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Should I Let to a Tenant Who Failed Reference Checks?

Referencing potential tenants is a key process in the beginning of any healthy tenancy. The process makes it clear as to who the applicant is, providing the landlord with complete confidence they have found their ideal tenant. However, what if a tenant fails referencing? Can landlords still let to tenants that have failed reference checks? 

As can be expected, landlords will not want to let out their property to a tenant that they do not know. Of course, this can be a tall order for owners, especially when their interaction with their future tenant will have mostly been through any in-person property viewings, and to this end the referencing process paints a clearer picture for owners, allowing them to make an informed decision as to who they should proceed into a tenancy with.  

Should I Let to a Tenant Who Failed Reference Checks?
Young caucasian couple consulting with bank financial adviser before buying new house. Two bearded men sitting at table and checking documents while woman stands behind.

The referencing process is an essential aspect of finding a tenant for the rental property. All landlords will have heard the age-old advice of not rushing the search for an ideal tenant, but neglecting to conduct reference checks on each applicant will leave owners without any indication of a renter’s character or financial stability, leaving them guessing as to the suitability of the renter for their property. Similarly, to how many landlords would not like for their tenants to sublet to an unknown renter, having a problem tenant with the property could lead to needless, avoidable damage to the rental, refusals to vacate upon the end of the tenancy and perhaps even significant rent arrears, leaving landlords far worse off than if the time was taken to properly evaluate each applicant.  

How Long Does Reference Checks Take for Renting? 

Whilst the exact time frame in which the referencing process is completed will depend on how long it takes for the tenant to provide the necessary information, the tenant referencing process typically takes around 48 hours.

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Why Do Tenants Fail Referencing? 

Simply because a tenant fails their referencing checks does not always mean that a landlord cannot enter into a tenancy with the applicant. With this being said, if the aspiring renter fails the affordability checks, landlords should implement additional measures to secure their rental income, such as requesting a guarantor or asking for rent in advance. It is also worth noting that if a tenant fails to pass the affordability checks, it is unlikely that the landlord will be able to take out rent guarantee insurance or tenant default insurance as they will have knowingly entered into a tenancy with a potential risk to their rental income.  

Tenant Failed Their Credit Check 

As can be expected, a large part of the referencing process is not only ensuring that the applicant would be the ideal fit for the rental property, but that they will be able to maintain their obligation to the owner to consistently pay rent on a periodic basis.  

To this end part of the “affordability checks” that sees the tenant have their current income and employment status evaluated, will also comprise an assessment of the renter’s credit history. This will reveal any outstanding debts, CCJ’s and other lines of credit that the tenant has neglected to pay, giving landlords an invaluable indication as to wherever the tenant is likely to accrue rent arrears.  

Poor Reference From as Past Landlord 

It goes without saying that the reference from a past landlord is perhaps the most valuable information that rental property owners can receive before entering into a tenancy. A reference from a past landlord will commonly detail how much rent was paid by the tenant, if these sums were consistently paid on time, the condition in which the rental property was returned and if the landlord would recommend them as a tenant. 

 Of course, many owners have heard of nightmarish events caused through the negligence of bad tenants, often resulting in costly repairs or significant rent arrears. This is why the past landlord reference is so valuable as it gives owners a first hand, recent account of the tenants conducts throughout the duration of the tenancy, giving the landlord a phenomenal insight into how the applicant is likely to approach the new tenancy, and if the agreement will be respected. As can be expected, if the tenant receives a poor reference from a previous landlord, it is unlikely to inspire any new owners to enter into a tenancy with the applicant. 

Right to rent checks 

With the implementation of the 2014 immigrations Act, landlords are legally obligated to perform right to rent checks on all aspiring tenants. As the name suggests these assessments will see the owner of the rental property confirm that their tenants have the appropriate immigration status to reside within the UKL for the duration of the tenancy. If the aspiring renter is from outside of the EU then alongside photographic identification, they will also be expected to provide a valid VISA or residency permit that clearly details the duration of their right to remain within the UK.  

If the aspiring tenant is unable to produce the appropriate documentation to prove their right to rent within the UK then the landlord is prohibited from offering them a tenancy, with the financial penalty for doing so being as much as £3,000 per offence.  

Proof of Address

It could be that the tenant failed for having no proof of address. The reason for this being that he or she hasn’t been in their last property long enough to register on the electoral roll, they don’t have a copy of their tenancy agreement and the bills are in another tenant’s name. All of these are legitimate reasons for not passing this part of the check.  

To remedy this situation it’s recommended that you ask the tenant for a letter from their bank. This will almost certainly have their address on it.

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What if the Guarantor Failed the Credit Check 

As mentioned, many landlords and rental property owners will depend upon their residents to obtain a guarantor before moving into the property, allowing the landlord to enjoy the certainty that their rental income is secured.  With this being said, it is because of this duty to cover any missing rental payments, that the guarantor must be assessed to ensure that they are in a comfortable enough financial position to do so. Therefore, guarantors are not automatically accepted and are subject to similar scrutiny to the tenants when going through the referencing process.  

These assessments will once again see the credit history, employment status and current income be evaluated to determine if the guarantor would be able to fulfil their expected role. It is worth noting that each letting agency, landlord or lender will have their own specific criteria that will determine a guarantor’s suitability, however generally speaking if the guarantor has maintained a healthy credit score, then they are likely to be accepted.  

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