A guide to tenant referencing

All landlords dream of finding the perfect tenant: someone who pays the rent on time, without delays or excuses and will treat the property like it’s their own. Here’s how you can undertake a simple, time-efficient screening process that could save you lost income, property damage and stress in the long run.

The truth is that rogue tenants aren’t uncommon. Before a person actually moves in and starts their occupancy, you have no idea what they might be like. That’s why tenant referencing is a must.

When you have a property sitting idle, it’s all too easy to accept the first person who comes along because of the prospect of quick rent money. But this is a false economy. Allow the wrong person to move in and you might find yourself repenting at leisure. 

With a simple, time-efficient screening process you could save yourself lost income, property damage and stress in the long run.

How to go about tenant referencing

There’s no one size fits all method but taking these precautions will increase your chances of finding the right tenant.

Ask for ID

First and foremost, be sure the person you’re dealing with is who they say they are. Ask to see a driver’s licence, a passport or some other credible form of ID. Anybody providing false information could be planning to use your property for illegal activity.

From February 2016, the government’s Right to Rent scheme came into effect, requiring landlords to make checks of prospective tenants. This builds on the Immigration Act of 2014 to try to help control illegal immigration.

Renting your property out to somebody who is not entitled to be in the UK could leave you with a fine of up to £3,000 per tenant. To help you out, there’s a Gov.uk tool that will help you through the checking process.

Use a Tenancy Application Form

A basic tenancy application form can be found online or you could draw one up yourself. Getting prospective tenants to fill this in will help you gather a few of the essential details you need to perform reference checks. Whether you use an existing form or draw one up yourself, here’s the information you should obtain:

1.    Tenant’s personal details:  
•    Name
•    Contact details
•    Time at current address (if it’s a short time, find out their reasons for moving)

2.    Tenancy details:
•    Property address
•    Rental period
•    Number of applicants
•    Proposed tenancy start date

3.    Background checks:
•    2 x Referee details
•    Guarantor details (if your prospective tenant is unable to pay the rent)
•    Current landlord details

4.    Employment details:
•    Current and past employment details
•    Salary

5.    Details about occupiers: 
•    All the people that will occupy the property

6.    Other details: 
•    Smoking status/ pets etc.

Remember to follow through on the background checks. It might only be a short phone call or an email but it’s time well spent.

Tenant guarantor

Making sure that your prospective tenant has a guarantor should be a red line. If, for any reason, your tenant is unable to pay the rent, it’s vital that there should be someone who can cover it. For any good tenants with a steady income, this will be a mere formality as it’s not something they’ll have to rely on. If they can’t provide a guarantor, you should take this as a red flag.

Landlord referencing

Of all the people to contact, the one most likely to provide the best insight into what a tenant might be like is, of course, their current landlord. Have there been any issues or would they wholeheartedly recommend this person to somebody else?

Sending over a landlord reference form is perhaps the easiest way to get this information. The landlord can simply tick ‘yes’ or ‘no’ to basic questions – such as whether the tenant owes arrears or violated the terms of their lease. Example forms can be downloaded online.

As well as a landlord reference, try to visit your prospective tenant’s current home. Inspecting it isn’t always possible but a quick visit might help to assess their standards of cleanliness. You needn’t do this for every applicant, just the ones you’re seriously considering.

Can your prospective tenant afford the rent?

If your prospective tenant falls in love with your beautiful property (as well they should) they might be tempted to sign the tenancy agreement without realistically being able to afford it. This is why you might need to assess the affordability of the property for them.

1.    Request 3 months’ payslips to verify their income. Factor in cost of living to work out if they can realistically afford the rent.
2.    Check their employment status to find out if they’re in full time, part time or zero hours employment because their pay slips alone might not tell the whole story.

Social media

Social media is an inescapable part of our lives. People share a lot of their life online so, while it’s unfair to judge someone based solely on a few photos from a stag or hen night, it’ll at least give you a richer picture of your would-be tenant. 
Instagram, Twitter and Facebook are good ports of call. It’s also become a fairly routine destination for employers checking out potential employees – so you needn’t feel too much like you’re prying.

Tenant referencing/credit check services

If you’d rather leave it to the professionals, there are a number of options (starting from as little as £5) that will do the legwork for you. The advantage here is that many of these services will be able to undertake credit checks and get an accurate reflection of your prospective tenant’s finances. You’ll generally get a report which will cover Identity Check, Tenant Risk Score, Financial Check, Income Reference and Previous Landlord Reference.

Here are some popular options:

•    NLA Tenant Check
The National Landlord Association offers a basic teant check and a full tenant check. Prices start from £8.95 for full members.

•    The Houseshop
Also offer a two-tier reference check with the cheapest starting at £9.99. The more comprehensive service goes as far as CCJs and aliases.

•    Experian
Experian’s background check pays special attention to your proposed tenant’s financial background and ability to pay.
For a very reasonable fee you can buy a little peace of mind but don’t rely entirely on just tenant referencing services. This should be just part of your process.

Go with your gut

Finally, and perhaps most importantly, listen to what your instincts tell you. While credit checks, references and guarantors are essential to tenant referencing, it’s hard to beat gut instinct about somebody. Regardless of impeccable finances, references or reliability, if you’re not comfortable with somebody it might immediately make the relationship between tenant and landlord difficult. That’s why it’s so important to meet them.

Take the opportunity to show them around the property yourself, ask them questions and generally just get to know them. You’ll soon get a sense if they’re the right candidate for you or not. Even if a letting agent is trying to push a candidate, you should trust your instincts. After all, no one else is going to care about your investment as much as you.

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