Those who rent an apartment via a real estate portal are very familiar with the situation. Dozens, if not several hundred rental requests arrive within just a few hours of placing the ad. In addition to subjective selection criteria such as marital status, pets and smoking habits, agents and landlords quickly raise the question regarding the solvency of the candidates. Can this potential tenant actually afford to rent the apartment?
To check the creditworthiness of the tenant, you should keep in mind the general rule that basic rent should not exceed one third of the net income. However, please note that this figure is no longer up to date in light of rising rental prices. According to German SPIEGEL Magazine, around 40 percent of households in Germany’s large cities spend significantly more than this. On the other hand, the ratio of rent to income is a purely theoretical figure anyway since it gives little information about the actual payment behaviour of a prospective tenant.
SCHUFA-Auskunft ist nur die halbe Wahrheit
Whether a prospective tenant can afford a home depends on many other financial obligations in addition to household income. Depending on which insurances, loan commitments and regular expenses applicants have, their liquidity can actually differ considerably at the end of the month. This applies even if the net income is the same.
There are numerous solutions to help you check the creditworthiness of a tenant. Large real estate portals in Germany such as ImmobilienScout24 and Immonet offer a credit check in cooperation with SCHUFA. However, as with all credit agencies, the SCHUFA credit report is also based on historical data.
New credit risks may arise from a short-term change in household income. It is possible that these risks weren’t taken into account in the credit report for the prospective tenant. At the same time, the historical approach can become a problem for people searching for accommodation, even if they would be an interesting candidate for their future landlord. Problems with liquidity dating back a long time have a negative impact on the credit profile, even if they no longer play a role today.
Agents and landlords can certainly use credit agencies to help them gather information about selected prospective tenants. However, these agencies alone are not enough to gain a reliable assessment of creditworthiness since they do not sufficiently reflect the current solvency and payment morale of a candidate.
Tenant Solvency Check: Also Available Online
Like any contractual relationship, a tenancy should be based on trust right from the outset. Agents and landlords legitimately want to gain an insight into the solvency of the potential tenant. At the same time, prospective tenants have a natural interest in building trust by providing relevant information.
The question of whether a tenant can pay their rent depends primarily on their current household expenditure, which is not recorded by any credit agency. The Digital Tenant Check is a new solution that bridges this gap. It can be used to carry out a real-time credit check on the basis of current data from the prospective tenant’s online banking account.
For example, CheckRental.net and FINcredible together with FinTecSystems as an Account Information Service Provider offer an online credit check of potential tenants. In fact, portals are already offering landlords and agents an evaluation of the relevant bank data for a few euros. This makes it possible to get a reliable statement about whether a prospective tenant has stable income levels. In addition, it also proves whether a tenant has regularly paid their rent in recent months.
- If an agent or landlord requests a credit check, the tenant will enter their bank details via an input mask. This allows the landlord or agent to access the information relevant to the tenancy in their online account.
- Access is not granted to providers such as CheckRental.net and FINcredible, but rather only to certified Account Information Service Providers such as FinTecSystems.
- The Account Information Service Provider (AISP) accesses the digital account statement after receiving approval by the account holder. This involves analysing the revenue and expenditure relevant to rent payments.
- On the basis of this information, a creditworthiness profile is created and is made available to the agent or landlord with the consent of the account holder.
This way, agents and apartment owners have a digital solution at their disposal that reduces media disruptions in the search for tenants and in the allocation process of a rented apartment. At the same time, the Digital Tenant Check provides landlords with a reliable assessment of the tenant’s creditworthiness. Prospective tenants reap the benefits of a purely digital application process and, in turn, only disclose information that is actually needed to assess their solvency. You can bid farewell to laboriously filling out a self-disclosure forms and submitting salary statements separately. Put simply, this is a win-win situation for all involved!