Finding the right tenant is crucial for a successful and stress-free let. While meeting someone might give you a "gut feeling," relying solely on intuition is risky. Thorough tenant referencing provides objective information to help you make an informed decision and minimise potential problems like rent arrears or property damage.
What is Tenant Referencing?
It's the process of verifying the information provided by a prospective tenant and assessing their suitability to rent your property. Key checks usually include:
- Identity Verification: Confirming the tenant is who they say they are (linking to Right to Rent checks).
- Credit Check: Assessing their credit history and financial reliability. This reveals County Court Judgments (CCJs), bankruptcy, or poor payment history.
- Affordability Check: Verifying their income (via payslips, bank statements, or employer references) to ensure they can comfortably afford the rent (a common benchmark is rent being no more than 30-40% of gross income).
- Previous Landlord Reference: Contacting their previous landlord(s) to ask about their payment history, property care, and general conduct as a tenant.
- Employer Reference: Confirming their employment status and income (often done as part of the affordability check).
Why is Referencing So Important?
- Reduces Risk of Arrears: Identifies tenants with a history of missed payments.
- Minimises Property Damage: Previous landlord references can flag tenants who haven't looked after properties well.
- Prevents Fraud: Helps weed out applicants providing false information.
- Informed Decisions: Provides objective data to support your choice.
- Insurance Requirements: Some landlord insurance policies may require referencing to be carried out.
Legalmaster & The Bigger Picture:
While Legalmaster focuses on creating the legally compliant tenancy agreement once you've chosen your tenant, the importance of referencing cannot be overstated. Having a solid agreement is vital, but it's most effective when paired with a reliable tenant identified through proper checks. Consider referencing an essential step before you reach the Legalmaster agreement stage.
Don't rely on guesswork. Implement a consistent and thorough tenant referencing process for every applicant. It's a critical investment in protecting your property and ensuring a smoother, more secure tenancy.
