Why is Tenant Referencing so Important?

Your property is probably one of the most expensive things you own, so you don’t want just any one moving in.

Referencing is the best way to protect yourself against bad tenants, ensuring that they are who they say they are, giving an insight into their ability to pay the agreed rent and their history of paying rent in the past.

First and foremost, ensuring that the tenant is who they say they are is very important. A tenant giving false details is obviously indicative of potential bad intentions. It is also important to establish identity in order to ensure that the contract is enforceable.

A good reference should include both employer and landlord references (although these may not be available if you are renting to a social housing tenant, or if the tenant has not previously rented).

The reference should include details of any bankruptcies and CCJ’s and previous credit history, which will indicate whether they have failed to pay bills in the past.

Your reference check should include a confirmation of their employment status and current salary, which in turn enables you to identify whether they are able to afford the monthly rent.

We offer a comprehensive referencing service which covers all of these important areas, and costs just £39 per reference, but is free to landlords who use our free tenant find service.  Our Tenant Referencing Report provides a clear indication of whether or not your potential tenant has met our criteria, allowing you to let your property with confidence.

Additional information which you may request from tenants is 3 months bank statements, showing monthly incomings/outgoings and also next of kin details, which can help if you can’t get in touch with your tenant directly.

If your tenant fails the credit check, it can be prudent to consider why, and how serious this actually is. For example, if they have a CCJ or were declared bankrupt, they will automatically fail the credit check. If the reason for this was that they were made redundant during the recession, but they have now had a full time job for two years and are easily able to cover the cost of their rent with their income, and have good references, perhaps it is worth considering allowing them as tenants, but with a guarantor.

A guarantor is a person who you, as the landlord, can ask to pay the rent if the tenant fails to do so. Of course, it is important that the guarantor also passes a reference check.  If you are using our referencing service, and a tenant fails, but you would accept them with a suitable guarantor, we will reference check the guarantor on your behalf.

Often a tenant with a poor credit history will offer to pay a number of months rent in advance, or pay a larger deposit. Although this is clearly a sign of good will, it may be better to ask them to pay the LAST month’s rent in advance instead, and have this written in to the contract. Unless otherwise stated in the contract, you cannot take money from the deposit to pay rental arrears.

If you do not feel comfortable with a tenant, their reference, or the option of a guarantor, you should not accept them as a tenant. It is better to reject a tenant, and restart the process than leave yourself open to a potential bad tenant.

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