Tenant Referencing
Before agreeing to let your property to a tenant, you should always show prudence and carry out tenant referencing or otherwise known as a tenant check. This is common practise for any High Street letting agent as tenant referencing / tenant check is one of the most important aspects of letting a property.
Every private landlord association supports tenant referencing / tenant checks and most banks will require a tenant to be referenced as a condition to a buy to let mortgage.
As a minimum standard, every tenant check should include all of the following:
As a private landlord, we also recommend obtaining proof of identity such as a passport and utilities bill dated within the last 3 months.
Our tenant referencing / tenant check will provide you with all of the above information which will allow you to make an informed rental decision.
We will ensure that the minimum tenant referencing standards are met in order to provide you with the confidence that you have a suitable tenant.
| WHAT IS INCLUDED IN THE TENANT CHECK? | TENANT CHECK |
|---|---|
| *Cost per tenant reference (exc. VAT) | £60 |
| Income Validation - This is where our experienced referencing team will assess the likelihood that the salary matches the type of employment i.e. a nurse is unlikely going to be on £100,000 per year. Any anomalies would be investigated. |  |
| Affordability Calculation - The tenant salary should be in the region of 30 times the monthly rent. This is a set calculation used the ascertain the tenants affordability taking into account other expenses associated with cost of living expenses. | |
| Voters Roll check - The tenant is checked against the voters register for all addresses supplied within the last 6 years. | |
| Public information check for CCJs, Bankruptcy and voluntary arrangements | |
| Fraud Potential - Based on the information supplied by the tenant as well as the background checks, the tenant will be issues a fraud potential score. | |
| Confirm income where the applicant is employed, self employed or retired, their income will be validated by contacting either the employer or accountant in the case of self employment. | |
| Previous landlord is contacted to establish whether there were payment issues or if any dilapidation was recorded. | |
| Automated consistent decisions using sophisticated scoring technology to increase decision speed. | |
Add to your Shopping Basket for £60 + vat (As an industry standard, tenant referencing is a tenant associated cost. It is normal practice for the tenant to pay this fee.) | |
Employment Reference
Possibly one of the most important aspects of the tenant check is the employment reference. The information gathered should contain:
- The tenant's salary - for affordability purposes, this should be at least 30 times the monthly rental agreed
- Position held within the Company
- Length of employment
- Full time / part time or contract
Credit Check
The tenant would be required to sign an authorisation form prior to any credit checks being carried out. It is illegal to carry out a credit check on a tenant without their authority.
The credit check will contain financial information held against their name and addresses over the previous 6 years. Any CCJ's (County Court Judgements) or outstanding / missed payments would be highlighted.
As a landlord, you should look out for signs of unpaid bills as this is a major red flag when dealing with potential loss of rent.
Previous Landlord Reference
A useful reference to obtain. The previous landlord should be contacted directly to ascertain the suitability of the tenant. The questions that should be asked are as follows:
- Has the tenant paid the rent on time and in full throughout the agreement?
- Has the tenant caused any damage to the property?
- Have there been any disputes with regards to deposit?
- Would you re-let to the tenant?
If the landlord positively confirms each of the above, then you should have a satisfactory previous landlord reference.
Bank Check
Tenants with Bank accounts are more likely to pay the rent on time as you would insist on payment by standing order.
Without a bank account, the tenant would make payment by cash which often leads to issues with late payments. The information you should gather is the tenant's bank account, sort code and account name. It would be advisable to request a copy of a bank statement dated within the last 3 months.
NB - You should never ask for a tenant to provide their own tenant references as it is very easy nowadays to forge employment / previous landlord documents. Your referencing agency should always contact the tenant's employer and previous landlord directly.
Frequently Asked Questions
What tenant referencing report type do I need?
What are the turnaround times for the tenant referencing reports?
How do we assess the suitability of a prospective tenant?
Can I submit additional information after receiving my final tenant referencing report?
Can I cancel my tenant referencing report?
Can you obtain reports on Businesses, to use for Commercial Lets?
How do you assess someone who is self employed?
What tenant referencing report type do I need?
Our tenant referencing is comprehensive - Use this tenant referencing report where you are looking for a decision to support the suitability of the Tenant or Guarantor. To produce this report we take appropriate tenant references; for example to verify the income the applicant states they receive we will contact their employer, pension provider or Accountant. Where a tenant has previously lived in rented accommodation we will check that they did not have payment issues or left the premises in a state of dilapidation.
What are the turnaround times for the tenant referencing reports?
The Comprehensive tenant referencing report is in essence 2 parts,
- The financial element of the report which as above is available instantly.
- This is then enhanced by sourcing the reference information from the employer and previous landlord (if appropriate).
An overall decision is then applied regarding the suitability of the applicant for the proposed tenancy. Our service level is that we will either return the completed report to you within 40 working hours (5 working days dependent on the referees co-operation) or should the requested references still be outstanding, you will be notified via a delay advice report informing you of the reference(s) which we await and the reason for the delay. However typically we are able to return 70% of reports within 2 days.
How do we assess the suitability of a prospective tenant?
Financial Stability
Looks at the applicant's current financial position disclosing any County Court Judgements, bankruptcy orders, voluntary arrangements or administration orders, thereby giving an indication as to whether they will be able to meet their rental payments, reducing your exposure to risk.
Affordability
Assesses the applicants ability to pay, looking at their earnings in relation to the proposed monthly rental.
Previous Landlord Reference
Gives an indication of the applicant's commitment to rented properties in the past and whether there was any dilapidation or arrears on the property during their tenancy.
Employers Reference
Confirms applicant's salary, the position they currently hold and whether this position is permanent, temporary or a fixed term contract.
Can I submit additional information after receiving my final tenant referencing report?
Once we have processed your tenant referencing report and we have created the final report, any additional information included must be submitted in a new application.
Can I cancel my tenant referencing report?
Once the order has been submitted, you are unable to cancel the tenant referencing report.
Can you obtain reports on Businesses, to use for Commercial Lets?
Our Tenant Referencing system provides references on individuals. Business reports, which can be used as checks for commercial lets, can be requested, and paid for using a credit card, from the Experian site www.busibody.com reports are available from just £5.
How do you assess someone who is self employed?
Our preferred method is to obtain a reference from the applicant's accountant to establish their Gross Turnover and Gross profit. Should the applicant not have an accountant we would request a copy of their latest six months bank statements. From these statements we would establish their income from deposits made into their account from either cash deposits or re-occurring client credits. Transfers are not be taken as income. Should acceptable bank statements covering 6 months not be available, we would recommend that the Landlord obtains a Guarantor or an upfront payment for the entire rental amount.
Follow us on Twitter 
del.icio.us 
Facebook 
StumbleUpon 
Google