Rent takes 75% of income in some areas, admits agency

I'd say that if rent alone is 75% of net income for a tenant there's a VERY high risk of default.

We used to do all of our own advertising and views as well as management ourselves, but over the years have been phasing-in agents to take it all over from us, which is working well and great. However we still like to meet ALL tenants before giving a green light for them to go on to be ID and credit checked for us by our agents. One part of that meeting is to run through realistic estimates with the prospective tenants of the real cost of renting to check they understand it and reassure us they know what they are doing and can afford it.

We use OUR OWN rule of thumb method for doing this, which we know works against us in terms of rejecting a much higher proportion of applicants, however we prefer to have a property empty than occupied by a defaulting tenant in dispute with us.

Here's what we do; for a start we don't just go on rent but the WHOLE cost of rent plus main bills, e.g. for one of our studios it might be £875 PcM for rent, but adding in council tax, estimates for energy averaged over the year, water, TV licence (many don;'t have anymore so we're happy to on that on request) and phone/internet, it might come to £1,170 which is a lot more than just rent.

THEN we say that if that is 45% or less than their joint net income (this usually works for couple when both have respectable jobs, but rarely for single applicants unless slightly higher earners which is also fine). That means for this example they need to earn at least £1,170 / 0.45 = £2,600 PcM or £31,200 per year net. Usually fine for the type of couples we'd aim for and often fine for singles in better jobs.

IF they don't quite earn enough, including guaranteed bonuses or overtime or guaranteed secondary income but excluding estimates overtime or bonuses that we don't accept for this estimate, but still wish to go ahead then between 55% - 70% we'd accept them with one or perhaps two credible and also fully credit and ID checked guarantors to meet our criteria. That means the couple or single tenant must have at least £20,000 net per year for this studio plus one or else two guarantors with SURPLUS income in addition to covering their own commitments of £11,200 meaning probably £50,000 - £60,000 net income in total.

If our prospective tenants don't meet our slightly more rigorous tests, or are put off by it or don't confidently believe they can easily get suitable guarantors then we don';t pass them back to our agents for the next steps of formal ID and credit checking.

In our view if a tenant needs a guarantor but can't easily find one then why should we trust them if nobody they know much better than us doesn't!

Also, we'd much prefer to have an empty property, even for a void of a month or two, then rush to get a poor quality tenant who then defaults at some point on rent - costing us much more than a month or two's rent plus a lot of hassle, extra work and worry, to get them out. We've also found that tenants in that situation are more likely to start disrespecting the flat because they know they are probably going to do a runner after hanging on rent free for as long as possible - because some idiot at the CAB, or even worse the hated always anti-landlord Shelter people, told them we don't matter, can't do much about it and they can live in our property rent free if they can't afford it because its their home and our problem.

This approach has worked well for us for well over 20 years now and we haven't gone bust yet, despite the best efforts of our successive governments including the current one that we don't trust either, but still much prefer to some Labour/LibDem alliance (perhaps with a smattering of Green to make it even worse). They all pander (highly counter-productively) too much the likes of "generation rent" and listen way too much to highly politisised "charities" feathering their own nests like Shelter instead of completely ignoring them - as they jolly well should - and instead asking proper industry expert for real information and advice on what will work best for everyone including tenants.

sorry for the slight rant - hope of interest even so?