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Understanding Tenant References: Letting Agent Policies Explained

Renting a property can be complex and sometimes daunting for tenants and letting agents. A crucial aspect of this process is tenant referencing, which ensures prospective tenants are appropriate rental candidates. While it is vital for letting agents to perform tenant referencing to verify the reliability of their prospective tenants, it is equally essential for tenants to understand what this process entails.

 

This comprehensive guide will dive into how tenant referencing works and how you can navigate the rental landscape confidently.

 

  • What is Tenant Referencing?
  • Why is Tenant Referencing Important?
  • Tenant Referencing Process
  • How Can I Pass Tenant Referencing?
  • What Happens After Referencing?
  • Tenant Referencing FAQs

What is Tenant Referencing?

Tenant referencing is a check your letting agent will conduct to discover and confirm information about a prospective tenant. This referencing process will help agents determine whether you are the right fit for their rental property. 

Why is Tenant Referencing Important?

A clear and comprehensive tenant referencing policy is vital for letting agents manage landlords’ properties. It protects landlords’ investments and ensures smooth tenancy agreements.

 

This process enables letting agents to select only the most reliable tenants for their properties. By passing these relevant checks, the letting agent will be confident that the chosen tenant:

 

  • Can cover monthly rental payments and will pay them on time
  • Has the Right to Rent in the UK
  • Will keep the property in good condition throughout the tenancy

 

Overall, tenant referencing gives letting agents peace of mind that they have selected an appropriate tenant for a rental property to maximise the landlord’s investment.

Tenant Referencing Process

The tenant referencing process may sound intimidating but is usually very straightforward. Although landlords and letting agents may conduct tenant referencing differently, what you must provide is generally standard across the board.

What References Do Letting Agents Need?

Proof of Identity

Tenant reference checks usually require two forms of identification, one of which must be a photographic ID such as a passport or driving licence. With identity fraud at an all-time high, it is essential for letting agents to secure these forms of identity to ensure the tenant is who they claim to be.

Proof of Address

During the identification process, a letting agent will also need proof of address, usually through a bank statement or utility bill, to ensure that the correct address is provided.

Right to Rent

The letting agent is legally obliged to ensure that a prospective tenant has the right to rent in the UK. 

 

Tenants have the right to rent if any of the following conditions apply:

  • You are a British or Irish citizen
  • You have indefinite leave to remain (ILR)
  • You have permission to be in the UK, for example, on a work or student visa
  • You have refugee status or humanitarian protection
  • You have settled or pre-settled status under the EU settlement scheme
  • The Home Office has granted you a time-limited right to rent

 

The letting agent may be subject to heavy fines or even a prison sentence if these checks are not fulfilled.

Proof of Employment and Income

To ensure that you can afford to make your rent payments on time each month, your letting agent will need to contact your employer to confirm your income if you are a full-time employee. This step is essential as letting agents want to avoid granting a tenancy to a candidate who is likely to default on rent payments.

 

Usually, your income threshold is 2.5x the property’s rental amount. This helps letting agents check that you will easily cover the total cost of the rent each month.

Credit Checks

Running a credit check is vital to learn about a tenant’s income and debt history. This information will provide insight into whether prospective tenants have the means to make repayments on time, especially if they have outstanding loans and debts they are currently paying off. 

 

A poor credit score does not mean you will be rejected as a tenant. It means letting agents may conduct further checks into your income and previous landlord references.

Previous Landlord Reference

If you have previously rented a property, the letting agent may seek a reference from your previous landlord or letting agent to determine whether you are a suitable and reliable tenant. They will discover whether you pay rent on time and keep the property in good condition. 

 

This is one of the most valuable ways a letting agent can determine how you will act during your tenancy.

How Can I Pass Tenant Referencing?

While there is no step-by-step guide to ensure you pass each reference, we have some tips to put you in a better position.

Gather all Necessary Documents

If you are in a position to rent a property, it is good practice to ensure you have all the documents you need before you choose a property. Proof of identity, income, and address will significantly speed up the rental process.

Be Open & Honest

From the get-go, it is crucial to be open and honest with your letting agent about your information, such as how much income you receive, your employment status, your credit history, and even any bad experiences with previous landlords.

Inform Your Referees 

It is always a good idea to tell your referees, such as employers or previous landlords, that you are renting a property, and they can expect a letting agent to contact them. By giving them a heads-up, you will reduce the chance of any delays.

What Happens After Referencing?

After completing the tenant referencing procedure, your letting agent will decide about the prospective tenant. Depending on the references, your letting agent will proceed with one of the following options.

Initiate a Tenancy Agreement

If your tenant referencing goes well, your letting agent will proceed with your application and begin to organise your tenancy agreement.

Request a Guarantor

A letting agent may request a guarantor if they have doubts about the tenant’s affordability. Sometimes, a letting agent may require a guarantor for all prospective tenants as part of their affordability criteria.

Once a guarantor has been provided, guarantor checks will be run, and if approved, the tenancy agreement will be drawn up.

Application Rejection

In a few cases, a tenant who fails the tenant referencing process will be deemed unsuitable for the property. In this case, the application will be rejected, and if a holding deposit was taken, the letting agent has seven days to return it. 

 

A letting agent may retain the holding deposit if a tenant has either failed the Right to Rent check or intentionally provided false information.

 

If the letting agent takes this course of action, they must explain to the tenant why you are keeping the holding deposit. Failure to provide a written explanation will result in the holding deposit being returned regardless of failed checks.

Tenant Referencing FAQs

How Do Letting Agents Check References?

Most letting agents will carry out basic tenant reference checks, which at the least involve asking for proof of identity, income and credit score checks. They will contact your current employer and previous landlord or letting agent to get a good idea of your character. 

 

The letting agent can only refuse a tenant if they have adequate means, for example, if the tenant lacks the right to rent. It is illegal to refuse a tenancy based on the following characteristics:

 

  • Age of the tenant
  • Gender
  • Marital status
  • Religious beliefs
  • Race/ethnicity
  • Disabilities

Can Letting Agents Charge for Referencing Checks?

As of 2019, tenants cannot be charged for any referencing checks following the introduction of the Tenant Fees Act. This legislation categorises reference checks as a prohibited payment.

How long does tenant referencing usually take?

Tenant referencing is usually a quick process. Once the letting agent receives all documentation and necessary information, it should take around 48 hours to complete.

Level Up Your Tenant Referencing Policy with Us

At LevelUp, we appreciate the importance of conducting a thorough tenant screening process to ensure that only the most reliable tenants can rent your property. Our primary goal is to maximise your property investment by ensuring that your property is managed efficiently from start to finish. 

 

Whether you are seeking a let-only tenant-find service or a full property management service, our team of experts can find the best fit for your rental property. Contact us today, and let us eliminate the hassle of sourcing a suitable tenant.

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