What Kind Of Tenant References Do You Need As A Landlord?

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May 22, 2024

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What Kind Of Tenant References Do You Need As A Landlord?

It can be tempting as a landlord to get tenants in as quickly as possible and start receiving those monthly rental payments. However, not doing your due diligence for tenants can cost you in the long run. Bad tenants could mean late or missed payments, trouble with neighbours and damage to your property. Taking the time to collect proper tenant documentation, including references, right to rent, and credit checks, could save you problems in the future.

What Is a Tenant Reference?

Tenant references can help landlords find out about their prospective tenants and see if they are reliable or suitable for the property. A tenant reference involves various  checks and verifications – either carried out by the landlord themself or through letting agents or professional tenant referencing companies.

The majority of landlords and letting agents rely on basic tenant references – these almost always include a credit check. More comprehensive tenant references could also include factors such as employment checks, character referencing, background screening and affordability calculators.

Why Are Tenant References Important For Landlords?

You will likely want to know who will be living in your property. By running background and reference checks, you can get an idea of your tenant’s renting history and finances, as well as whether they have had any criminal issues in the past.

How Long Does Tenant Referencing Take?

As a landlord, you could run the tenant reference check yourself. However, if it is not your full time job, it could be time-consuming. You could work with a letting agent or use a professional tenant reference service which can free up time for you and make sure that the checks are carried out properly.

What Do I Need To Request for a Tenant Reference?

Proof of Identity

Checking a proof of identity should be a basic step for any new tenant. Photo ID, such as a driving licence or passport, is the easiest way to confirm that a person is who they say they are. If a tenant doesn’t have photo Id for any reason, you need to decide whether the rest of the reference checks are enough to determine if the tenant is eligible or not.

Character Reference

You want to know that the tenant you are renting to will be a good and reliable tenant. It is common to request a reference from the tenant’s current landlord or previous landlord – this can guarantee that the tenant respected the property, paid rent on time and did not cause any other problems. 

In addition, you can get a reference from their employer – this shows that they have a job and long-term job security to guarantee that they will be able to meet rent payments. Asking to see recent bank statements can also be a way to check regular income. For self-employed tenants, you can ask for copies of trading accounts along with a reference from an accountant.

Credit Checks

It is highly recommended to carry out a credit check that will show whether the tenant has had issues paying bills in the past. To do this, you must always get permission from the tenant first.

For tenants with bad credit history, it is worth asking them about their situation. However, it is a red flag for landlords and should be treated with caution. If you are unsure that a tenant will be able to meet payments, it is worth getting a guarantor, asking for a larger deposit or requesting more rent up front.

Getting a Guarantor

If you are renting to tenants that don’t have any credit history, such as students, it could be a good safety net to get a guarantor – someone who agrees to pay the rent if the tenant cannot. For students, this will likely be their parent or guardian.

Right to Rent

Highly important is checking that your tenants have the right to rent in the UK, otherwise this could legally implicate you in the future. In order to verify this, you will need to check their passports or immigration documents at the start of the tenancy, reviewing all documents for adult occupants. 

For tenants who have a biometric residence permit or card, they may provide an online code rather than the physical card. Tenants with settled or pre-settled status under the EU Settlement Scheme will also provide an online code. However, if tenants are still waiting for a decision on their EU Settlement Scheme application, they must provide an online ‘certificate of application’ along with a share code, or a copy of the confirmation letter or email from the Home Office.