Finding a good tenant is a crucial part of succeeding as a landlord. Find out how to check your prospective tenants in our guide to tenant referencing.
No tenant check is bulletproof, and finding the ‘perfect tenant’ is never fully guaranteed, but a thorough tenant vetting process can substantially mitigate the risk of taking on a bad tenant and is a very valuable tool in any landlord’s arsenal.
Important note: Under the Immigration Act 2014, landlords in England are required to check that their tenant is legally permitted to reside in the UK.
Find out more about ‘right to rent’ checks later in this article.
Who does the check: agents or landlords?
Letting agents offer a variety of services, from simply listing your property to a full management service, with divergent levels of value and quality. Finding a good letting agent is another matter altogether, but it is important to establish what service your letting agent, if any, will be providing.
Nearly all agents will conduct tenant checks as part of a full management service, and some will conduct them as part of a basic pre-tenancy service. If your agent will be checking prospective tenants for you, you should ask what type of checks they will perform; a credit report? Employment check? Fraud check? Identity check? Landlord references? Ask to see samples of reference request letters that they send out and which credit referencing agency they use. Also ensure that the fees they charge are representative of the service; they will either charge you or the prospective tenant, and overly large fees can put off some applicants.
DIY tenant checking
Conducting checks yourself has many benefits; it allows you to be as thorough as you wish, gives you direct control over a very important stage of the selection process and invariably costs less money. It is reasonable to charge prospective tenants for any costs incurred in the checking process and a small amount for your time (if you think it necessary); tenants generally expect this, but will still find a tenancy with lower applications costs more attractive. You should state what fees will be charged on the tenancy application form and on all advertising.
Conducting the checks
Much of the information necessary to conduct the appropriate checks can be obtained on a tenancy application form, which you can download for free from our landlord forms section. This will be things like address history, employment history and references; our form also includes personal details such as whether or not the tenant is a smoker or pet-owner, and gives them the opportunity to disclose any previous evictions, debt problems etc. One form should be completed by each individual tenant.
Part 3, Chapter 1 of the Immigration Act 2014 requires landlords to check the immigration status of their prospective tenants. Landlords who grant a residential tenancy to an adult who is disqualified by their immigration status from living in the UK could face a civil penalty of up to £3,000.
This law applies to tenancies in England that began on or after 1 February 2016. Tenancies that began before 1 February but which became or will become periodic after this date are not affected.
- The law applies to all prospective tenants, so even if you are certain that an applicant is an EU or UK citizen, you will still need to perform the necessary checks.
- You must conduct the checks even if the tenant is not named on the tenancy agreement, if the agreement is not in writing or if there is no agreement at all.
- If you pay a letting agent to manage your property for you, ensure that they are aware of the requirement to perform right to rent checks.
- You or your agent may conduct checks no later than 28 days prior to the commencement of the tenancy.
- Be sure to keep evidence that you have performed the checks as required.
The following Home Office documents contain useful information for landlords affected by the new rules:
- Code of practice on illegal immigrants and private rented accommodation
- Right to rent document checks: a user guide
- Summary guidance for landlords: right to rent checks (checklist)
You can also visit the following page in the Government’s A–Z guidance on being a landlord: www.gov.uk/check-tenant-right-to-rent-documents
Ask each tenant for photographic ID – generally either a passport or photocard driving license. The purpose is to verify the tenant’s name, date of birth and appearance; be sure to take a photocopy of the ID for your records. A useful guide to checking passports specifically can be found on the gov.uk website.
Bear in mind that some tenants may own neither a passport nor a driving license, but you can obtain some of the information from elsewhere; full name from utility bills and date of birth from a birth certificate, for instance.
You can verify your prospective tenant’s current address with a current council tax or utility bill or current tenancy agreement. The latter is particularly helpful, as this also confirms the address of your applicant’s current landlord.
You may wish to request bank statements to verify your prospective tenant’s income and outgoings.
You should obtain references from employers and landlords or, if one or both are not possible, a character reference. Template reference request letters are also available in our forms and guidance section.
It is beneficial to also try to get a reference over the telephone, and consider asking for details not just of the prospective tenant’s current landlord, but also the previous one (if any). Inconsistencies between the two may be worth looking into, particularly if the tenancies were not very far apart.
If obtaining a character reference, make sure that it is from a professional that the applicant has known for at least three years; a doctor, tutor, solicitor or accountant is ideal for this purpose. It should not be someone to whom the prospective tenant is related or an individual they live or are in a relationship with.
Remember to keep records and photocopies of each and every document you issue or obtain.
The credit check
So far, the vetting procedure will have cost you little more than time and postage costs, but you will at some point have to consider paying for an in-depth credit check, as performed by one of the three main credit agencies: Equifax, Callcredit and Experian. All tenant-checking services, whether specialists or part of another service provider like a letting agent, use one of these three agencies; they are also used by credit providers to check the credit-worthiness of potential borrowers. There is no set fee for a credit report; each agency affords you the option to tailor a bespoke report with as much or as little information as you want. You should contact an agency directly if you wish to obtain credit reports for business services.
The information on credit reports comes from two sources: the electoral roll, which details address history, including CCJs (county court judgements) listed at previous addresses; and credit history, which is an account of all money borrowed from credit lenders such as credit card companies, loan companies and mortgage lenders. Consent to share this information, including whether or not any and all of the credit was repaid on time, is part of any credit agreement signed by a borrower. Late or missed debt payments stay on a credit report for up to three years, whereas CCJs will remain for at least six.
You must get the written permission of each individual applicant to conduct a credit check on them, and all of the reference agencies will ask to see this permission before they agree to provide you with any information.
Remember that you cannot discriminate in advertisements or during tenant selection on the basis of race, nationality, gender, sexuality or disability, but you can make distinctions based upon the suitability of the prospective tenant. It is up to you to make an informed decision based upon the evidence you receive, but be prepared to defend yourself against allegations of discrimination and retain records of everything.
Attracting the right individuals to begin with is as much a part of the tenant selection process, and will determine where and how you market. A link to a blog about marketing your property is listed in the ‘other useful articles’ section below.