Understanding Tenant Referencing: A Guide for Landlords and Tenants
Tenant referencing is crucial for landlords to minimize risks and ensure reliable tenants. Learn the essential checks, process, and best practices for effective tenant screening.
Carrying out correct tenant referencing is one of the most important processes a landlord undertakes when choosing to let a private property. Professional tenant referencing and Right to Rent checks are the only way to confirm that a tenant is who they say they are, has the financial means to pay rent on time, and is worthy of being entrusted with your investment property.
What Is Tenant Referencing?
Tenant referencing provides a comprehensive report to help landlords make more informed decisions about prospective tenants, reducing the risk of problem tenancies later down the line. There are millions of reliable tenants out there simply looking to put a roof over their head. However, landlords who take shortcuts or bypass this process because they "think the tenant seems OK" could end up with problem tenants who don't pay rent or cause property damage.
At R Residential, we understand the importance of thorough tenant screening. Our comprehensive referencing process helps protect your investment and ensures you select the most suitable tenants for your property.
Essential Tenant Referencing Checks
These are the 10 key checks we recommend all landlords carry out before accepting a tenant:
1. Proof of Identity
Request either a driving licence or passport. Ideally the driving licence, as this will have an address that you can verify.
2. Right to Rent Certification
All landlords in England are required to conduct 'Right to Rent' checks to ensure tenants have a legal right to be living in the UK. This is a legal requirement, not optional.
3. National Insurance Number
This proves the tenant is legitimately working in the UK and helps verify their employment status.
4. Proof of Address
Ask for the last three months' utility bills (gas, electric, or water) to check current and previous addresses. Mobile bills don't count as proof of address.
5. Bank Statements
The last three months' bank statements are a great source of information. They help understand when the individual is paid, how regularly, how much is 'spare' at the end of the month, and what they spend their money on.
6. Employer's Reference
Secure this via both a telephone conversation and a letter on company headed paper. Always verify the company and call their main switchboard to confirm the reference is genuine.
7. Previous Landlord Reference
If the tenant is moving from another rented home, ask for a reference from the previous landlord. Check the Land Registry (costs just £4) to confirm the person writing the reference actually owns the property.
8. Guarantor Referencing
If the tenant is using a guarantor, this individual must also be referenced in the same comprehensive way.
9. Credit Reference Checks
These show that a tenant pays their debts on time and doesn't have any County Court Judgements against them. Essential for assessing financial reliability.
10. Trust Your Instincts
Regardless of the results of the above checks, if you have any doubt about whether this is the right person to rent your property, don't proceed. If phone calls always go to voicemail or they're late with deposits, it's probably best to stay away.
Understanding Credit Checks
A 'credit enquiry' will return any debt-related County Court Judgments a tenant may have, but a full credit check provides a comprehensive statement of all outstanding debts, payment arrangements, and financial arrears history. This information gives landlords a clear impression of how reliable the prospective tenant is with money.
If a prospective tenant has never borrowed money, used a credit card, or is new to the UK, there may be limited credit information available. This isn't necessarily a red flag, but it means you'll need to rely more heavily on other referencing checks.
How Long Does Tenant Referencing Take?
Full referencing can typically be carried out within 48 hours, but this depends on how quickly applicants and their referees respond. The main delays usually come from getting employer and previous landlord references.
If a tenant is keen to move in quickly, make it clear that it's their responsibility to chase up references. It's not up to the landlord or letting agent to prove their worthiness—it's the tenant's job to demonstrate they can provide good references.
Professional Referencing Services
Using a professional and reputable tenant referencing company is highly recommended as it provides greater peace of mind. Most companies offer different service levels, from basic to enhanced background checks, with comprehensive searches going up to around £40 per tenant.
At R Residential, we work with trusted referencing partners to ensure our landlords receive thorough, reliable tenant assessments that minimize risk and protect their investments.
The Bottom Line
Thorough referencing is paramount in protecting your investment. A good reference should always include credit history checks, identity verification, affordability calculations, and residency checks. However, it's equally important to obtain references from current or previous employers and landlords.
Remember: even with all available referencing checks, some tenants with ulterior motives will target private landlords. Landlords with less experience should consider using professional services to support their buy-to-let business. It will be worth its weight in gold if it prevents a long, costly eviction process down the line.