Although among private landlords tenant selection is still often based on first impression and trust, professional market participants increasingly assess tenant reliability based on objective data, such as a credit history report.
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“Today, one way to assess a tenant’s solvency and reliability is the ability to review their credit history report. This allows the landlord to objectively evaluate a person’s financial discipline and responsibility in meeting obligations, base trust on facts, and for the tenant – to attract the landlord’s attention,” says Marius Ramanauskas, head of the product department at Creditinfo Lithuania.
Credit history is still more often checked by professionals
Activity in the rental market of major cities is constantly recorded, but it intensifies especially in August–September, when the number of people looking for housing traditionally increases. Market activity is accompanied by rising rental prices.
As shown by data from the portal Aruodas presented in the real estate (RE) company Ober-Haus review, in April–June this year the average price per square meter of rental housing in Vilnius was 16.4 euros, in Kaunas – 12.8 euros, and in Klaipėda – 11.7 euros. Compared to the same period last year, prices increased the most in Vilnius – by 11%, while in Kaunas and Klaipėda they rose by 5.7% and 5.8%, respectively.
According to Marius Čiulada, head of the Ober-Haus Vilnius Old Town office, landlords themselves also take into account the seasonal market activation – some plan the terms of their rental agreements so that they end in August–September, when housing demand traditionally rises. Therefore, during this period, the market sees an increase not only in tenants looking for housing but also in rental offers.
“The market is so active and there are so many players that it is not advisable to look around and search for housing for a long time, because the next day the option you viewed yesterday evening may simply no longer be available,” says M. Čiulada.
A larger number of potential tenants also means more choice for landlords, who can reduce selection risk by checking the potential tenant’s credit history. However, according to M. Čiulada, among individuals renting simpler apartments, this practice is still rare in Lithuania. It is more often applied by professional intermediaries who rely on credit reports to better assess potential tenants and protect landlords’ interests.
“It should be understood that the landlord entrusts the tenant with managing property worth tens, and often hundreds of thousands of euros, and often has to judge the tenant’s reliability from a brief meeting. So it should not be surprising if the landlord wants to get to know the tenant better, their lifestyle, financial capabilities,” says M. Čiulada.
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What does a credit history report show about a person?
A credit history report is a document designed to show a person’s financial reliability. It allows the landlord to objectively assess the most important things: whether the potential tenant meets obligations on time, has no debts, their payment history, personal credit rating, and, for example, how often they use quick loan services – all this can show how well a person manages their finances.
“For the tenant, the report is a tool to prove reliability and a responsible approach to financial obligations based on official financial institution data. When several candidates compete for housing, such transparency can become one of the arguments helping to earn the landlord’s trust and get the desired housing,” says M. Ramanauskas.
A pre-prepared copy of the credit history brought to the apartment viewing will help prove to the potential tenant that they are orderly and fulfill financial obligations on time.
What is worth asking the landlord?
In turn, before signing a new contract, the tenant should ask the landlord about a few things. Before signing the contract, you can ask the landlord to show a document confirming ownership – a purchase-sale agreement, a gift deed, or an extract from the real estate register. An honest landlord will do this without any obstacles. A landlord who refuses or delays doing so is a serious reason not to rush either with the contract or the deposit. It is important – never pay a deposit without signing a contract.
Also, it is necessary to record the condition of the apartment in advance. During the inspection, check the walls for moisture, test electrical outlets, plumbing, heating. Most importantly – if defects are found, take photos of them together with the landlord and ask to attach them to the handover-acceptance act.
It is also important to clearly foresee and agree on the conditions for returning the deposit, the procedure for terminating the contract, and payment for utilities.
M. Ramanauskas notes that rental relationships begin with mutual trust. The more it is based on objective facts, the greater the likelihood that both parties will make a decision favorable to them.
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