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Renting to Foreign Tenants – Rewarding or Risky?

Many risk-averse landlords view the idea of renting out their properties to foreign tenants with trepidation no thanks to some of the horror stories out there. Are these anomalous cases, or do foreign tenants pose a higher risk than reward when it comes to the rental market?

1. Difficulty of screening

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As a starting point, landlords should run background checks on their prospective tenants. However, this would not be as straightforward if the tenants are not local. Landlords may not be able to make an informed decision if they are unsure of the prospective tenant’s track record.

To avoid being stuck in a messy situation, landlords can mitigate their risk by requesting that foreign tenants provide guarantee/referral letters. On another note, in this internet era, searching up your prospective tenant online would be a helpful tool to carry out a general background search. With the help of real estate websites like PropAdvisor, landlords can screen through their potential tenants with a score rating.

2. Higher Risk

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There is no way to guarantee that all tenants would pay their rent. Some tenants will pay regularly and some may not pay at all. The risk is higher when landlords are dealing with foreign tenants as these tenants tend to rent for a short term and move around frequently. If said tenants were to leave the property midway through the tenancy, the landlord would be left with little to no redress once these tenants leave the country.

Landlords should note that foreign tenants are required to produce proof supporting their reasons for moving out of the country and the landlord must be given a written notice of at least two to three months before terminating the agreement.

3. Attractive Rates

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Renting to foreign tenants may be lucrative business. In recent years, there has been an increase in development of luxury, high-end accommodation targeted at expats. Undeniably, the niche market for high-end accommodation targeted at foreigners is booming.

Landlords may miss out on a segment of the lettings market if they completely rule out renting to this segment of the market who are able and willing to pay a premium price.

4. Improved upkeep of property

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Generally, foreign tenants will be asked to pay a higher security deposit to secure a property. This means that properties have to be kept in a good condition, where the majority of foreign tenants will go the extra mile to make sure that they get their deposit back.

In conclusion, as a landlord, don’t be too quick to dismiss renting to foreign tenants. Your letting experience will differ depending on the nature of the person that you are renting it to - be it to a foreigner or a local tenant.

The important thing to remember is ensuring that proper screening is done. Landlords need to be mindful to take measures to ensure that their property don’t fall into the wrong hands.