The best time to avoid a problematic tenancy is before it starts. A rigorous referencing process identifies financial risk (unpaid debts, insufficient income), character risk (adverse landlord references), and legal risk (no Right to Rent). Most landlord problems with rent arrears and property damage could be significantly mitigated by better referencing at the outset.
At the same time, referencing must comply with equality law and the Renters' Rights Act 2025. Blanket refusals based on benefit receipt or nationality are unlawful. The goal is evidence-based risk assessment — not gatekeeping based on protected characteristics.
The five components of a thorough tenant reference
A complete reference combines financial, character, and legal checks:
- Credit check: Searches for County Court Judgments (CCJs), insolvency orders, Individual Voluntary Arrangements (IVAs), and general credit history. Conducted through a referencing agency using data from Experian, Equifax, or TransUnion
- Affordability assessment: Rent should typically not exceed 33–40% of the tenant's gross monthly income. For a rent of £1,000/month, the tenant should earn at least £30,000/year. Request last 3 months' payslips and recent bank statements
- Employment verification: Written employer reference confirming employment status, start date, contract type (permanent/fixed-term), and salary. For self-employed tenants: 2 years of accounts or an accountant's letter confirming income
- Previous landlord reference: Contact the tenant's most recent previous landlord (not the current one — current landlords sometimes give false positives). Ask: Did the tenant pay rent on time? Was the property returned in good condition? Would you let to them again?
- Right to Rent check: Mandatory legal requirement for all private residential tenancies in England — verify and record the tenant's right to rent before the tenancy starts
Right to Rent checks — the legal requirement
Right to Rent checks are mandatory — failure carries civil penalties of up to £20,000 per tenant:
- British and Irish citizens: check original UK or Irish passport. Alternatively: UK birth certificate plus proof of National Insurance (payslip or HMRC letter)
- EU, EEA, and Swiss citizens (post-Brexit): use the Home Office online share code service — the tenant generates a share code from their UKVI account. This is the only reliable method; do not rely on EU passports alone
- Other nationalities: check visa, Biometric Residence Permit, or share code — confirm the right to rent is not time-limited. For time-limited permission, set a diary reminder to repeat the check before it expires
- Keep copies of all documents checked and the date of the check — retain for at least 2 years after the tenancy ends
- All tenants must be checked equally — conducting checks only on tenants who appear non-British is unlawful racial discrimination
Using a referencing agency
Referencing agencies provide comprehensive reports quickly and cost-effectively:
- Specialist agencies: HomeLet, Canopy, Vouch, OpenRent Referencing, Let Alliance — each offers packages covering credit check, affordability, employment, and previous landlord reference
- Cost: typically £20–£40 per applicant — the landlord pays. Charging tenants for referencing is a prohibited payment under the Tenant Fees Act 2019
- Turnaround: typically 24–72 hours for a full reference package
- Report outcomes: most agencies return a 'recommended' (pass), 'referred' (borderline — consider with caution), or 'declined' (significant adverse findings) outcome
- A 'referred' outcome does not mean automatically reject — consider whether a guarantor or additional conditions would adequately mitigate the identified risk
Guarantors — when to use one
A guarantor is a creditworthy third party who agrees to cover the rent if the tenant defaults:
- Use a guarantor where the tenant fails affordability (e.g. student or low-income tenant) or has limited credit history
- The guarantor should be a UK-based homeowner earning at least 3× the annual rent — reference the guarantor as rigorously as the tenant
- The guarantor agreement must be in writing and signed before the tenancy starts — a verbal guarantee is not enforceable
- For full protection, the guarantor agreement should cover: all rent arrears, property damage above the deposit, and breach of tenancy agreement obligations
- Keep the signed guarantor agreement for the duration of the tenancy and for 6 years after it ends — it is a potentially enforceable debt instrument
Referencing restrictions — what you cannot do
Referencing must comply with equality law and the Renters' Rights Act 2025:
- You cannot refuse a tenancy on discriminatory grounds: race, sex, pregnancy/maternity, disability, religion, sexual orientation, age, or other protected characteristics under the Equality Act 2010
- You cannot operate a blanket 'no DSS' (no benefits) policy — this is indirect sex discrimination (and potentially disability discrimination) and is unlawful
- You can assess a benefits applicant on the same affordability criteria as an employed applicant — if UC or Housing Benefit covers the rent, this is a valid income source
- You cannot charge tenants for referencing — this is a prohibited payment under the Tenant Fees Act 2019
- A failed reference is not always a reason to refuse — assess whether a guarantor, higher deposit (subject to the 5-week cap), or additional conditions would adequately mitigate the identified risk before declining
Frequently asked questions
Can I reject a tenant based on a bad credit score alone?+
A poor credit score is a legitimate financial risk factor and is a valid basis for declining a tenancy application, provided you apply the same criteria consistently to all applicants. However, consider whether the adverse credit is recent or old, whether the tenant can provide a guarantor to mitigate the risk, and whether the circumstances are explainable (e.g. historical debt cleared, recent financial difficulty due to illness). A blanket 'no CCJs ever' policy may catch tenants who have long since resolved their financial difficulties — a proportionate and reasoned assessment is both more defensible and more likely to find you good tenants.
What if the tenant cannot provide previous landlord references (first-time renter)?+
First-time renters (young adults, previously living with family or in student halls) cannot provide previous landlord references. In this case, place greater weight on: the credit check, affordability assessment, employment verification, character references from employers or other professionals, and — if the income is insufficient — a guarantor. Many landlords are reluctant to take first-time renters, but they are often excellent tenants — do not apply a blanket refusal to applicants who simply have no rental history.
How long should I keep referencing records?+
Keep referencing records for at least 6 years after the tenancy ends — this covers the limitation period for most civil claims. Right to Rent documentation must be retained for at least 2 years after the tenancy ends (a specific statutory requirement). The practical approach is to keep all referencing and tenancy records for 6 years, ensuring both requirements are met. Store documents securely and in compliance with your GDPR obligations — tenants have the right to request access to personal data you hold about them.
Can I run a reference on a prospective tenant without their knowledge?+
No. Under UK GDPR, you must inform the prospective tenant that you are processing their personal data (including running a credit check) and obtain their consent before doing so. Most referencing agencies require the applicant's consent as part of their process. Running a credit check without consent is a breach of data protection law. Always provide the applicant with a brief privacy notice before commencing referencing — this is a simple one-page document explaining what data you collect, how you use it, and who you share it with.