Thorough tenant referencing before granting a tenancy is one of the most cost-effective risk-management tools available to a private landlord. A two-week reference process is far cheaper than a 6-month possession claim and a void period. The Renters' Rights Act 2025 (commencement: 1 May 2026) adds new dimensions: advertising and refusal restrictions, the abolition of no-fault eviction, and changes to deposit rules all make the pre-let reference more important than ever.
Step 1 — Right to Rent check (legal obligation)
Under the Immigration Act 2014, all landlords in England must check that every adult occupant — not just the named tenant — has the legal right to rent residential property in the UK before the tenancy begins. Failure to conduct a Right to Rent check carries a civil penalty of up to £20,000 per lodger or up to £3,000 per occupant for subsequent failures; a criminal conviction is also possible where a landlord knew or had reasonable cause to believe a tenant had no right to rent.
- Check passports, biometric residence permits, or other acceptable documents listed in the Home Office Code of Practice
- Use the online Home Office Right to Rent checking service for those with a share code (BRP/BRC/EUSS holders)
- Conduct the check in person or via a certified Identity Service Provider (IDSP)
- Record the check date, documents seen, and the checker's name — keep copies for the duration of the tenancy plus one year
- For time-limited right to rent, set a diary reminder to re-check before the permission expiry date
Step 2 — Identity and employment verification
Beyond Right to Rent, verify the tenant's identity and employment status before proceeding to a full credit reference:
- Passport or driving licence (or both) confirming the name matches the application
- Employer letter or three months' payslips confirming employed income
- For self-employed applicants: two years' HMRC self-assessment summaries (SA302 or equivalent) and three months' business bank statements
- For benefit claimants: Universal Credit award letter or equivalent — this is now an acceptable affordability document and blanket refusal on the basis of receipt of benefits is unlawful under the RRA 2025
Step 3 — Affordability check
The standard landlord affordability rule of thumb is that the annual rent should not exceed 35–40% of gross annual income, or that gross annual income should be at least 2.5x the annual rent. Apply the threshold consistently to all applicants. Under the Renters' Rights Act 2025:
- You may set an affordability threshold and apply it to all applicants
- You may not advertise 'No DSS' or refuse applicants solely because they receive Universal Credit, Housing Benefit, or other qualifying benefits
- You must assess benefit claimants against the same affordability criteria as employed applicants — using their actual income from all sources
- A blanket ban on benefit claimants is now a civil offence enforceable by local authorities with a civil penalty of up to £7,000
You can decline an applicant because they cannot afford the rent (their income is insufficient on your standard affordability criteria). You cannot decline an applicant because their income is derived from benefits rather than employment. The distinction is between assessing actual affordability and discriminating by income type.
Step 4 — Credit reference check
A credit reference from a specialist tenant referencing agency (such as Let Alliance, Homeppl, or TenantPlus) will typically cover:
- UK credit file review: defaults, CCJs, IVAs, bankruptcy
- Electoral roll confirmation of address history
- Employment income verification (via Open Banking or employer contact)
- Previous landlord reference: rent payment history and property condition
- Identity fraud check
Under the Tenant Fees Act 2019, all referencing costs must be borne by the landlord or letting agent — you cannot pass them to the applicant as a 'referencing fee'. Budget approximately £15–£30 per applicant for a standard agency reference.
Step 5 — Guarantor referencing
Where a tenant fails affordability referencing but you want to proceed, a guarantor can bridge the gap. A guarantor is jointly and severally liable for rent and any breach of the tenancy. Key points for 2026:
- The guarantor should pass the same affordability and credit checks as a tenant — guarantee a higher-risk tenant with a well-referenced guarantor
- The guarantor agreement should be a separate deed (not embedded in the tenancy agreement) and signed by the guarantor in the presence of an independent witness
- Ensure the guarantee covers the Periodic Assured Tenancy from day one, including rent arrears and dilapidations, and that it survives the conversion of any existing AST to PAT
- Guarantor obligations survive the death of the guarantor — include a clause confirming this and ensuring the liability passes to the estate
- Do not charge the tenant or guarantor for the guarantor agreement — this is a prohibited payment under the Tenant Fees Act 2019
GDPR obligations when referencing
Tenant referencing involves processing personal data. As a landlord, you are a data controller under the UK GDPR:
- Provide a privacy notice to applicants before collecting any personal data — this must explain what data you collect, why, how long you keep it, and who you share it with
- Retain referencing data only for as long as necessary — typically the duration of the tenancy plus one year for Right to Rent; no longer than six months for unsuccessful applicants
- Do not share applicant data with third parties beyond the referencing agency and any referees
- Store referencing documents securely — do not retain physical document copies in unlocked storage
What to do if a tenant passes referencing
Once all checks pass, issue the Periodic Assured Tenancy Agreement for signature. Ensure the agreement is signed before any keys are handed over and before any rent or deposit is received. For 2026 onwards, the agreement must be a PAT-compliant periodic tenancy — not a fixed-term AST.
Sources
- Tenant Fees Act 2019 (legislation.gov.uk)
- Immigration Act 2014 — Right to Rent provisions
- Renters' Rights Act 2025 — no-DSS prohibition
- gov.uk: Right to Rent checks — landlord guidance
This guide is accurate as at 27 May 2026. It is provided for information purposes only and does not constitute legal advice.