Tenant referencing is hugely important for landlords and using a letting agent is the most thorough way to assess a tenant’s suitability for your property.
Here's what to expect from the referencing process…
How do reference checks work?
Your letting agent will undertake a variety of referencing checks on potential tenants for your rental property, including:
1. The tenant’s background
One of the ways your letting agent will get an idea of a tenant’s suitability is through getting to know them and asking the right questions.
Your letting agent should find out:
- Details about the tenant’s employment and previous work background
- More about their renting history and how many properties they’ve rented over a certain period
- Why they’re looking to rent in the area and how far your property is from their workplace
- Their experiences of renting other properties and why they left their last rental
As well as these kinds of questions, your agent will perform identification checks, requiring:
- Proof of personal identification through a driving licence or passport
- Proof of current and past addresses through utility bills
2. Credit checks
Performing a credit check on a tenant is one of the best ways to assess their financial situation and history.
Your agent will perform a soft credit check when a tenant applies to rent your property and this will show them:
- Information on any County Court Judgments (CCJs) or insolvencies caused by missed payments in the past
- The tenant’s electoral roll status, proving their current address
- Whether or not there are any credit accounts linked to their name and address
Because a letting agent’s credit check is a ‘soft’ search, it won’t reveal any specific details about money the tenant has borrowed.
3. Affordability checks
As well as a credit check, your letting agent will assess whether the tenant applying to rent your property can afford to do so.
To do this, they’ll ask the tenant for:
- Bank statements to show incoming and outgoing cash
- Employer payslips and a P60 to prove monthly and annual income
- Copies of accounts if the tenant is self-employed
In most cases, the tenant’s monthly gross salary will need to be 2.5 times the monthly rent you’re looking to charge for them to pass the affordability tests.
For joint applicants, each tenant’s affordability test would be performed based on the share of the rent they’d be paying.
4. Landlord and employer references
Your letting agent will contact a tenant’s employer to request a reference, confirming:
- The tenant’s job title and employment details
- Their annual salary
- Their contract and whether they’re in a probation period
The agent may also contact the tenant’s previous landlord to obtain a reference and confirm:
- They’re up to date with their rent payments
- They’ve kept the property in good order
All this information will be used by your letting agent to validate the information given to them by the tenant.
5. Right to Rent
Another major part of the referencing process is checking that the tenant has the right to rent a property in the UK.
The rules around these immigration checks are changing in April 2022 and the best way to navigate the changes is to use a letting agent to find your tenants.
From April 6, 2022, your agent will no longer need to check a tenant’s personal immigration or documents to assess their right to rent.
Instead, they’ll use the Right to Rent Online Checking Service for Biometric Residence Card or Permit holders.
Until September 30, 2022, however your agent can also check a non-Biometric Residence Card or Permit holder’s Right to Rent virtually, either over video call or by asking them to submit a scanned copy of their original documents.
Options if a tenant fails a reference check
If a potential tenant for your property fails a reference check due to your agent’s concerns over affordability, you could request that they have a guarantor in place.
A guarantor will also be referenced by your agent but would be in place to pay your tenant’s rent should they fall into arrears.
How long does a tenant reference check take?
If you’re prospective tenant can provide all the information required by your letting agent quickly, a referencing check can be as quick as 48 hours.
However, often obtaining previous landlord or employer references can mean the process takes longer.
Further reading…
The costs you’ll need to consider when renting out a property
