What referencing covers
- Identity. Confirming the person is who they say they are.
- Affordability. Income against rent, and any existing commitments.
- Employment. Confirmed with the employer, including whether a contract is permanent, fixed term or probationary.
- Credit history. County court judgments, bankruptcies, defaults.
- Previous landlord. Payment record, condition of the property, whether notice was served.
- Right to rent, in England only.
The cheap version of referencing is an automated credit check and nothing else. It is quick, it looks like due diligence on a report, and it misses the two things that actually predict a difficult tenancy: how someone behaved in their last home, and whether their income is genuinely secure.
The affordability test
The usual benchmark is annual income of roughly thirty times the monthly rent. On a one thousand pound property that is thirty thousand pounds a year, which is a guide rather than a rule and should be read alongside everything else.
Look at the shape of the income as well as the amount. Six months into a permanent role is different from week two of a probationary period. Self employed applicants should be assessed on accounts or tax returns rather than excluded, and benefit income counts as income, as our post on pets and benefits explains, because refusing to consider it at all has been found discriminatory.
Where affordability is marginal but everything else is strong, a guarantor is usually a better answer than rejection.
The reference that matters most
The previous landlord, and it repays the effort of getting it properly.
Ask specific questions rather than sending a form. Did they pay on time, every time. Was the property returned in reasonable condition. Were there complaints from neighbours. Was notice served, and why. Would you let to them again.
One check worth making: confirm you are talking to the actual landlord or agent rather than a friend. Cross reference the address against the land register or the letting agency directly. It is rare, but it happens, and it takes a minute.
Right to rent, and Scotland
In England, right to rent checks are compulsory on every adult occupier before the tenancy begins, with copies retained. Penalties for failing to carry them out are significant.
Scotland has no equivalent scheme, so an agency applying English right to rent procedure to a Scottish tenancy is either confused about which country it is operating in or using a process built for somewhere else. Either is worth asking about. Scottish landlords have their own compulsory step instead, which is landlord registration with the council before letting.
Guarantors
A guarantor agrees to cover the rent if the tenant does not. They should be referenced to the same standard as the tenant, usually against a higher income threshold, and the agreement must be in writing and signed.
Two things to be careful about. In a shared house, a guarantor may be guaranteeing the whole rent rather than one share, depending on how the tenancy is drafted, and that should be made explicit to them. And demanding a guarantor only from certain categories of applicant, such as benefit claimants, risks being the same discrimination problem in a different form. Apply the requirement by circumstance, not by category, and record why.
Doing it fairly
- Write down your criteria before you advertise, and apply the same ones to everybody.
- Record the reason for every decision. If a refusal is ever challenged, a contemporaneous note is your evidence.
- Do not exclude whole categories. Assess the individual.
- Do not ask for large sums of rent in advance as a substitute for referencing, particularly where it operates as a way of excluding people.
- Handle the data properly. Referencing generates a lot of personal information and it should not sit in an inbox indefinitely.
When you are choosing an agency, ask what its referencing includes, who carries it out, and whether it obtains a previous landlord reference by telephone or only by form. Agencies with rent guarantee products usually reference to a specified standard because the insurer requires it, which is a useful proxy for quality.
Common questions
Can I charge the tenant for referencing?
No. Referencing and credit check fees charged to tenants are prohibited payments in both countries. The cost sits with the landlord or the agency, which is one reason to check what your agency's referencing actually includes rather than assuming it is thorough.
What income should a tenant have?
A common benchmark is annual income of around thirty times the monthly rent, sometimes expressed as rent being no more than about a third of gross income. Treat it as a guide and apply it consistently, alongside the rest of the picture rather than as a single pass or fail gate.
Is a credit check enough on its own?
No. A clean credit file tells you somebody pays their phone bill. It does not tell you whether they looked after a property or got on with neighbours, which is what a previous landlord reference is for.
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