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Referencing and rent checks

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If you are a landlord, it is not too much to expect your tenant to:

  • pay the rent on time;
  • treat your property with the care and respect it deserves; and
  • behave in a socially responsible way towards the neighbours.

It’s not so much to ask, after all, but too often it might seem easier said than done. That’s what makes it so important to choose your tenants with care, o take up references and, examine their past history in any rented accommodation before granting a tenancy.

Although nothing can ever guarantee that the tenants you choose will always prove reliable and responsible, referencing and rent checks may go a long way to lengthening the odds.

In the present climate – as with practically everything having a bearing on your role as a landlord – there are various rules you must respect when conducting your referencing and rent checks. There are also particular checks that the law requires you to conduct.

References from previous landlords

If you want to know how any prospective tenant is likely to treat your property and the obligation to come up with the rent when it falls due, one of the best clues is likely to be given by a previous landlord or landlords.

The landlords’ resource Propertymark, for instance, suggests that one of your most common recourses for referencing is going to be previous landlords of your tenant applicant. Ask the previous landlord whether this person paid their rent on time, treated the rented property with care and respect, avoided being a nuisance to the neighbours, and any other aspects of the past tenancy which might be relevant to you as the new landlord.

Affordability and credit checks

A further indication of whether the rent you are due is going to be paid on time may be indicated by the affordability for the prospective tenant of the rent you are charging.

Affordability is likely to be determined by the level of income from the tenant’s employment, so you might want to establish what job he or she does, contact the employer and establish what income is earned. You might also want to ask the employer for a character reference indicating the employee’s attitudes and responsibility towards the job.

Closely related to the question of affordability is the associated question of the prospective tenant’s management of his or her financial affairs – especially with respect to credit, debt, and the payment of bills (such as rent) on time.

This is the detail you would hope to gather through a credit check of your tenant applicant. Just as the bank would conduct a credit check on the way you have managed your financial affairs before granting any new loan, so you might want to do the same before allowing any tenant to occupy your let accommodation.

Tenants deposits

One of the ways in which landlords have traditionally sought to protect themselves against losses caused by tenants breaking or damaging property is by charging a refundable deposit.

Tenants’ deposits are currently protected by law since the landlord is obliged to pay over any funds to a recognised deposit-holding company, which is responsible for refunding some or all of the deposit at the end of the tenancy.

In an effort to skirt the formalities involved in these arrangements, some letting agents and landlords are offering zero-deposit tenancy agreements – clearly, an immediate appeal to those tenants for whom finding the necessary deposit may be too onerous.

The landlord is also saved the administrative hassle of receiving the deposit and placing it in the hands of a deposit protection company. The landlord’s safeguard against breakages and damage caused during the tenancy is preserved by his or her rights to make a legal claim for restitution.

The Right to Rent

The referencing and rent checks mentioned so far are all fairly clearly in the landlord’s immediate financial interest.

But there is a further referencing check which landlords are legally obliged to conduct – this time on behalf of the UK government’s immigration authorities.

These are the checks a landlord is required to conduct to validate any tenant’s so-called Right to Rent – namely that the tenants, or prospective tenant, has the legal right to remain and reside in the UK and is, therefore, sufficiently entitled to rent the let accommodation in question.

An article in Property Investor Today on the 4th of November 2020 outlined recent changes to the way in which Right to Rent checks should be conducted.

Referencing and rent checks are, therefore, likely to continue to play an important part in the way in which landlord’s screen and select their tenants – with the overall aim of securing reliable and responsible tenants who are legally entitled to occupy the let accommodation and who will pay their rent on time.