For a tenancy to be successful, it’s essential to be sure that a tenant (a) is who they say they are, (b) can and will pay the rent in full and on time each month, and (c) will look after their rented home. So, before accepting a tenant on behalf of a landlord, we make a series of due diligence checks that help us assess whether they are suitable for the tenancy:
- Proof of identity. We ask the tenant for two forms of ID, including a driving licence or passport with their photo.
- Proof of address. This can be either a utility bill or a bank statement, dated within the last two months.
- Credit check. This reveals whether the tenant has any outstanding or unsettled County Court Judgements (CCJs) and checks for bankruptcy orders, and also confirms residency. Importantly, the tenant must give their written permission for a credit check.
- Employer’s reference. A written reference, confirming the tenant’s employment and salary (they should ideally be earning at least 2.5 times the rent).
- Last 3 months’ bank statements. This lets us see the tenant’s regular income and expenditure, allowing us to assess affordability of the rent.
- Previous landlord’s reference. If they have rented before, we ask the landlord to confirm whether rent was always paid on time and in full, and whether they would be happy to rent to them again in the future.
While these checks are not a legal requirement, they are considered best practice to reduce the risk of something going wrong with the tenancy. Nevertheless, some self-managing landlords only do the bare minimum, such as getting photo ID, while a few don’t make any checks at all – and that is a huge mistake.
Failing to carry out robust pre-tenancy checks means landlords have very little information about the person living in their property and their ability to pay rent – on top of which, it signals to prospective tenants that the landlord may not be operating professionally. This can make a landlord a target for criminal tenants.
It’s also worth noting that if you have a Buy to Let mortgage on the property, referencing and credit checks might be a condition of the loan, and if you end up making a claim on your landlord insurance for damage caused by tenants, you may need to provide evidence that you carried out a full reference check in order for the claim to be valid.
Right to rent checks (England)
Unlike referencing, right to rent checks are legally required. Landlords and agents letting property in England must carry out this check to make sure the prospective tenant has the legal right to rent property in the UK. This applies to all tenants, both UK and non-UK nationals, and extends to anyone aged over-18 living in the property, regardless of whether they’re actually named on the tenancy agreement. That means it’s particularly important to check during periodic inspections whether anyone else may have moved in that you’re not aware of, such as a partner or carer.
If any occupant of the property is found to be illegally living in the UK, you can be fined £1,000 per tenant for a first offence and £3,000 thereafter, but these penalties are set to be raised at the start of 2024 to £10,000 and £20,000, respectively – so failing to carry out a right to rent check could have severe financial consequences for you.
More on how to make checks and the upcoming changes can be found in our blog 'New Right To Rent Checks Guidance for Landlords'.
If you have any queries about our pre-tenancy checks or would like to discuss our landlord services, just get in touch with the team in your local Reeds Rains branch, who will be happy to help.
The Reeds Rains Content Marketing Team
