For example, if a tenant wishes to rent a property for £2,000 per month, they must earn at least £60,000 and provide six weeks’ rent as a deposit. If they earn less than this, they are required to pay the difference in cash up front. Bonuses are not taken into account, and six month employment contracts, which are currently very common in the city, are usually not accepted.
Many Central London tenants who can easily afford the property they want are finding they have no option but to pay the entire year’s rent up front in order to satisfy the referencing company and the landlord, and secure the property.
Lynn Hilton, Partner for Residential Lettings, 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 5% of tenants failed the referencing process, but now this is closer to 20%, 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."
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