Understanding tenant referencing is crucial for all first time landlords. Getting tenant referencing right protects you from losing money due to voids and legal issues. In this guide, we will explore the ins and outs of tenant referencing.
Tenant Referencing steps
Tenant referencing should include verification of identity, employment, and salary. It should also include landlord references and a credit history which includes previous defaults and county court judgments. Taking shortcuts during tenant referencing can lead to landlord rental arrears.
Right to Rent checks
Since Right to Rent checks have been introduced, landlords must ensure every adult renting a property is legally allowed to live in the UK. Checking Right to Rent is not a formality; ignorance of this can lead to hefty fines. It is important to also note that some types of visas will require these checks to be done multiple times throughout the tenancy.
Acceptable Documentation
Right to Rent checks can be done in person through original documents, online using the government service, or through a Digital Identity Service Provider for some types of digital verification.
Whatever system you decide to use, keep detailed, dated notes of what you have checked, and how. If any of the checks are ever questioned, these documents will protect you.
Affordability is as important as identity
It is common practice that a tenant’s gross income is estimated at 2.5 to 3 times the annual rent, but this is highly dependent on the region and the referencing agency’s specific requirements. In situations where this income threshold is not met by a tenant, there can be a gap bridged by a sufficiently earning guarantor. However, the guarantor must undergo referencing to the same depth as the tenant.
Referencing: a checklist
- Identity and Right to Rent checks have to be done before signing anything
- Credit history must be provided and there should be no adverse history that is undisclosed
- A reference must be obtained from the current landlord and not just a previous one
- Income must be verified and if a guarantor is required, this should be done
- Documentation must be kept for the entire tenancy and after
This is important now more than ever
Because rental legislation is continuing to evolve and the courts are slow to process possession claims in cases of problems, comprehensive referencing at the beginning of the tenancy is much more cost-effective than solving issues. It also ensures good tenants that the process will be fair to all applicants.
Contact our team today if you are a landlord who is unsure if your referencing process is compliant or if you would like help managing your letting from beginning to end.
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