Specialist referencing companies

Landlords can engage a specialist referencing company as an alternative or to compliment their own checks.

Most companies will offer the option of a credit report or a full tenant check.

A full tenant check normally includes:

Landlords can engage a specialist referencing company as an alternative or to compliment their own checks.

Most companies will offer the option of a credit report or a full tenant check.

A full tenant check normally includes:

• a credit report
• landlord and employer references
• confirmation of bank details
• confirmation of previous property ownership
• income confirmation
• assessment of the prospective tenants ability to pay the rent

A specialist referencing service will only confirm facts. If a check ‘fails’ it does not necessarily mean that the tenant will be a bad tenant, but would normally be seen as an increased risk.

Reasons why tenants may ‘fail’ the professional referencing process include:

• County Court Judgements against their name. Even if they are satisfied, they are likely to show up on a credit check for some years. Court decrees, bankruptcy or administration orders will also affect the results.
• Poor income to rent ratio. Referencing agencies will usually use a ratio of around 2.5. This means that the gross salary must be at least 2.5 times their share of the rent. If there is more than one tenant, it may be possible for the rent to be apportioned unequally for referencing purposes. If the tenant is self employed, their income will be measured as an average of the last 3 years, as stated in their accounts. Undeclared payments received will not be classed as income.
• Breaks in employment. Any breaks in employment over the previous 6 months, other than the holiday entitlement, may cause the tenant to fail. Short term employment contracts are usually not acceptable for referencing purposes.
• Previous landlord’s reference. If the previous landlord was not happy with the tenant, they may refuse to give a reference.
• Poor credit score. Missed payments on credit cards and loans will have a detrimental effect on the credit score although the score generally has to be very bad to fail the tenant referencing process.