Why your landlord wants to see your bank statements
Being a landlord takes cash and a fair amount of risk
Homes are expensive to purchase and maintain. Most landlords invest in residential homes as a pension source instead of the more traditional stocks and shares. The cost of this investment makes landlords keen to only let their property to tenants they are sure can afford it and will care for their investments. It is no surprise that experienced landlords would rather keep their properties empty than risk getting an irresponsible tenant.
Tenant references are the way that landlords ensure that you will make a good tenant. Most landlords and referencing agencies require tenants to provide bank statements as proof of income and rent payments.
Bank statements are very private. They can reveal a lot about how you live your life. And although they are used in cases such as applying for a mortgage, landlords do not have the right to the same level of financial information as banks and building societies. So, why do landlords ask for this information when there are other means of proving income and rent payments?
The odds and expense of fraud make it difficult to give everyone the benefit of the doubt
The simple answer is fraud and dishonesty. Traditionally, referencing agencies who act on behalf of landlords and letting agents would ask you for employment letters/contracts and payslips. There is a key issue with that, unlike say a passport, there is no universal way an employment contract or payslip looks. This means that anyone with a computer can create one and present this as evidence of genuine employment. Many people have done just that.
Asking for contact details and calling employers and past landlords to ask about you directly can also be risky. Reference companies have experienced way too many cases of potential tenants naming relatives and friends as employers/landlords in order to defraud landlords. Although this happens less than 10% of the time, you can understand why most landlords will not take the risk.
So, what should you do when a landlord asks for your bank statements?
This is unfortunately a catch-22 situation; refusing to provide statements might lead a landlord to think you have something to hide, rather than you really care about your privacy. If you are certain that you really want that home there are two options:
Redact your statements, i.e. black out everything but your rent payments and income. That way your landlord sees what they need to and you keep your personal data private.
Ask for an independent reference company. Good reference companies are usually more protective of user data. At Husmus for example, our automated referencing process using Open Banking and our AI bots pick out your salary and rent payments instantly. Plus, we immediately delete your data afterwards meaning that not only does no human view your data, but it isn’t stored either.
Struggling to find the funds for your next Deposit? Don’t miss out, our Deposit Promise can help take out the sting, check it out.