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what-is-tenant-referecing-header - Essential Living

What Is Tenant Referencing and Why Is It Needed?

Blog Guide to Renting
15.02.18

Finding the perfect property can be a challenge, because everybody has different needs and requirements in their rentals. Once you find the space that is ideal for you, there is one final hurdle that stands in between you and your residential dream: tenant referencing.

This is the process by which your new landlord or letting agent finds out more about you. It’s an important stage in the process for landlords, as they have to establish how reliable you are as a tenant before you both sign a binding contract.

Elements of the Tenant Referencing Process

Understandably, landlords have to know that you will be able to pay them, that you won’t destroy the property and that you aren’t attempting to defraud them in any way.

This is achieved through…

  • Credit checks
  • Investigating address history
  • Investigating authenticity of bank details
  • References from previous landlords

Although these stages can seem intimidating, each application is unique and completely dependent on the circumstances – as long as you’re not attempting to lie to your new landlord, elements that might let you down with one application might not have an impact on another.

The sooner the tenant referencing process is over, the sooner you can move into your new home, and there are a few ways that you can ensure that the application runs as smoothly as possible.

1. Honesty Is the Best Policy

If you have bad credit history, or your employment isn’t permanent, or your previous landlord hasn’t left you with a good reference: try not to worry. Yes, these are factors that will decide if you secure your dream rental or not, but the worst course of action is for you to lie on on your application – your hidden history is likely to appear in the referencing process, which will give your landlord reason to believe that you are an untrustworthy tenant.

Appearing unreliable gives your landlord a good excuse not to let you rent their property. Remember: being transparent on your application shows that you are honest, which means your landlord is more likely to come to an arrangement – paying your rent in advance or providing a guarantor usually gives the property owner the peace of mind that they need to offer their rental to you.

2. The Faster, the Better

The referencing process is not only the final obstacle between you and your dream rental, but it’s also the last box that your landlord needs to tick before they can fill their vacant property. It’s worth remembering that while this property is empty, your landlord is losing money, so it is in their best interest to fill this vacancy as soon as possible.

If you take too long to deal with the application process, then you’ll find that property owners may choose to give the space to another potential tenant over you – especially if this is a popular rental.

Landlords will usually employ the help of an external company when it comes to completing these checks, and they might follow up your application with requests for further evidence – provide them with bank statements, proof of identity and anything else that they need as soon as possible to avoid potential delays to your application.

3. Inform Your Referees

Referencing companies will regularly attempt to contact your referees until they get a response. The faster your referee responds, the faster your application can move forward. As this is an essential stage in the process, a failure (on the part of your referee) to respond will bring your application to a standstill, and will thereby give other people a chance to claim the property before you.

If your employer or previous landlord isn’t aware that you have selected them to be your referee,  they may be unaware of the urgency of their recommendation. Letting your referee know in advance that you have selected them means that they will be prepared to answer the referencing request, and your application can progress more quickly.

4. Calculate the Rent Before you Apply

There is a rule that to pass the referencing process, your household income must amount to 2.5 times the annual rent. For example, if your rent is £2,000 per month, that’s £24,000 per year, so the household income must amount to at least £60,000 a year.

Typically, tenants will share their rent evenly and, subsequently, they will be referenced according to this. Using our previous example, two tenants would usually split the rent 50:50, and would be referenced at £12,000 each.

However, tenants with unequal incomes might split the rent differently, which means that they have to be referenced for their varying annual incomes. Outlining this difference early in the application process will ensure that the process runs as quickly and efficiently as possible.

5. Do You Need a Guarantor?

If you’ve answered the questions on the application honestly, dealt with it promptly and informed your referees, but you still believe that there might be a chance of you failing the process, then you should prepare for the event in which you’ll need a guarantor.

A guarantor acts as a safety net for your landlord. Having this in place gives them the peace of mind that somebody else will cover your rent in the event that you can’t pay. Whoever you select to be your guarantor must earn at least three times your annual rent, and preparing someone beforehand will streamline the process, ensuring you secure the property before anybody else does.

Tenant Referencing

The best course of action for you as the potential tenant is to prepare to be referenced. Arrange required documents, seek out a potential guarantor and answer correspondence as quickly and honestly as possible.

Seeking out a property owner who values transparency will ensure that your tenant referencing process runs as efficiently as possible, and you can settle into your dream rental sooner than you think.

 

Dressage Court - Bethnal Green

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