Yes, believe it or not, there are (at least 6!) reasons for Rental Agents to LOVE FICA . . .
. . . because you can use it go get more business!
To explain this, let’s take a look at the FICA requirements imposed on a Rental Agency, as an accountable institution, under FICA legislation . . .
Rental agents are required to carry out FICA-related due diligence on ALL prospective Tenants and Landlords BEFORE entering into a business relationship with them, i.e. concluding a mandate, or a lease agreementFICA: What Every Residential Property Rental Professional Needs to Know – in just 30 minutes!
Let’s take the example of a prospective natural person tenant application for the purposes of this article.
PRIOR to signing a lease agreement you need to do do the following . . . .
- OBTAIN the ID of the prospective tenant, and
- VERIFY the ID of the prospective tenant, and
- REQUEST the current residential address of the prospective tenant, and
- VERIFY the current residential address of the prospective tenant, and
- CARRY OUT A RISK ASSESSMENT on the prospective tenant, including
- DETERMINING the SOURCE OF their FUNDS
None of the above are optional – they’re a legislative requirement under the FICA legislation.
If you do this as part of your Rental Application Vetting Procedure, as I believe you should, then by the time you make a recommendation to the Landlord to approve the application, the following would have been CONFIRMED . . .
- that the person is who they say they are, and
- they reside where they say they do, and
- they are not a High Risk Individual, and
- the source of their funds is known and not suspicious
In contrast, a landlord dealing with their own rental property= may have asked for a copy of the prospective tenant’s ID, but it is highly unlikely that they will have access to the resources that you do to verify the ID is valid.
It is also highly unlikely that a landlord renting out his/her own property would ask for Proof or Residential Address for the applicant – and it would certainly be most unusual for them to have asked the prospective tenant the necessary questions to determine if they are High Risk Individuals. As private landlords are not required to do this under the FICA legislation, most private landlords would in fact not even know about these questions.
Furthermore, a private landlord would possibly (?) ask for a copy of payslips, although I know that most are even uncomfortable asking for this, but the vast majority (I am certain) would be far too uncomfortable asking for copies of bank statements – even some rental agents are uncomfortable doing this. So, although they might have determined where the applicants ‘declared’ income is coming from, they would not be aware of any ‘suspicious’ income reflected in bank statements.
In summary, your FICA obligations vs those of a DIY landlord can be summarised in the following table . . . .
That’s at least 6 legally prescribed actions that a Rental Agent has to comply with under FICA-related legislation that private landlords, as a general rule, don’t do, or don’t have access to the resources to enable them to do
. . . .and I haven’t even included the fact that, as a Rental Agent, you will also be doing a credit check on all rental applicants, something, once again, that most landlords do not have access to.
If you would like to find out more about FICA and the duties imposed on rental agents and agencies, take a look at the training video I made: FICA: What Every Residential Property Rental Professional Needs to Know – in just 30 minutes!
I hope and trust you found this information useful. Please feel free to post any questions you have below and please feel free to share this post if you know of anyone else that might also find it useful – or share on Facebook or Twitter by clicking on the share links below.