Tenant Selection (also Vals)

Question 1

Why is tenant selection so important

Answer 1

Direct relationship between tenants covenant and investment value of a property

Question 2

What factors influence a landlords likeliness to request additional surety?

Answer 2

Market conditions and strength of tenant covenant

Question 3

Where should a tenant deposit be documented and held?

Answer 3

Documented in a rent deposit deed and money held in a separate bank account

Question 4

For releasing tenant money held in deposit, what must there be?

Answer 4

Agreed terms for the release of money in the rent deposit deed

Can include rent review top ups

Interest must go to tenant

Rent deposit deed must be separate to the lease

Question 5

What some requirements a landlord may have for assessing covenant strength

Answer 5

Asking for the Bank and accountant and 2 trade references

Previous/ existing Landlords reference

3 years audited accounts/ business plan such as from Dun and Bradstreet

Question 6

Profits test- what is it?

Answer 6

3 times the rent for three consecutive years or the net asset value of the business must be 5 times the rent