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Effective Tenant Referencing

1st January 2014 Simon Holland

Following a viewing of a rental property, an agent will hopefully receive an application from a prospective tenant wishing to take up the property. The agent must then fully reference that applicant on behalf of their landlord client.

It is worth remembering that any tenant referencing only ever provides a ‘snapshot’ of that persons history and of their situation at that time, and is no guarantee of their future performance. Individuals circumstances can and do change, for example they may fall ill, their relationship may end or they may lose their job.

Good agents will always try to be as thorough as possible when seeking references on prospective tenants, and this process should include:

1. Checking their Identity – this can be done by asking for NI numbers, date of birth, passport/driving licence, recent bank statements or utility bills, current employment details and current address verification

2. Seeking References – this would be from an employer, confirming length of service, pay/salary information and security of employment. It would also be from a current or previous landlord, to see if they have maintained previous properties to an acceptable standard and kept up with their rental commitments. A good agent would also conduct a credit reference, to ascertain previous payment history and see if there are any bad debts at any previous addresses. This would also confirm whether they have been located on the electoral roll at their disclosed addresses.

3. Interview – from the first moment a prospective tenant calls to book a viewing, they are being interviewed. During the viewing, the agent should be asking questions, regarding timescales, current situation and reasons for looking to let the property. This will often give a good indication of whether this individual is going to be suitable as a tenant, and is a vital part of the referencing process.

There are sometimes situations where an agent needs to ‘think outside of the box’ and use their commercial judgement. For example, when an individual is self-employed, as they cannot always provide the required 3 years account statements. In this case, most agents would look for a working, UK based guarantor who is also a homeowner. The guarantor would then need to undergo a credit check and affordability check to ensure they fully understand the responsibility, and can pay the rent should the tenant fail to do so. I would also issue them with a copy of any tenancy agreement, to ensure they fully understand all of their responsibilities.

An agent always like to see a strong employment history, payslips or P60’s, as an applicants income must be sufficient to cover the monthly rent. Any agent should always give serious consideration to any application received, especially if the prospective tenant has paid an administration fee.

It is then up to the agent to make a fully detailed representation to the landlord of the applicants current status and suitability as a tenant for their property, and the final decision whether to grant a tenancy always lies with the landlord.

Thorough tenant referencing is vital and can help a tenancy run smoothly, which is at the end of the day, what all parties concerned hope for.