4 Safeguards For The Growing Tide of Roommate Renters
Renters who are strangers and yet will be roommates can present a challenge for leasing apartments.
Here are 4 safeguards to consider when renting to these types of occupants.
While individual renter households represent the highest volume growth since 2007, non-family roommate renter households have grown at almost twice the pace, or 2.9 percent over the same period, according to recent Axiometrics data.
That’s an increase of 20.7 million “non-family” households consisting of either one person or two or more roommates, representing growth of 330,000 people per year sharing apartment homes – and potentially a lot of hassle for communities that don’t have clear policies in place.
Renting to Non-family Roommate Renters
Typically all parties applying for a lease have to meet screening criteria. But what happens when one roommate’s screening is up to snuff and the other’s isn’t?
That’s where corporate policy comes in. Most companies consider each party jointly and severely responsible for the lease. The question still is, “Do you use the lowest screening score or the highest in determining whether applicants are accepted outright or with conditions?”
Think of college friends who decide to move in together while they experience their first taste of independence and new jobs. One person not taking rent seriously is enough to ruin a relationship and leave the community spending unwanted time going to occur.
The situation can be worse in situations where two strangers decided to co-habitate after matching profiles on a roommate listing site. They may feel little if any obligation to act responsibly toward each other or the community, and only consider themselves obligated to pay their fair share.
Putting aside the potentially messy interpersonal issues that come when people share an obligation, there are safeguards communities can put in place:
4 Safeguards for Apartments And Roommate Renters
1. The conservative approach is to use the lowest screening score in developing lease offers for renters and to treat both residents as conditionally approved while collecting some extra deposit or other protection for the company. Requiring each roommate to pay a security deposit is the usual course of business since it creates ‘skin in the game’ for each person and provides protection to each roommate in the event of unit damage at move out.
2. Alternately, some communities require each roommate to provide a guarantor for a portion of the lease or requiring one guarantor for the entire lease. In the college graduate scenario this is usually the parent who has the best credit so both roommates and qualify. In roommate match-up scenarios it can get trickier.
3. Providing payment options that protect on time rent delivery has also become a strategic amenity as many communities are finding that simply requiring automated payments with roommates isn’t enough to assure performance. These companies are turning to options like rent from payroll which involves direct deposit from employer payroll of a portion of rent every time each roommate is paid to a bank account neither person can withdraw from. These programs also allow flexibility if one roommate will be responsible for a larger portion of rent.
4. It’s also important to be clear about late fee policies for rent in arrears and the potential legal consequences to all involved if one roommate fails to perform. All parties need to realize the implications of financial commitments.