Tenant Screening

1 in 10 tenants have CCJs, and its increasing

It is estimated that in 2009 there will be over 150,000 repossession claims for private sector landlords, this represents around 5% of the private rental sector. One of the key factors to avoid such a predicament is continuity of rental income, and this requires adequate checking of tenants before letting a property.

The impact of the credit crunch is going to have a severe effect on the financial situation of many people, and in particular those who have a poor credit history. We have carried out some research that we feel all landlords and letting agents should be made aware of:

In 2009 there will be an estimated 880,000 CCJs issued for non payment of debts (Note 1). The actual figures are increasing from an average of 1,990 per day in December last year to 2,430 per day in 2009. This is an increase of over 22%

In 2009 there will be an estimated 150,000 people made bankrupt / insolvent (Note 1). Bankruptcies and Insolvencies will increase from an average of 298 per day in December last year to 411 per day in 2009. This is an increase of over 37%.

1 County Court Judgement for every 10 tenants checked (Note 2). Credit-Check-Services.co.uk survey found an average of 1 Count Court Judgement (CCJ) or Court Decree (CD) for every 10 tenants. With the projected increase in defaults we expect to see an increase in the number of tenants with CCJs awarded.

But these are only averages. If your buy-to-let property is in an affluent area with high net-worth tenants then it is reasonable to assume a lower percentage of tenants are likely to have CCJ history. On the other hand if your property is an area where prospective tenants are less well off and more indebted then there will be a higher proportion that have CCJs.

The key message for landlords is don’t become a statistic, take action to help ensure you maximise rental incomes through adequate checking of tenants. Ask yourself this question, can a landlord afford not to check tenants for County Court Judgements / Court Decrees?

Note 1 - Data sources from KPMG research and the Credit Action Charity.

Note 2 – Credit-Check-Services.co.uk provides online tenant checking services for landlords and letting agents. Statistics are based on a sample of 500 tenant reports purchased during Q4, 2008.

Other related links:

Tenant Screening | Landlord Insurance