A thorough tenant reference check is vital for London landlords, especially as the Renters’ Rights Bill draws closer to becoming law. After all, the key proposals in the bill are tighter restrictions on evictions, longer notice periods and stronger tenant protections. All these may seem like good news for renters, but they limit the flexibility that landlords once enjoyed. It also increases the financial risk when it comes from the wrong tenant.

By securing a reliable and responsible tenant, you won’t have to worry about the stipulations in the Renters’ Rights Bill. A high-quality tenant would pay rent on time and would take care of your property. They would be willing to communicate with you so you can resolve any conflicts amicably.

The question is, how can you ensure you get the right tenants to rent your property? This is where a tenant reference check comes into play.

In this article, you’ll learn what a tenant referencing check is and how you can use it to screen prospective tenants. You’ll also receive a checklist to help confirm that the tenant is the right fit for your rental property.

What is a Tenant Reference Check?

A tenant reference check is a screening process that allows you to verify potential tenants’ financial responsibility and suitability for living in your property. The process involves gathering information to ensure the tenant can pay rent and meet the terms of the tenancy agreement.

The information gathered is crucial in helping landlords determine if a tenant can be trusted to rent a property. Through this reference check, landlords reduce the risk of dealing with a problematic tenant while protecting their properties. This is important because the Renters’ Rights Bill imposes stricter restrictions on evictions.

4 Key Areas in a Tenant Reference Check

A proper tenant reference check involves the following:

• Right to Rent. This is a legal requirement in the UK. Landlords should ensure that the tenant is legally permitted to work and reside in the country. A right to rent includes verifying documents such as a valid passport and ID. Take note of the expiration date of the presented documents to know when to conduct another right to rent check. Failure to do so would result in penalties.

• Credit check. This step verifies the potential tenant’s financial history, with a primary focus on their credit score. This will reveal any County Court Judgements (CCJs), missed payments or bankruptcies that indicate a higher risk of non-payment. A tenant with a good credit score reflects good behaviour and financial responsibility.

• Affordability check. This checks the tenant’s ability to pay rent. Verify through an employment reference, which is a written confirmation from the employer indicating the tenant’s job title, annual income and length of employment. Make sure the tenant earns at least twice the monthly rent to ensure affordability.

• Previous landlord references. Contact the tenant’s previous landlords to gain insight into their rental history. This involves confirming the tenant pays on time and that they have taken care of the property, leaving it in good condition. The landlord reference check can also reveal any complaints, disputes, or damages that may indicate potential risks.

Student tenants, those without a regular income, and first-time renters would require additional checks, such as a guarantor reference. This ensures the rent will be paid.

Requesting that the tenant pay rent in advance is also one way to ensure they can afford to stay in the property. This can serve as a security deposit to demonstrate the tenant’s commitment to the agreement. This is also a great time to discuss the tenancy deposit protection scheme with them.

Why is a Tenant Reference Check Important?

A thorough check is one of the most effective ways to protect your property and minimise the stress of managing tenants. It helps you avoid various issues.

For instance, by going through an affordability check, you can avoid missed rental payments. Also, the landlord reference will help determine if the tenant has a history of late payments.

Performing a right-to-rent check will also ensure compliance with the laws and prevent you from incurring penalties.

The tenant reference check also minimises messy evictions. A responsible and reliable tenant would be open to communicating with you and settling any issues amicably. You’ll also avoid property damage by having a trustworthy tenant stay in it.

What Disqualifies a Tenant?

Not every prospective tenant will pass the tenant reference check. Ideally, you want to be strict about this so you won’t end up with a problematic tenant. Now that you know what is involved in the check, make a list of the non-negotiables.

For instance, the right to rent check is mandated by the law. Failure to comply could result in a fine of up to £20,000 per occupier. If the tenant doesn’t have the right to rent, don’t proceed with the tenancy agreement.

CCJs can also be non-negotiable, unless the tenant shows proof that it’s a one-time event caused by unavoidable circumstances. A low income should also disqualify a tenant, as it would cause problems with rental payments and other tenant fees.

Poor landlord references should be considered on a case-by-case basis. Sometimes, the previous landlord may be the cause of the problem.

Incomplete documents may be suspicious, so consider declining the tenant if they can’t meet all your requirements.

Ultimately, it’s best to trust your instincts when selecting the right tenant. When your gut tells you someone isn’t trustworthy, don’t proceed with the agreement.

Before declining the tenant, give them a chance to provide an explanation or submit additional documents to demonstrate their trustworthiness for a tenancy agreement. You can also request additional references. But if the issues persist, then politely decline them. Just ensure that your decisions won’t put you at risk of being accused of discrimination.

Common Questions Asked About Tenant Referencing

Whether you’re managing a single flat or a block of apartments in London, it’s natural to have questions about tenant referencing. Ensure you understand the process to find the best tenant for your property.

Here are the most frequently asked questions about tenant reference checks.

Can I charge tenant referencing fees in London?

No, you can’t charge the fee to prospective tenants. Even if you use a professional referencing service, the Tenant Fees Act 2019 prohibits landlords and agents from charging tenants for any referencing checks. You are only allowed to request a deposit (completely refundable) and rent in advance. Anything added to that may result in fines.

How many references should I collect?

The references are typically provided by the tenant’s employer and previous landlord. Both of these are enough to confirm the tenant’s ability to pay rent and their behaviour. For first-time renters or student tenants, you may need to obtain a guarantor reference for additional security.

What impact do CCJs have during tenant checks?

County Court Judgements (CCJs) should be taken seriously. These are indicators of past financial issues that make a tenant a high risk. This is especially true for recent CCJs. However, if the CCJ is old and fully paid, check the tenant’s employment status. If they can show proof of a stable income and their previous landlord has no complaints, you might want to consider the tenant’s application.

How long does tenant referencing take?

A tenant reference check usually takes 1 to 3 business days. If there are no delays and the tenant provides the necessary documents and information, the check will be completed promptly. Among the factors that may cause delays are inaccurate data or unresponsive contacts. Using a professional referencing service might help speed up the process.

Get High-Quality Tenants for Your Rental Property

Conducting a thorough tenant reference check helps reduce the risk of renting to a problematic tenant. It also builds the foundation for a good tenant-landlord relationship.

With the looming Renters’ Rights Bill passing into law, it’s more important than ever to screen tenancy applications so that you end up with reliable and responsible tenants. Ensure you screen for identity, credit issues, affordability, and rent history. If necessary, consider obtaining additional security, such as guarantors.

All these won’t just make your job as a landlord stress-free. It will also protect your property, as responsible tenants tend to take care of their home as if it were their own.

If you need help with tenant referencing, you always have the option to hire a professional to assist you. Property management companies, such as City Relay, include tenant vetting and referencing as part of their services. You can also receive end-to-end property management services tailored to either long-term or short-term letting strategies.

Get a free rent estimate and find out how City Relay can help you secure high-quality tenants.