Landlords in England and Wales are now legally obliged to verify a new tenant’s right to live in the UK under the Government’s new Right to Rent scheme. This will mean checking they have a UK or European passport or a visa that entitles them to live here.
Trust me, referencing tenants is quite easy
Some landlords are afraid to find tenants themselves because they haven’t a clue what background checks to make on applicants, but carrying out referencing and credit checks is pretty straight forward.
First of all ask the tenant for proof of ID (passport, driver’s licence, NUS card) so you know they are who they say they are. Don’t forget that landlords in England and Wales must also check that tenants have a legal right to live here, so you’ll need to take a copy of their photo ID.
Also, get a reference from their current landlord that should include the address of the property so you can check on the land registry that the person offering the reference is indeed the owner.
Get a phone number for the current landlord too, so that you can call them and check all the details in any written reference. I know what you’re thinking — a tenant could give you the number of a friend posing as their landlord. Yes, they can, but you might be able to sniff out a bogus landlord if you probe a little. Besides, short of hiring a private detective to check on tenants, there’s a limit to how thorough you can be and believe me, letting agents are not that thorough.
You should also ask for copies of the tenant’s bank statements for the last three months so you can see if they’re solvent, if they’ve made regular rent payments, and if their salary goes into their account. You could also use the statements to double-check the address they gave you.
Finally, you should ask for a reference from their employer stating their salary, which should be at least twice the rent, and also the terms of their contract, so you can see if they’re likely to have a job for the duration of the tenancy.
To make sure the tenant doesn’t have a history of debt, you can run a credit check on them. A detailed report on a tenant, including a credit check, costs from as little as £10 depending on which agency you use. Experian is one, but there are lots of others available online.
HOW TO REFERENCE TENANTS
You need to ask the tenant’s permission to run a check and you could ask them to pay for it — most letting agents do at the moment, so you can too. However, note that the government is thinking of banning letting agents from charging fees to tenants so keep an eye on this, but for the time being it’s okay to charge tenants for credit checks. If they cough up you’ll know that they’re serious about taking the property and they’ve probably got nothing to hide. If you feel a bit stingy doing this, you could say you’ll refund the cost if they take the property.
Most credit checks can be completed online, all you need to do is email the tenant the details they need to fill in.
If you use an online letting agent to advertise your property they’ll most likely offer to reference the tenants and they’ll charge the tenant, not you. However, they will charge them more than the actual cost of the service, so it’s up to you whether you take this easier option and let the tenant take the hit or do it yourself.
Now then, that’s the sensible way to reference a tenant, but you have to remember that none of the above will guarantee you a great tenant. Sure, some of the checks should weed out the real rotters — I doubt that anyone planning to operate a terrorist cell from your living room would be willing to hand over their passport and bank statements — but a tenant who ticks all the boxes can still turn out to be a pain in the neck.
I had one tenant who looked perfect on paper. She was a hospital doctor with a decent salary and she owned her own property. She was also reckless, inconsiderate, and a pathological liar, but that wasn’t flagged up in any of the reports. On the other hand, I’ve taken on tenants without references of any kind and they’ve been excellent.
So now I’ve developed a test of my own for all future tenants. I sit them down with a cup of tea, look deep into their eyes and see if I can trust them. Some might find this approach a touch spooky, but honestly, it works for me.
Google can also be a great tool for finding out more about a potential tenant. It’s surprising how much you can learn about someone from their online footprints. Most people have Facebook, Linked In or Twitter accounts, which can be quite revealing.
Note that even if a prospective tenant fails a credit check or hasn’t got a job and doesn’t tick all the financial boxes, all is not lost. If you think they’ll still make a good tenant, you could ask for several months’ rent upfront, get them to pay a bigger deposit or ask them to provide a guarantor. Find out how here.