Tenant referencing, and what it is really checking

Referencing is the step between having an offer accepted on a rental and actually getting the keys, and it is the step people understand least. It is also, for a landlord, the single decision that most determines how the next two years go.

What is usually looked at

• Affordability. Income against the rent, usually against a stated multiple. This is the main event.
• Employment or income. Confirmation that the income is real and expected to continue. Self employed applicants are normally asked for accounts or tax returns instead.
• Previous landlord. Whether the rent was paid on time and the property looked after.
• Credit record. Usually looking for county court judgments, bankruptcies and defaults rather than a score in the abstract.
• Right to rent. A legal check in England on immigration status, separate from the affordability assessment.

What a guarantor is actually signing

A guarantor agrees to pay if the tenant does not. That is a significant commitment and it is frequently signed without being read.

Two things are worth checking before anybody signs. First, whether the liability is limited to that person’s share of the rent or extends to the whole tenancy, which in a shared house can mean being liable for other people’s rent. Second, how long the obligation runs, including whether it continues automatically if the tenancy rolls on past its initial term.

Neither of those is a reason not to be a guarantor. Both are reasons to know what has been agreed.

If something will show up

Say so first. A referencing report that surprises a landlord is far more damaging than a fact disclosed at the start with an explanation attached.

A default from six years ago, a gap in employment, a first job on probation: none of these are automatic refusals, and all of them look worse arriving as a surprise. Offering the explanation, plus a guarantor or a larger share of rent up front if you can, converts a great many of these.

What tenants can ask

You are entitled to know what is being checked, who is doing the checking, and what happens to your data afterwards. You can ask for a copy of the report. If a decision goes against you and you think the information is wrong, ask what it was, because referencing reports do contain errors and they are correctable.

On fees: charging tenants for referencing is restricted in England by the Tenant Fees Act 2019, with equivalent rules elsewhere in the United Kingdom. If you are being asked to pay for a check, it is worth confirming against the government guidance whether that charge is permitted.

For landlords: what referencing does not tell you

It tells you whether somebody has paid their bills. It does not tell you whether they will look after the place, get on with the neighbours, or tell you early when something breaks. Nothing on a report captures those, which is why a conversation with the applicant, and a proper word with the previous landlord rather than a form, remains worth the time.

And a report is a snapshot. Circumstances change during a tenancy, and the tenant who tells you early when they are struggling is worth far more than the one who referenced perfectly and then goes quiet.

What we would say

Reference everybody the same way, write down what the criteria are, and apply them consistently. It is fairer, it is easier to defend, and it produces better decisions than judgement applied case by case.