For landlords, tenant referencing has never been more important when renting out a property.
Budget pressures and costly void periods, not to mention eviction procedures, all take their toll on a landlord's bottom line.
Good tenants are a dream for a landlord and a solid referencing process should mean rooting out the bag eggs.
The best way for landlords to undertake referencing procedures is through a managing agent like Martin & Co.
For tenants, meanwhile, referencing and screening can be a daunting process.
Much like a job interview, referencing procedures take a look into all aspects of your life, from income to previous tenancies and even your right to rent a property in the UK.
So, with all that in mind, it's worth knowing what to expect before you apply for a tenancy...
What do lettings agents check when referencing?
Lettings agents are crucial when it comes to tenant screening.
Their know-how and experience means they can easily root out potential problem tenants through a combination of gut instinct and thorough background checks.
When screening you, an agent should ask questions about your employment, previous employment and renting history and why you are looking to rent a particular property in a particular area.
As well as details about your work, they might ask how far the commute is. After all, a tenant with a long, frustrating commute is far more likely to want a short-term tenancy or attempt to end a tenancy early if the commute becomes unmanageable.
The agent should ask about previous properties you have rented, your experiences and why you left your last rental property.
This stage of the screening process is about the agent getting to know you and assessing your suitability for the property you want to rent.
Tenant credit check
This is almost certainly the most thorough part of the tenant referencing process and will largely determine whether you are suitable for the property you wish to rent.
Credit checks by landlords are rare and lettings agents will usually use a tenant referencing service for this part of the process and they will check:
* Your financial situation through a credit check, which could raise issues like County Court Judgments (CCJs) or a bad credit history
* With your employer to establish your income, employment status, job title and contract of employment
* With your previous landlord to establish your suitability as a tenant
* For linked addresses, which could reveal address you have not made known for reasons of unpaid rent or CCJs
An affordability assessment
Tenants can be just like buyers when it comes to property and will often go into a search for a new home with eyes bigger than their bellies.
That is why tenant referencing includes an affordability profile and stress test, so the lettings agent and landlord can be sure your monthly rent is affordable.
For landlords, evictions and unpaid rent can be hugely time-consuming and costly, so the referencing agency will establish whether the rent is affordable for you - they even add in the cost of having a life!
If at the end of the process they establish that your income, less monthly costs, does not adequately cover the rent then the lettings agent will discuss options with you.
The guarantor option
Often a poor affordability profile doesn't mean the end of the road for your tenancy application.
One option is to put a guarantor in place.
This is a vital safety net for a landlord when a tenant may be at risk of rent arrears as the guarantor will be asked to pay any outstanding rent owed.
Of course, the lettings agent and referencing agent will undertake a screening process on any guarantor, too, but generally this is a good way to secure a tenancy when affordability has been questioned.
Right to Rent checks
One major obligation for your landlord is to establish that you have a right to rent property in the UK.
This is a legal requirement and a landlord’s failure to undertake these checks could see them fined heavily.
Landlords who use lettings agents like Martin & Co see these checks performed for them, so your lettings agent may ask you to provide the following documents to prove your right to rent:
1. A British or EU passport or National Identity Card
2. A non-EU passport showing the tenant has indefinite right to reside in the UK
3. A Home Office certificate or residence permit card showing residency status
4. A certificate of naturalization
The agent should make copies of the documents and date them, as well as checking they are genuine with you present.
They should also confirm dates when follow-up checks will be undertaken if your right to remain in the UK is not indefinite.
If you have any questions about reference checks for your next rental property, speak to your local Martin & Co office who will be happy to help.
