If you’re a landlord, a tenant or a letting agent, you may have had to deal with tenant referencing checks.
For a landlord, tenant referencing is the first line of defence against renting your property to an unsuitable tenant. But, you must clearly understand what tenant referencing is and what it means to a landlord, letting agent or a tenant. This blog will clearly guide you on these lines.
What is Tenant Referencing?
As a landlord, you will need to rigorously reference new tenants to check whether they are reliable and will be able to meet rent payments each month. These include credit eligibility, employer checks and previous landlord references.
All adult tenants aged 18 and over involved in the Tenancy Agreement should be required to have a reference check completed.
Most importantly, landlords must check that their tenants have the right to lawfully live in the UK. Failure to undertake a Right to Rent under the Immigration Act 2014 can result in a fine or even a jail term, therefore, it’s important they are conducted thoroughly.
Now, it's essential that all landlords are aware of the importance of tenant referencing and how carefully it should be carried out to reduce the impact it has on new tenancies.
Why is Tenant Referencing Done?
Tenant referencing is a crucial part of the rental process and can give a landlord or letting agent a good indication of whether a potential applicant will be a good, reliable tenant and take care of their property.
Tenant Referencing for Landlords
Tenant referencing offers landlords;
· Clarity and confidence that their property will be well looked after.
· It provides all the background information on your prospective tenants.
· To make an educated choice about who you are letting your properties to.
· To check what a tenant does for a living.
· Check whether they have a previous landlord recommendation
· Check the tenants right to rent in the UK
· Make a check on tenant's financial position and their ability to pay the rent on time each month.
Becoming a landlord can be enjoyable and successful for everyone involved if they follow the tenant reference guidelines and the procedures in place.
Role of Letting Agents in Informal Referencing
All good Letting Agents will carry out a short survey with the prospective tenants during the initial enquiry about the property they would like to rent. That is before the tenancy is agreed.
The questions they will ask the tenants includes 5 "W"s and they are:
· Who you are question includes– name, address, telephone, email, occupation and marital status.
· What questions include - furnished/unfurnished, flat/house/bungalow, number of beds/baths, garden, garage, parking and pets you have.
· Where – which area are they looking to move to?
· When – timeframe for move, flexibility etc.
· Why – upsize/downsize, schools, job relocation, first home?
This allows the Letting Agent to verify the applicant(s) suitability for the property they enquired about and if suitable, to arrange a date and time for them to view.
Once the informal referencing is over, the applicant make an offer which is deemed acceptable by the Landlord. The applicant must then pay the reservation fee and the official referencing process will be started by the lettings negotiator.
Current Landlord Reference
This is the type of reference check carried out on a tenant when they are already renting another property. This gives a good indication of their quality as a tenant.
The Landlord reference check will establish:
· How much rent was paid by the tenant?
· Was the rent paid on time?
· Was the property looked after during the tenancy?
· Was the property left in good order at the end of the tenancy?
· Would the Landlord consider renting to the tenant again in the future?
If it happens that the tenant fails in any of the reference checks, landlords are able to exercise discretion based on the specific tenant they’re dealing with.
Therefore, strict tenant referencing process gives landlords clarity and essentially confidence that their property will be well looked after.