because landlords seldom pursue them- its simply not worth their while- why chase a tenant who has caused 10k of damage, when you know he/she has no means of making good their destruction- and its only going to cost a landlord time and expense neither of which are never going to be recompensed.

The era of BTL landlord's not paying their mortgages- is on the wane, and hopefully over, given the enactment of the new legislation. Debt write-downs are not going to happen for people who have played the system- that has been spelt out, and seen to be working. There aren't going to be exceptions to this- though there could very well be some high profile prosecutions to keep it in everyone's minds, and pistol whip anyone who might be tempted to continue playing charades.

In Irish law- the tenants rights are sacrosanct. The landlord's are not.

djimi

Gandhi wrote: »

I have never heard of someone asking to run a credit check on a landlord. Not sure what that would achieve. When someone rents from me, I am handing them the keys to an asset worth around a quarter of a million dollars, in exchange for regular payment for its use. I need to see that they have a record of paying bills in full and on time, which is what a credit check does. There is no check you can run on a landlord that tells you whether he is really fast at fixing plumbing issues or squeaky door hinges. The fact that a landlord has never been late with his electric bill really does not tell you much.

The reason that I suggested it originally may well be specific to this country in this point in time, and it is because too many landlords in this country at the moment are renting out properties because they are in trouble financially and are doing so out of necessity rather than the desire to be involved in the business of property rental. This can have a direct affect on tenants when you consider if a landlord has fallen behind on their management fees for example then it will be the tenant who suffers the consequence of reduction of service such as clamping on cars or deactivation of gate/door fobs etc, and usually without warning. Also, if a tenant is looking to rent somewhere as a reasonably long term option (or as long term as our rental laws will allow) then the last thing they want is a letter from a receiver three months into the tenancy saying that the property has been taken over and will be required to be vacant for sale in near future.

If landlords want to remove the risk from a tenant by asking for financial details then I dont see why the opposite shouldnt also apply where a tenant can ask for things like proof of payment of management fees and proof that the mortgage is up to date; things that will directly affect their tenancy in an adverse and unexpected way.

on_my_oe

I live in a small building of around 50 apartments. In the last year there have nine repossessions, eight of which were BTL including apartment we were renting. When the sheriff knocks on the door, they provide you with paperwork so you are quickly able to see how many payments your landlord had missed (in our case, over five years). Of the eight, anyone want to guess how many of the tenants got their deposit back? None

I completely understand that being a landlord is tough, and the eviction laws are a joke, but on the flip side there is an attitude that all tenants are greedy demanding feckers who are ripe for a right screwing over. I had one who left me without hot water and heating during snow for six weeks and told me to wash in a bucket.

In short deposits need to be held in a separate account controlled by an external party (I'd suggest the government but I wouldn't trust them with 5c), deposits should increase to two months for unfurnished, three months for furnished, substantial fines levied on landlords - payable to the tenant - in the case if delays on repairs, and evictions should be completed with 28 days.

syklops

on_my_oe wrote: »

I live in a small building of around 50 apartments. In the last year there have nine repossessions, eight of which were BTL including apartment we were renting. When the sheriff knocks on the door, they provide you with paperwork so you are quickly able to see how many payments your landlord had missed (in our case, over five years). Of the eight, anyone want to guess how many of the tenants got their deposit back? None

I completely understand that being a landlord is tough, and the eviction laws are a joke, but on the flip side there is an attitude that all tenants are greedy demanding feckers who are ripe for a right screwing over. I had one who left me without hot water and heating during snow for six weeks and told me to wash in a bucket.

In short deposits need to be held in a separate account controlled by an external party (I'd suggest the government but I wouldn't trust them with 5c), deposits should increase to two months for unfurnished, three months for furnished, substantial fines levied on landlords - payable to the tenant - in the case if delays on repairs, and evictions should be completed with 28 days.

Why do you want deposits increased?

on_my_oe

Because I'm well aware there are some destructive so and so's who deliberately damage property.

However the key would be placing the money with a third party, which protects tenants from landlords with sticky fingers

gaius c

The_Conductor wrote: »

Delinquent landlords?

We're just below 30% of BTL mortgages being in arrears (over 40k at this stage) and that's before you even start to consider the mortgages that are officially PPR but the property is being let out. That's a huge number of landlords in financial difficulty and that's a huge number of tenants potentially being left to swing.

Either give those tenants proper protection or accept that under the current circumstances in this country, tenants are as entitled to query their landlord's credit rating as the landlord is theirs.

drumswan

The_Conductor wrote: »

The era of BTL landlord's not paying their mortgages- is on the wane, and hopefully over

Eh?

murphaph

gaius c wrote: »

We're just below 30% of BTL mortgages being in arrears (over 40k at this stage) and that's before you even start to consider the mortgages that are officially PPR but the property is being let out. That's a huge number of landlords in financial difficulty and that's a huge number of tenants potentially being left to swing.

Either give those tenants proper protection or accept that under the current circumstances in this country, tenants are as entitled to query their landlord's credit rating as the landlord is theirs.

