Every landlord in England must check that all adult occupants have the right to rent before the tenancy begins. Failure to check carries a civil penalty of up to £20,000 per occupant. This is separate from — but part of — a complete tenant referencing process.
Why Tenant Referencing Matters in 2026
With Section 21 abolished from 1 May 2026, getting the right tenant from the outset is more important than ever. Under the old regime, a landlord who made a poor tenancy decision could serve a Section 21 notice after two months without giving a reason. That option no longer exists. Every possession action now requires proving a specific legal ground — a process that typically takes four to twelve months from notice to enforcement.
Thorough tenant referencing does not guarantee a problem-free tenancy, but it materially reduces the risk of rent arrears, property damage, and costly possession proceedings. It is the single most effective risk management step a landlord can take.
Step 1 — Right to Rent Check (Legally Required)
The Right to Rent check is a statutory obligation under the Immigration Act 2014. You must check that every person aged 18 or over who will occupy the property as their only or main home has a legal right to rent in England.
- Who to check: Every adult (18+) occupant, including those not named on the tenancy agreement
- When to check: Before the tenancy begins — not after moving in
- How to check: Check original documents in person (or via the government's online checking service for digitally-held immigration status) and retain copies. Acceptable documents include UK passport, EU Settlement Scheme share code, Biometric Residence Permit, and other Home Office documents
- Time-limited status: If the tenant's right to rent has a time limit (e.g. student visa, limited leave to remain), you must carry out a follow-up check before the earlier of 12 months or the expiry date
- Penalties for failure: Civil penalty of up to £20,000 per occupant if you did not conduct a check, or up to £20,000 if you knew or had reasonable cause to believe the occupant did not have the right to rent
Step 2 — Credit Check
A credit check reveals the prospective tenant's financial history: whether they have any County Court Judgments (CCJs), have been subject to an Individual Voluntary Arrangement (IVA) or bankruptcy, and how reliably they have paid their debts.
- Obtaining consent: You must have the tenant's written consent before carrying out a credit search. This is typically obtained via the referencing application form
- CCJs and defaults: CCJs within the past 6 years are a significant red flag. Recent CCJs (within 12 months) or multiple defaults suggest active financial difficulty
- Satisfied vs unsatisfied CCJs: A satisfied CCJ (debt paid) is less concerning than an outstanding one — but multiple satisfied CCJs still indicate a pattern of financial difficulty
- No-credit-history applicants: Students and young professionals may have limited credit history. This is not automatically a red flag — look for positive indicators such as a continuous rental history and a stable employment contract, and consider requesting a guarantor
- Using a referencing agency: Services such as OpenRent Referencing, Homeppl, TotallyMoney Landlord, and Let Alliance provide credit searches as part of a bundled referencing report. Cost typically ranges from £20–40 per applicant
Step 3 — Employment and Income Verification
Verify that the tenant has sufficient income to cover the rent and can demonstrate employment stability.
- Affordability threshold: As a general rule, gross annual income should be at least 30x the monthly rent — i.e. for a rent of £1,000/month, look for gross income of £30,000+. Some landlords use 2.5x annual rent as the threshold
- Employment verification: Request a copy of the employment contract (showing salary, contract type, and start date) plus a recent employer's reference confirming salary and employment status
- Self-employed applicants: Request 2 years of HMRC SA302 tax calculations or certified accounts. Self-employed income can be variable — look for stability across the two periods
- Universal Credit and housing benefit: You cannot lawfully refuse to let to tenants on benefits unless there is a legitimate commercial reason (e.g. mortgage terms). Carry out an affordability assessment on the same basis as employed applicants, factoring in the benefit amounts
- Multiple income applicants: For joint tenancies, assess combined income against the rent threshold. Consider whether all tenants are jointly and severally liable under the tenancy agreement
Step 4 — Previous Landlord Reference
A reference from the previous landlord provides direct evidence of the tenant's rental behaviour: payment record, property care, and compliance with tenancy obligations.
- What to ask: Was rent paid on time and in full? Were there any arrears? Was the property returned in good condition? Were there any complaints from neighbours? Would you let to this tenant again?
- Current landlord caution: Be aware that a current landlord who wants to end the tenancy may give an unrealistically positive reference. Where possible, also contact the landlord before the current one
- No previous rental history: First-time renters (students, young adults leaving home) will not have a landlord reference. Assess on employment/income, guarantor, and character reference instead
- Unexplained gaps: Ask about any gaps in the rental history — a gap may indicate eviction proceedings or squatting, or it may have an innocent explanation (e.g. living with family, overseas travel)
- Verify the reference source: Confirm the reference is from a genuine landlord, not a friend posing as one. Cross-reference the landlord's details against the Land Registry or electoral roll where you have concerns
Step 5 — Guarantor Reference (Where Required)
Where the tenant does not meet the standard affordability or credit threshold, a guarantor can provide additional security. A guarantor is a third party who agrees to be jointly liable for the tenant's rent and obligations under the tenancy.
- Who makes a suitable guarantor: A UK-resident homeowner with sufficient income to cover the rent (typically at least 36x the monthly rent in gross annual income)
- Reference the guarantor too: Carry out a credit check and employment/income check on the guarantor, as you would a tenant — their financial position must support the obligation they are taking on
- Deed of Guarantee: The guarantor's obligation must be documented in writing — either within the tenancy agreement or as a separate Deed of Guarantee. Verbal guarantees are unenforceable
- Scope of the guarantee: Ensure the guarantee is drafted to cover the Periodic Assured Tenancy (not just a fixed-term period), and that it survives any rent increases made via Section 13 Form 4A
- Overseas guarantors: Enforcement against overseas guarantors is complex and expensive. Prefer UK-resident homeowners where possible
Tenant Fees Act 2019 — What Landlords Cannot Charge
The Tenant Fees Act 2019 prohibits landlords and letting agents from charging tenants certain fees in connection with a tenancy. Prohibited charges include:
- Referencing fees: You cannot charge the tenant for carrying out credit checks or obtaining references
- Administration fees: Any fee associated with setting up or processing the tenancy
- Check-in fees: The cost of attending a check-in or inventory inspection
- Contract preparation fees: Cost of drawing up the tenancy agreement
- Permitted payments: Rent; capped tenancy deposit (max 5 weeks' rent); holding deposit (max 1 week's rent); changes to the tenancy requested by the tenant (max £50); early termination fees at the tenant's request; default fees for late payment or key replacement (must be stated in the agreement)
- Penalty for prohibited charges: A financial penalty of up to £5,000 for a first breach; up to £30,000 for a repeat breach. Charging a prohibited payment can also prevent you from serving a valid Section 21 notice (when that route was available) and can trigger a Rent Repayment Order
What to Do if a Tenant's Reference Fails
- Decline and continue searching: You have no obligation to let to a tenant who does not meet your referencing criteria. Document your reasons
- Accept with a guarantor: If the tenant is otherwise suitable but income or credit is marginal, a creditworthy guarantor (UK homeowner, financially verified) can bridge the gap
- Refer to a specialist referencing agency: Where the result is borderline, a full referencing agency report may reveal information (or confirm positives) that a self-conducted check would miss
- Rent in advance: A tenant may offer to pay several months' rent upfront — while this does not guarantee future payment, it reduces short-term arrears risk. Be aware the Tenant Fees Act caps what you can require to be paid in advance
- Document everything: Whatever decision you make, document the referencing process and outcome. If a tenant later defaults, evidence that you conducted reasonable due diligence may be relevant to possession proceedings
This guide is accurate as at 6 June 2026. It is provided for information purposes only and does not constitute legal advice.