Referencing Tenants before signing a tenancy agreement
A tenancy agreement is a legally binding contract, whether the T&C’s are agreed upon verbally or sensibly documented in a tenancy agreement form, it makes no difference. That means picking the ‘right tenant’ is imperative from the very outset; which typically means someone that will pay rent on time and treat your property like a home.
While there’s no way of ever guaranteeing the ‘perfect tenant’, there are steps every landlord can take in order to maximise the chances of choosing one. Many landlords make the fatal mistake of not minimising their risks, and that’s often an extremely expensive mistake to make, not to mention stressful.
To assist in finding suitable tenants, every landlord, with or without a letting agent, should ensure every prospective tenant is thoroughly referenced before agreeing to or signing a tenancy. Referencing will help determine the suitability by highlighting which applicant has the strongest credentials.
How to reference prospective tenants
Here is a list of checks landlords should make on every prospective tenant…
- Photo I.D – check photo ID (e.g. passport, driving license) of applicant to confirm identity. You should also take a photocopy.
- Right-to-rent landlords renting property in England have a legal obligation to check whether their tenant has the legal ‘right to rent’ in the country. In most simple cases, ensuring the applicant has a UK or E.U passport and/or Identity card is enough. Other documents will need to be checked for nationals outside of the E.U. A full guide on how to comply with the right-to-rent legislation can be found on the GOV website.
- Employment – get references from current employer and enquire how long they have been in employment for.
- Salary – assessing whether the applicants can afford the rent + expenses is crucial, so do the math based on their salary. Ask for 3 recent payslips to confirm salary.
- Credit Check – use a credit check service to report any adverse credit history, such as County Court Judgments and Bankruptcies and Insolvencies.
- Current/previous Landlord – get references from any current and past landlords.
- Guarantor – insist on a guarantor and just as importantly, reference the guarantor.
- Ask questions – don’t be afraid to questions which will help you get a better understanding of their situation. For example, find out why they’re moving from their current accommodation.