They can query all they want but will be shown the door.

djimi

murphaph wrote: »

They can query all they want but will be shown the door.

Why should it be one rule for landlords and another for tenants? Do you think its okay that only landlords should be afforded the protection of being able to request financial details?

murphaph

djimi wrote: »

Why should it be one rule for landlords and another for tenants? Do you think its okay that only landlords should be afforded the protection of being able to request financial details?

I can't speak for all landlords but I wouldn't entertain being asked for credit scores unless and until it becomes commonplace.

It's already one rule for landlords and another for tenants in many respects unfortunately.

djimi

murphaph wrote: »

I can't speak for all landlords but I wouldn't entertain being asked for credit scores unless and until it becomes commonplace.

It's already one rule for landlords and another for tenants in many respects unfortunately.

If you wouldnt entertain someone asking for your credit rating or whatever then why do you think its okay for you to ask for someone elses? I have already pointed out two significant reasons why a landlords finances could affect a tenant, so why is not okay for a tenant to be able to protect themselves in the same way that you are proposing that landlords should?

The_Conductor

djimi wrote: »

If you wouldnt entertain someone asking for your credit rating or whatever then why do you think its okay for you to ask for someone elses?

Because you are entrusting them with an asset possibly worth hundreds of thousands of Euro? If the rules are not changed to give landlords proper protection from rogue tenants- then of course, a landlord should do whatever they can do, to protect themselves. The law is firmly in favour of tenants- not landlords, no matter what you appear to believe.

djimi wrote: »

I have already pointed out two significant reasons why a landlords finances could affect a tenant, so why is not okay for a tenant to be able to protect themselves in the same way that you are proposing that landlords should?

Ok- so a landlord may not have paid their Management Charge- and/or their mortgage.........

Payment of a Management Charge is not going to be registered with a credit bureau, and it is reasonable for a tenant to seek assurances that it has been paid. How you'd do this, I really don't know. You can ask the Landlord- by all means, but you have no right to ask the Management Company- or anyone else.

As for whether the mortgage is uptodate or not- the numbers involved are falling (according to the Central Bank)- they are still too high (approx. 26% of BTL mortgages are in arrears), but the figures are falling after every survey- so its movements in the right direction.

It is reasonable for a tenant to check that the tenancy is registered (PRTB), that a BER is supplied for the property, and that bank account details are supplied for lodging the rent. It is also reasonable that if problems or issues arise- that the landlord should be taking charge of- they should discharge this obligation in a reasonable manner. It is not the tenants business though- whether or not the landlord is in compliance with his or her mortgage, or indeed any of their other obligations (save their tax obligations- if they are non-resident).

Its all well and good saying 'Whats good for the goose, is good for the gander'- but there would seem to be a complete and utter lack of comprehension that you are renting an asset worth a considerable amount of money- and that it should be reasonable for a landlord to ensure they are giving a sane person charge of this asset.

The cards are firmly stacked in favour of tenants- firmly- and unless the law is rebalanced to address this inequity, and indeed to allow for-

1. An independent agency who deposits would be lodged with
2. An understanding that deposits would be 2-3 months in future
3. A rewriting of the law to allow unfurnished lettings
4. Where a tenant has legitimately been asked to leave, a mechanism to ensure they do so in a reasonable manner and timeframe, without damaging the property.
5. Greater acceptance of the right to redecorate etc- as a tenant sees fit- providing they return the property to its original state on the elapse of the tenancy.

etc etc etc

then- landlords are going to have to take additional measures to try to safeguard themselves.

I'm really not sure that you comprehend just how bad it is for landlords- it can take well over a year to evict a tenant who doesn't pay their rent- and there are several companies in Galway alone, who specialise in repairing damaged houses and apartments after tenancies (I'm sure Dublin is similar). Most of my siblings have had to emigrate- one sister's apartment in Galway had to be rebuilt due to structural damage caused by a tenant. Another sister's apartment suffered extensive damage when a tenant noticed a fire at a gas tank behind the building, but decided to do nothing about it (I'm not joking- they decided it was someone else's problem). A sister in Dublin had to pay for water damage to adjacent units- when a tenant went away during the cold winter for a few weeks and didn't leave the heat on at a low level and pipes burst. I mean- comeon- it was -22, and no heat at all for 3 weeks? And as for non-payment of rent- seems to be pretty standard- toss in some spurious PRTB case, that gives you a few months, then ignore the arbitration, then ignore the findings, then sit back and await the sheriff, and then do a legger at the last possible moment- a year later.

I hear horror stories about tenants far more than I hear horror stories about landlords- though I do hear horror stories about landlords too (mostly here in this forum).

Tenants tend to chase issues and raise cases when their rights are not adhered to. Landlords do not. Landlords have damn all manners of protecting themselves- save trying to ensure they get as good a tenant as possible, and when they do, trying to keep them. A stage in this process- is at the very outset- checking out prospective tenants. Once a tenant has signed on the dotted line- the landlord has very little he or she can do if things go wrong- the tenant holds all the cards.