Private Landlords’ Guide To Tenant References

All UK landlords would love to be guaranteed that their next tenant will be completely trouble-free. It is top of their wish list to get a tenant that pays their rent on time and never hears a peep from them. Most tenants are reasonable and will treat their rented home as if it is their own, but there will always be a level of uncertainty for landlords when creating a new tenancy.

Although every landlord must protect themselves and their investments with the right landlord insurance, it would be better not to claim by ensuring you have the right tenants that will respect and care for your rental property like it was their own home.

Not having the right tenant in place can lead to issues over missed rent payments, expensive property repairs and complaints from the neighbours for noise or unsociable behaviour. But there is no guarantee that you will get a good tenant, and the only way you can try to ensure you are getting a good tenant is through a tenant reference check.

What is a tenant reference?

Landlords can conduct tenant referencing to find out some background information about a prospective new tenant. A tenant reference is a set of checks that enables landlords to decide about the prospective tenant.

Some landlords will conduct these checks for themselves, but many will use the services of a letting agent or a professional tenant referencing company. While it can be quick and efficient to carry out basic tenant reference checks, which involve a credit check and maybe reading a reference from a previous landlord, most will double-check background information with more comprehensive assessments.

A deeper tenant reference check would involve employment checks, previous landlord references, criminal background checks, affordability calculators and more background screening measures.

Why are tenant references important?

When you think about it, you are putting a lot of trust in your tenants. You wouldn’t hand over the keys to your primary financial asset unless you feel confident that your tenant will treat your property well, can afford the rent and will hold up their responsibilities as your tenant.

Tenant references can give landlord’s an insight into the renting history of the tenant, their financial stability and reliability, and reassure them that their property won’t be used for any criminal activities.

Landlords must also check the identity of their prospective tenants to make sure they are who they claim to be and have a right of residency in this country. For the past few years, checking driving licences and passports has become a regular part of tenant reference checks. A reference from a previous landlord can be worth its weight in gold when you want to feel reassured that your property will be looked after.

What do tenant references look like?

When a landlord completes a tenant reference check, they can go through different stages of reviews, depending on how deep they want to go. Most landlords will do a basic check first, and you can do this yourself if you want to avoid paying additional fees from a letting agent or a reference check company.

Landlords can undertake primary screening and be happy enough with the results to feel confident to rent their property to the prospective tenant. Primary screening can involve ensuring your tenant meets with a set of essential requirements, for example:

• Is the applicant in employment
• Are they a smoker
• Do they have pets

A basic tenant reference check such as this will help you rule out prospective tenants if you only want to let someone with a job and a non-smoker. New government legislation means landlords should accept tenants with pets and have a valid reason to refuse pets. Still, you may not want to let your property to tenants with certain types of pets, so this basic check will allow you to reject tenants that don’t fit the bill.

Following a basic check, you may want to take tenant referencing further with a credit check, proof of address (or residency with a right-to-rent check), and sourcing previous landlord’s references.

How long does tenant referencing take?

Conducting a tenant reference check by yourself will take as long as the available time you can dedicate to it. Suppose you have a full-time job and a busy family life. In that case, you may not have much time to commit to going through tenant referencing motions, so allowing a professional tenant referencing company to do this may be a much quicker process.

There will be a delay in getting hold of previous landlord references, employment and financial records, so if you are keen to let out your property as quickly as possible, using a professional service can be a speedier process.

Professional tenant reference providers can usually complete the process within three days of receiving the appropriate documents and permissions.

Can I charge for tenant references?

Professional referencing companies typically charge between £15 and £40 per tenant. But if you are doing the checks yourself, you can still face some costs along the way. It costs £3 each time you access the Land Registry to check your prospective tenant’s previous landlords to confirm who they are.

It may also cost you money to run a basic credit check on a prospective tenant, but you cannot pass on these expenses to your tenant. The Tenant Fees Act 2019 means landlords in England can no longer charge tenants for reference checks. If you want to dive deep into your prospective tenants’ background information, you should expect to pay these costs yourself. Even if the applicant fails the reference check, you still cannot bill them for these expenses.

How to carry out tenant reference checks (step by step)

To make tenant reference checks easier, you can download a tenant reference template from the internet as a guide. A tenant reference letter template can save you time when calling for information, such as requesting the landlord’s references and employment confirmation.

It can help to have a tenant reference checklist to follow once you have conducted a basic check and narrowed down your list of prospective new tenants. A tenant reference checklist can include the following information, but you may not want to tick off everything on the list:

• Bank statements: Ask for a recent bank statement from the previous three months
• Credit check: Use an online credit check service to confirm that the tenant pays on time or has a CCJ against them
• Debts/outgoings: You can ask what debts the tenant carries, as this can affect whether or not they will be able to afford the rent
• Employer reference: landlords can request evidence of their employment from the prospective tenant’s employer, which can help prove their reliability and confirm their income will cover their rent commitments
• Previous landlord reference: A reference from an earlier landlord can be invaluable
• Proof of address: Ask for a recent utility bill or council tax bill for the current year, driving licence or passport, bank or building society statement showing the current address, or a previous tenancy agreement
• Proof of identity: A photo ID such as a driving license or passport is the most accessible form of ID to check
• Right to rent certification: Every landlord in England must conduct ‘right to rent checks to ensure tenants can legally live in the UK

Conclusion

A checklist such as the one listed above will help you to assess a prospective tenant’s suitability and reliability. Even though it makes sense to have a checklist like this in place, it is always safer to go with your gut feeling about your prospective tenant.

If you don’t think they are being honest and genuine at any point in their tenancy check, you can choose to reject them or investigate further to find out more. At Brisco Business, we prioritise building long-term relationships with our clients by offering exceptional customer service and reliable business insurance solutions.

Darragh Timlin

With over 25 years’ experience, Darragh is an expert in all things insurance. Starting his career in commercial property underwriting, Darragh has worked for a number of global insurers and is now Managing Director of Brisco Business, part of the wider Henry Seymour Group.

All articles by Darragh Timlin