Ultimate Guide to Tenant Referencing
- Posted Date 22/06/2018
- Posted Byadmin
The ideal tenant is someone who pays the rent on time and who treats the property as if their own, keeping it immaculate and free of damage.
Sadly, in reality, it’s almost impossible to find that dream tenant. Some landlords may merely have accepted a renter in haste to have somebody pay the bills – and it is often in such cases when it’s too late to find out that you’ve permitted a rogue stranger to live in your property: someone who is falling behind in their monthly dues and gradually defacing your most lavish investment.
But, while we say finding the right tenant is nearly beyond imaginable, there’s still one great way to minimise the likelihood of having tenancy issues. Enter tenant referencing. Carrying out a tenant reference check is key to your success as a landlord, and we know it as we speak from years of being a trusted online letting agent in the UK.
So, to help you start with, we guide you through everything you need to know when referencing a prospective tenant.
What is Tenant Referencing?
As a landlord, you most likely have no idea what a person may be like until he has moved into your property. But this isn’t the case with tenant referencing.
Tenant referencing is basically a screening process that saves you from this situation by confirming that a renter:
- is whom he says he is
- is financially capable to pay the rent in full and on time
- is responsible enough to look after your property
What does Tenant Referencing Involve?
No two tenant referencing methods are the same. But, they are all made up of a number of different checks that give you insight into a tenant’s background including – but not limited to - a written verification of employment, income, credit history, and residency confirmation. The following are some 10 key checks you need to accomplish before accepting a tenant into your property.
- Proof of Identity - To begin with, make sure the person you’re dealing with is whom he says he is. Ask for an identification either a passport or any other credible ID.
NOTE: Be careful with who you transact with, you may be fined for renting your property out to someone who shouldn’t be in the UK. This legislation aims to regulate illegal immigration.
- Right to Rent Certification – Conduct a right to rent assessment to ensure that your possible tenant has legal rights to live in the UK. It is mandatory among landlords.
- National Insurance Number – Request for a copy of an NI number. It is a personal account number that serves as proof the tenant legally works in the UK.
- Bank Statements – Ask for the latest bank statements. These will be a great source of information that will help you understand his financial status.
- Proof of Address – Check the current or previous addresses by requesting for the last three months worth of utility bills.
- Employer Reference – Secure an employer reference over the phone and through a request letter. These measures will ensure that a tenant is not forging his paper reference.
- Landlord Reference – If the tenant is currently renting another home, contact the landlord and see if they will recommend this person in terms of character and financial reliability.
- Guarantor Request – You can request a guarantor to have someone liable for the rent if the tenant is unable to pay. You can also request the guarantor to provide written references.
- Credit Check – Look into the financial history of the tenant. This will highlight any County Court Judgment (CCJ), bankruptcy, identity check and residency check.
- Gut – Finally, while written references are crucial, your gut instinct should also come into play. If in doubt as to whether the potential tenant is right for you, it’ll probably best to not proceed and move on to the next person.
Tenant Application Form
Using a tenant application form a potential renter can fill in helps you easily gather the above information to perform reference checks. It will also help speed up the process for both ends.
In the form, request for the basic information: contact number, home address and e-mail address. You can also ask for the information on where he works and inquire on how long he intends to rent your property for and the number of people staying. Likewise, you can ask some personal questions about his habits (if smoking is an issue) or looking to bring in pets.
DIY Tenant Referencing
The process involved may seem laborious and complicated but the information tenant referencing can provide you helps you make informed decisions thus, reducing your risk of encountering problems down the line.
Conducting the check yourself has its own benefits: you have a direct control over the selection process which allows you to be as thorough as you wish. It will also cost you less money. However, the downside to it is that you shoulder all the tasks and there is a high chance that you might miss out on some crucial parts of the process.
Using a Tenant Referencing Service
Meanwhile, hiring a professional tenant referencing company relieves you of the lengthy process and give you a greater peace of mind. A letting agent can reveal to you all the essential information about a potential tenant including credit score, outstanding debts, residency and address confirmation and any CCJs filed against them.
How long does Tenant Referencing Take?
A full referencing can be accomplished within 48 hrs. However, it will still depend on the amount it takes for the parties involved to respond and provide the needed information. If you are ordering a reference from a professional letting company, an estimated time frame is usually provided – and broadly speaking, the result can take anywhere between a few hours and two working days.
NOTE: If a tenant is in urgent need to move in ASAP, you should be clear that it’s not your responsibility to get the references sorted but his.
Who Pays for Tenant Referencing?
Unless you specify to cover the costs of tenant referencing, it is a standard practice that the tenant pays for the reference checks. However, it may still change until a Tenant Fee Ban will be enforced. Once put into force, the legislation will prevent letting agents and landlords charge a tenant of fees to secure a rent. It is bound to be implemented sometime this year.
- Who Pays for Referencing through a Letting Agent?
As mentioned, most of the reference checks are typically paid for by the tenant applying for rent from a letting agent. An applicant is usually charged with admin fees that cover a professional reference service cost.
- Who Pays for Referencing through a Private Landlord?
If, on the other hand, the tenant is applying directly through you, then it is up to you to decide who will pay for the costs of a reference check. Some landlords shoulder the fees themselves while others ask the tenant to pay up front.
But, remember, all these may change when the Tenant Fee Ban is already enforced.
A comprehensive referencing is paramount in protecting your investment. However, the information you get can only go so far. Finding the dream tenant is never guaranteed most particularly when there will always be some renters with untoward motives for renting a property.
All the same, the process can lower the risk of taking in a disastrous tenant. Whether experienced or not, you should consider entrusting your letting business to the professionals. It will actually save you money in the long run as it can mitigate a pricey eviction process down the line.
Do you consider hiring a tenant referencing company? Check out our affordable packages at Tenant Find.