Tenancy referencing is a verification check used by landlords or letting agencies. Tenant referencing can assist homeowners or letting agencies when considering a possible tenant.
What does tenant referencing cover?
It can always be a challenge for a landlord to find the right tenant for their property. A tenant may cause excessive damage to a property. A tenant may miss rent payments or a tenant might be a nuisance to their neighbours. Letting the property to the wrong tenant can cause difficulties to the landlord. Difficulties which the landlord can avoid if they reference check their tenants before.
The referencing is a background check usually carried out by an external agency. The reference provides the landlord with important details on the tenant. These details are helpful when considering whether to let the property out.
In other words, the tenant referencing check is a vital background check. It highlights important details to the landlord or letting agency. Which assists them when considering tenants. The reference check cover previous employment checks, credit history, or references from others.
With so many challenges in finding the right tenants, it's not worth the risk of getting it wrong. In the UK an average tenancy lasts between 8 - 12 months. It is not uncommon for tenancies to last years as well. During this time many avoidable costs can occur due to the wrong tenant. Costs arising from property repair which a deposit may not cover. Costs if a tenant misses rent payments. If the tenant causes other problems the landlord could also incur admin or legal charges.
There are insurance options which a landlord can consider. Such as, rental guarantee insurance or contact insurance. But, this insurance is a cost to the landlord. It can be even more expensive for he landlord if they then use this insurance to cover costs caused by the tenant. So the landlord may not consider insurance as insurance is an extra cost. Or the landlord may not use the insurance to cover the tenant as this will increase the cost of the insurance.
A landlord may conduct a report or ask questions themselves to save on the hassle of a reference check. Or they may think getting a reference check will delay the process to choose not to get one. By performing a check themselves they may not be able to get an accurate background. It may be difficult to get information the landlord requires. This is at the landlords’ discretion and whether they think the background check is worth it. Given the extra time, money and work involved.
What does a tenant reference include?
A reference will typical involve basic information on the referencee. Some companies will provide a more thorough check. For example, a check may include previous names and addresses. Employment history and references off of other landlords or employers. Some tenant referencing agencies may include more information such as credit history. Each agency will have there own criteria.
Who pay for a tenancy referencing check.
Some landlords may carry out the referencing checks themselves. However, it is normal for the landlord or letting agency to outsource the referencing to a professional company. The costs that the landlords pays for the check is usually past on to the tenant. If the tenant pays the fees and then is taken on, in some circumstances the fees are included as part of the tenancy. If the tenant pulls out or fails the check, its the tenant who normally pays the fees. As this is the fault of the tenant, the tenant will likely not be able to recover these fees.
The above-highlighted elements are subject to further advice and guidance. We recommend landlords to consult with the legal team before embarking on on the process. Individual circumstances are always different and relevant actions may vary. During the tenancy checks due to the GDPR practices, all sorts of legal issues or despite can arise. It is thus very important to seek clarification from an expert. It helps to decide on the right way forward. Our solicitors have decades of experience in providing right advice and guidance. They consult with landlords and property owners on all sorts of property-related matters. For more information or an informal conversation with one of our legal advisers, please use the contact us form at the bottom of this website.