For self-employed tenants, going through the referencing stage to be successful in renting a property can sometimes be tricky. Due to its very nature, it’s just not as straightforward as someone who is employed and that’s a fact. Below is a handy guide we’ve put together for self-employed tenants looking to rent.
Find out your (accurate) figures
If you’ve ever watched Dragons’ Den, you’ll know one of the most common pitfalls for the aspiring entrepreneurs is that they simply don’t know the figures on how their business is performing. The key figure we’ll ask for, and which will be relayed to any landlord, will be your net profit. This is the amount of money left over once your business has paid all of its outgoings and taxes.
If you’re a new business owner
If you’ve just recently opened your business and have not done your first year’s worth of accounts, you’ll need a guarantor.
Accountant or Self-Assessment
As a business owner, you have a legal obligation to declare your earnings and pay income tax. Your yearly books need to be done by either an accountant or yourself via a self-assessment submitted to HMRC. We’ve had tenants say neither in the past and unfortunately there’s not a lot we can do to help here.
Don’t exaggerate figures. If the net profit of your company is £10,000, please just tell us this. Don’t say you pay yourself £500 a week, because it won’t stack up when we come to the referencing stage.
Don’t bamboozle us
Whether it’s undeclared earnings, offsetting this against that, sub-contracting, dividends, tax deductions, “I’m a director but I’m not self-employed”, “I own the company but I’m also employed by the company”. Please just keep it as straightforward as you can when talking to staff and ensure the net profit of your company meets the affordability criteria for the property. This is the only figure that matters if you are self-employed when renting.