Landlords invest a lot of money, time and effort into their rental properties and it is perhaps understandable that they want to protect that investment as best as they can. One way to do this is to carry out tenant reference checks on any prospective tenant before signing a contract. In this article we will take a look at the ins and outs of tenant referencing.
What is tenant referencing
Tenant referencing is slightly different to Right-To-Rent checks. These checks are legally required to ensure that a prospective tenant has the legal right to live in the UK. Tenant referencing is a voluntary task that a landlord does to ensure that any tenant:
- Is who they say they are
- Has the financial means and stability to pay the rent on time
- Can be trusted to look after the property properly
It can be tempting to just go on gut feel, but those initial interactions are not always a reliable judge of character.
What checks to carry out
- At the most basic, always carry out an identity check to prove that the tenant is who they say they are. We would advise a driving licence and a recent utility bill with the applicant’s name and address. It is also worth asking for a few years’ worth of address details if the prospective tenant hasn’t been in their current address for very long.
- Employer referencing makes a lot of sense. This is to get verification that the tenant is employed, on what terms and how much they get paid. This will help a landlord decide whether the tenant is securely employed and whether they can afford the rent.
- At least 3 months’ worth of bank statements. This will show a landlord when a tenant gets paid, what their salary is and what disposable income they have at the end of the month. Again, this will let a landlord know whether the tenant will be able to reliably pay the rent and still afford to live after paying rent.
- Previous landlord references are important as these will tell a new landlord how well a tenant treated a previous property and whether they paid the rent reliably. It makes sense to double check that the person writing the reference is actually the person who owns the property.
- Credit checks will look into the financial affairs of the tenant such as any defaults they might have, how much debt they have and also confirm previous address history.
How long does Tenant referencing take?
Typically, tenant referencing takes around 48 hours for the credit checks and address verifications. It can be a little longer depending on how quickly a tenant can obtain employer references and previous landlord references. It often makes sense to use a professional tenant referencing service.
How much does tenant referencing cost?
Basic referencing can start at £15 per tenant with comprehensive checks costing around £40.
Tenant referencing can seem like another administrative hurdle in the life of a landlord, but given the level of investment that a landlord makes in a property, it makes sense to ensure that a prospective tenant is reliable, trustworthy, able to pay the rent and likely to look after the property so spending a small amount of money to check them out can potentially save a much larger expense later on down the line.
