Why Rental History Matters to Landlords

In the world of property management, tenant screening is crucial for protecting your investment and ensuring a smooth landlord-tenant relationship. Among the various factors to consider, rental history stands out as a particularly important indicator of a tenant’s reliability and suitability. In this article, we’ll explore why rental history matters to landlords so much, especially in the Canadian context, and how it can be used effectively to minimize risks and maximize returns.

Understanding Rental History

Definition and Components: Rental history refers to a tenant’s past experiences with renting properties, including payment records, duration of previous tenancies, behavior during the lease period, and feedback from previous landlords. Key components include:

• Payment History: Consistency and timeliness of rent payments.
• Length of Tenancy: The duration of time a tenant stayed in a previous rental.
• Behavior: Respect for property, adherence to lease terms, and any incidents of property damage.
• Landlord References: Feedback from previous landlords regarding the tenant’s behavior and payment history.

Why It’s a Key Indicator: Rental history offers a window into a tenant’s reliability. While credit scores and employment history provide insight into a tenant’s financial stability, rental history reveals how they have handled similar situations in the past, making it an invaluable part of the screening process.

Resources for Rental History Verification:

• Tenant Screening Services: Companies like Tenant Verification Service Inc. and Rent Check Credit Bureau offer comprehensive reports that include rental history.
• Provincial Landlord Associations: Many associations provide resources and support for verifying tenant backgrounds, such as the Ontario Landlords Association.
• Previous Landlords: Direct contact with former landlords can provide first-hand information on the tenant’s behavior and reliability.

Payment Consistency and Financial Responsibility

On-Time Payments: A tenant’s payment history is a strong predictor of future behavior. Consistent on-time payments indicate a responsible tenant who values their housing stability. For landlords, this translates to predictable cash flow and reduced stress over missed or late payments.

Handling Financial Challenges: Patterns of partial or late payments can signal potential financial instability. A history of such issues might indicate that a tenant struggles with budgeting or prioritizing rent, increasing the risk of future missed payments.

Resources for Payment Verification:

• Tenant Credit Reports: Services like Equifax and TransUnion offer credit reports that can include rental payment histories.
• Rent Reporting Services: Some landlords use services like Landlord Credit Bureau, which report rent payments to credit bureaus, allowing future landlords to access this information.

Tenant Behavior and Property Care

Respect for Property: A tenant’s past behavior is often indicative of how they will treat your property. Positive rental history usually means the tenant took care of the property, followed the rules, and left the unit in good condition.

Relationship with Previous Landlords: The quality of a tenant’s relationship with their previous landlords can provide valuable insights. Frequent disputes, non-compliance with lease terms, or a history of property damage are red flags that should not be ignored.

Resources for Landlord References:

• Tenant Verification Platforms: Websites like Naborly or RentPrep allow landlords to access detailed references from previous landlords.
• Direct Contact: Whenever possible, contacting previous landlords directly offers the most reliable insights.

Stability and Longevity of Tenancy

Long-Term Tenancy: Tenants with a history of long-term rentals are often more stable and less likely to cause turnover, which can be costly. Long-term tenants also tend to form stronger ties to the community and are more likely to treat the property as their own.

Frequent Moves: Frequent moves can indicate instability or dissatisfaction, which could lead to higher vacancy rates and increased turnover costs for landlords. It’s important to understand the reasons behind a tenant’s frequent moves before making a decision.

Resources for Verifying Tenancy Duration:

• Rental Application Forms: Include questions about previous rental durations.
• Tenant Screening Services: These often include detailed tenancy history in their reports.

Avoiding Eviction Risks

Eviction History: A history of evictions is a major red flag for landlords. Evictions are costly, time-consuming, and can lead to property damage. Understanding a tenant’s eviction history helps landlords avoid these risks.

Prevention Strategies: Verifying rental history and looking for any signs of previous evictions is essential. In Canada, eviction records are often accessible through court records or specialized tenant screening services.

Resources for Eviction History Checks:

• Provincial Court Records: Public records are available through provincial court websites, though access may vary by province.
• Tenant Screening Companies: Many offer eviction history as part of their standard reports.

Building a Positive Landlord-Tenant Relationship

Mutual Trust and Respect: A good rental history fosters trust and respect between the landlord and tenant. Tenants with positive rental histories are more likely to communicate effectively and resolve issues amicably, leading to fewer conflicts and a smoother rental experience.

Tenant Retention: Identifying tenants with good rental histories increases the likelihood of long-term tenancy. Retaining good tenants reduces the hassle and costs associated with turnover, vacancies, and new tenant acquisition.

Resources for Building Positive Relationships:

• Landlord Associations: Many associations provide resources and training on effective communication and conflict resolution.
• Property Management Software: Tools like Buildium or AppFolio can help maintain clear communication and track tenant history, aiding in relationship management.

Conclusion

Rental history is a critical component of the tenant screening process that should never be overlooked. By thoroughly evaluating a tenant’s past rental experiences, landlords can make informed decisions that protect their investments and contribute to a positive, long-term landlord-tenant relationship. To ensure you’re getting reliable tenants with strong rental histories, consider partnering with a professional property management company that can handle the screening process for you.