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You’ve advertised your place on the rental property market, skimmed through hundreds of applications and conducted viewings. You’ve found dozens of potential tenants, but that’s the easy part. There’s no shortage of people needing a place to rent, but it can be difficult finding a trustworthy and respectful tenant who reliably pays rent every month. Now, you must conduct extensive tenant referencing to ensure whoever stays in your property will treat it like their own home. So, what is a tenant reference check, and how exactly should you go about it? At Flex Living, our property management services team provides landlords with verified, professional tenants every month, and we want to pass on our referencing knowledge to you! If you dream of a smooth and uncomplicated tenancy, then this article is for you.
What is a Tenant Reference Check?
A tenant reference check is the best way to gain information about a potential tenant to decide whether you want them to rent your property. You undertake referencing to ensure the person who might live in your home is respectful, responsible and reliable. Some landlords may carry out these checks themselves, while others employ the use of letting agents and other professional tenant referencing services.
These background checks on tenants look into things such as:
- Affordability calculation (rent as % of income)
- Guarantors (where applicable)
- Employment history
- Educational background
- Financial history
- Job qualifications
- Previous renting history (landlord references)
- Criminal history
The primary purpose of reference checks is to ensure your tenant can afford the property, take good care of the property and pay the rent on time.
How Long Does Tenant Referencing Take?
Most tenant referencing companies aim to complete referencing in 48 hours. However, the process is much quicker if the tenant has all their documentation prepared and ready from the outset.
If you are doing the referencing yourself, it depends on how much time you commit to the process. Unlike specialised referencing companies, you may not have all day to focus on background checking your potential renter. So, it may take longer to carry out a comprehensive tenant reference check. There may also be unavoidable factors that slow down the tenant referencing process. For example, there could be a delayed response from a previous landlord who has been asked to write a reference.
Importance of a Background Check on Tenants
Completing or organising a background check on tenants is essential for protecting your property and income while ensuring your rental business runs smoothly.
Tenancy reference checks help you avoid problems such as:
- Damage to your property
- Late or missed rental payments
- Neighbourhood complaints
- Difficult communication
How Does The Referencing Process Work?
Tenant reference checks involve multiple queries into an applicant’s background. You (the landlord) or your agent can do this by requesting certain documentation from the tenant and contacting their references directly. Alternatively, you can outsource this process to a specialist referencing service. In a typical reference for tenancy, you should ask for some or all of the following documents:
- Recent bank statements
- Bank account details
- Proof of employment (e.g., recent payslips)
- Employer reference
- Previous landlord or agent reference
- Proof of previous address
- Proof of identity
- Right to rent documents (see the UK Government website to see what documents are acceptable)
With the tenant present (if possible), go through every document provided and ensure the tenant’s documents are genuine. Make sure you call all referees to confirm widespread validity across all evidence provided by the tenant.
Landlord Vision offers an excellent service where you can save your referencing checklists and other important documents under an online file. This helps you preserve evidence that you’ve completed your landlord responsibilities and done your due diligence on the tenant.
Can I charge my tenant for referencing?
No – The Tenant Fees Act (2019) makes it unlawful to charge tenants additional fees, including for reference checks. The landlord or their estate agency must for all tenant referencing costs.
Who Completes the Tenant Reference Check?
Tenant reference checks can be completed by:
1. You (the landlord)
2. Your letting agent
3. Professional referencing company
If you choose not to complete tenant referencing yourself, your letting agent will likely partner with a third party – a professional referencing company – to complete referencing for you. If you’re renting privately without an agent, you can still, of course, enlist the help of these third parties.
Here are some of the best third-party tenant referencing options:
Rentguard recognises that not every tenant will provide all the information you need. So, this company steps in and provides you with that missing information so you can make informed decisions about your prospective tenant’s credit worthiness. Rentguard can tell you if the tenant uses an alias name, various addresses or even a fake employer. To make your life easier and simplify your case, you will have a single point of contact with one Rentguard employee throughout the referencing process.
OpenRent, an online property service provider, helps you find tenants with referencing processes included and no hidden fees. OpenRent partners with dedicated referencing partners to provide fully comprehensive background checks on all tenants, including employer references, previous addresses, identity and fraud information, decrees and court information, affordability ratings, and previous landlord references.
Goodlord provides a comprehensive tenant referencing service with multiple packages available (Essential, Advanced, Advanced Plus and Priority) so you can select according to your needs. Goodlord provides extremely quick service, with their open banking and digital identity authentication technology solutions allowing them to deliver reference checks back in as little as one hour.
HomeLet has over 30 years of experience in tenant referencing and runs an affordable, easy-to-use service that provides all the essential checks from employment verification to credit history. HomeLet even runs checks on details not provided by the tenant, such as hidden names and hidden addresses.
The National Residential Landlords Association (NRLA) provides an accurate and comprehensive tenant check service returned within 48 hours. All applications are handled by a trained member of staff (not run through automated computer systems). The tenant reference check includes basic-level checks such as employer references and previous landlords, previous property details and bank account details. More complex checks include County Court Judgement search, Bankruptcy and insolvency data, Alias name search and other ID verification checks.
If you need tenant referencing urgently, NRLA also offers an Express Check. This fast-tracked background check is provided the next day and includes verbal communication of employment, verbal reference from the current landlord or letting agent, and bank account validation.
Pros and Cons of Using Third-Party Referencing
Ultimately, you can decide how you want to proceed with referencing tenants. There are pros and cons associated with completing the process yourself, and also with outsourcing to a professional referencing company.
PROS & CONS: REFERENCING BY YOURSELF OR VIA THIRD PARTY
|Landlord||Comfort knowing you’ve looked into the tenant’s background at the level you’d expect|
Can get to know the tenant better for yourself
Can choose the documentation required as that which you perceive as most important
|Your work and other commitments may leave less time for a comprehensive tenant background check
Can be difficult to know where to start on background checking
Easy to miss important details
|Letting agent or professional referencing company||Provide a comprehensive background check and minimise the risk of arrears in the future|
Get everything checked in one go to save you from having to go back and ask the tenant for additional details
|Can be more expensive
Cannot eliminate uncontrollable factors such as delayed responses from previous landlord
Sometimes can have rules that are too strict and lack room for logical exceptions. For instance, someone may be self-employed and have a good income, but not enough years of accounts to pass the referencing requirements.
Referencing Made Easy: Corporate Tenants
It appears from above that referencing tenants can be quite the process! However, you can minimise the time, effort and energy required for this process by instead opting for corporate tenants.
Since corporate tenants live in your property on the basis that their boss has organised it for them, they are more likely to live respectfully and responsibly. In a way, there is less need for you to verify these tenants because their company already vets them.
Flex Living’s Corporate Let Model
Flex Living’s property management services can help with finding vetted, professional tenants for your rental property.
We source professional tenants from our corporate partners who need to provide their employees with accommodation for work in various cities. Our tenants are employees of our professional (and highly trusted) corporate partners, they live respectfully and responsibly in all our properties.
By renting out your property with Flex Living, you can enjoy the low-stress landlording lifestyle that bypasses all complexities with difficult tenants and long referencing processes. Our dedicated support and management team handles all tenant communication at no extra cost, so you won’t have to worry about a thing.
Get in touch with one of our London property management agents today to find out more.