A new way of getting approval for renters has been launched by Homeppl.
The tenant approval process will, Homeppl estimates, open the private rental market up for significantly more people who are currently rejected by the existing system and enable them to pass credit checks and be approved.
Homeppl leverages Open Banking, proprietary behavioral analysis and fraud detection tests to assess the financial situation of potential tenants and ability to afford rent, enabling letting agents to fast-track growth with reduced risk of fraud, default, and delays.
Homeppl says that its approach means that a number of renters who are currently rejected by the system would be able to pass checks. These consumers include the self-employed, international students and expats.
The company, which is used by a number of letting agents, including Knight Frank and the Countrywide Group, says that it has 0% defaults and detects the 1.5% of all applications which are fraudulent.
Alexander Siedes, Homeppl co-founder, commented: “The rental market has used old credit check methods to assess whether a tenant can afford to pay. We need to stop imposing an unfair “tenant tax” on consumers and stop giving landlords false confidence – it’s time the market used a solution that’s fair for both sides and prioritises giving an accurate assessment. The pandemic is compounding this problem and has reinforced the need for a robust due diligence tool.”
Fraudsters are getting more sophisticated by the day so it is important that agents are able to adapt to reduce exposure, according to Russell Markou, Quintaini, the firm’s head of operations.
“The pain Homeppl prevents through their diligent process makes a massive difference,” he said. “We’ve had some poor experiences in the past with other service providers that failed to detect fraud, and we are still feeling the pain today.”
Comments (5)
A way round these problems is to not take on any AST tenants. Instead take on lodgers usually singles. As lodgers no problem evicting them for rent defaulting. The LL just needs EVERYTHING in his name. So fully inclusive rent providing all the services that would be expected in a normal home. Lodgers are permitted in 2nd homes. LL must reside in a 2nd home at least once per month for resi insurance purposes though the flaw with this is LL insurance will be in place not resi insurances.
But you can’t have resi insurance on a BTL to take in lodgers and LL insurance doesn’t cover lodgers.
So a conundrum!
Means basically you are uninsured.
But these are desperate times with 2 year eviction periods.
All a bit academic if the property has been repossessed due to rent defaulting tenants!
No more than 3 lodgers plus the LL in a 4 bed home as more than 4 occupants requires a Mandatory HMO licence. Remember as well that if the 2nd home is in an Additional Licensing area the licence will be needed if 3 occupy. LL must be at the property when a lodger agreement is signed. NO LA may be involved with letting a live-in LL 2nd home. If any HB claim is raised then only the HB lodger rate would be applicable for the respective lodger. This is usually about £360pcm or is it every 4 weeks; not sure. But certainly letting to single households on AST is very risky. Lodgers a far better solution. Of course it goes without saying that with a BTL mortgage conditions usually state single AST required. Though how would a lender ever know providing the mortgage was paid! Lodgers might be breaching mortgage conditions but I’m sure most lenders would be content just to see the mortgage paid. Obviously any LL not strictly adhering to mortgage conditions risks the loan being called in. But taking on tenants with an AST without RGI or a guarantor risks bankruptcy!! Decisions; decisions!!
The main safety net needed by landlords now are home-owning guarantors. International students and the self-employed (I don’t know why they mention expats) often can’t get these. Given that tenants can currently choose to not pay rent for around 2 years before facing a realistic eviction, who wants to take that risk without a guarantor? Landlords are rejecting thousands of potential tenants now who would easily pass affordability – this is only one part of the equation.
‘ …… rejected by the system would be able to pass checks.’
Or put another way, they failed so lets see how we can get around it!
Yep indeed the only referencing worth bothering with is that which RGI companies would accept. If the client fails to pass such checks then it is for the LL to determine whether they wish to take on a tenant who CANNOT qualify for RGI. Such a LL determination is a BUSINESS decision for the LL to make. There is obviously NO requirement for RGI to be required but presumably LL will be aware that without RGI they are taking massive risks on that particular tenant. That of course would be entirely the LL choice. Millions of LL take daily massive risks on tenants who are unable to pass the necessarily stringent RGI referencing checks. Nobody can doubt that RGI companies are perfectly entitled to have very stringent underwriting criteria. They are after all on the hook for large sums of money in the event the tenant rent defaults. Of course if a tenant can source a guarantor dumb enough to have RGI then that would usually persuade the LL to take on thr tenant. There are relatively few people who would be dumb enough to stand as guarantors for tenants. But invariably some LL are able to achieve these circumstances. They are fortunate indeed to be able to do so. As many LL are finding out NOW and ruing the day they didn’t take out RGI on tenants who qualified for it. Such LL are now facing thousands of pounds of rent defaulting which could have been covered for an annual £100 RGI policy. Many LL will be deeply regretting their pennywise pound foolish business methodology. But we are where we are. With the current County Court backlog evicting any rent defaulting tenant will take years. LL would be advised to only accept RGI qualifiable tenants or their guarantor. If unable then perhaps leaving a rental property empty might be the most pragmatic business decision!! That is what the ridiculous eviction ban may force many LL to do.
The only referencing worth carrying out is that which RGI companies find acceptable.
Therefore one has to determine what referencing a RGI company requires.