A landlord's guide to tenant referencing
Landlords and letting agents need to have trust in any tenant to pay rent on time, treat the property with respect and not be a nuisance to the neighbours. That’s where referencing comes in. In this guide we will cover everything you need to know, but if you have any questions, feel free to contact your local haart branch.
What is tenant referencing?
Referencing confirms some important information about a tenant, such as their past behaviour in other rented properties and whether they can afford to pay the rent. It’s there to give a landlord or letting agency confidence that a tenant is going to be a good fit for a property.
What referencing can be used?
There are several forms of referencing available to a landlord:
This involves getting in touch with the tenant’s previous landlord and asking about how the tenant behaved during their tenancy. Things to ask about are if they paid rent on time, left the property clean and tidy, or if there were any disputes during the tenancy.
This confirms the tenant’s credit history. County Court Judgements (CCJs), bankruptcy, or insolvency will be brought up, which can show the tenant may have bad credit. These checks may also include tenant’s past addresses and details on the electoral roll.
It is important to remember that landlords and letting agents must ask the prospective tenant’s permission to carry out a credit check. If the tenant refuses the landlord or letting agent can decline the request to rent the property.
This checks a tenant’s income with their employer to make sure they can afford the property they wish to rent. An employer can also choose to provide a reference for a tenant.
Right to rent
haart has a full guide on the right to rent but this essentially means that before a tenancy can be agreed or begin, a landlord must be sure that a tenant is in the UK legally, and has the right to rent a residential property.
What happens when a reference is bad?
A landlord can refuse to let a property if a prospective tenant fails any of the reference checks made. If the landlord has taken a holding deposit, it should be returned, unless the tenant has deliberately provided false information, in which case a landlord can choose to keep the holding deposit.
It’s important to know the legal side of holding deposits, so let’s go over that here:
A tenant has 15 days from paying a holding deposit to enter into a tenancy agreement. This is called the deadline for agreement. A different deadline with the landlord or agent can be agreed in writing if necessary.
If a tenancy agreement is then drawn up, the landlord can either:
- Return the holding deposit within 7 days of agreeing the contract
- Put it towards a tenancy deposit or the first rent payment with a tenant’s permission
A landlord or agent can only keep a holding deposit if:
- The prospective tenant decides not to rent the property
- The tenant has deliberately misled the landlord or agent
- The tenant has failed a right to rent immigration check
For example, even if a tenant fails a credit check, if they told the truth about their situation, the holding deposit must be returned. A landlord must provide written confirmation of why they are keeping the holding deposit within 7 days, or they must return it in full.
Can a landlord charge for a reference check?
As per The Tenant Fees Act 2019, landlords can no longer charge for referencing fees. This act was brought in to help bring down the initial costs for tenants looking to rent a property. If a landlord or agent breaches the terms of the act, the first instance will be considered a civil offence, and this comes with a financial penalty of up to £5,000.
haart can help
If you are looking to become a landlord, but not sure you want to handle all the paperwork, haart provides property management services, too.