What is a Tenant Reference?autorefsadmin
Tenancy reference checks are essential for ensuring a landlord experiences a stress-free rental agreement with occupants they can trust. With lots of aspects to consider when allowing somebody to live within your property, you would be forgiven for thinking, ‘what is a tenant reference check’. The reality is that these checks can be tailored to completely suit individual situations but knowing the basics is important to ensure no issues further down the line.
This complete guide to tenant reference checks will answer that exact question for you.
Why tenant referencing is important?
Tenant background checks gives insight into the financial stability, renting history, criminal records, and the general suitability of applicants. This allows the landlord to support any future decisions with the completed reference check and offers reassurance that the tenants are who they say they are. Tenant references also protect both parties, as a rental agreement must be suitable for everyone involved to have both happy renters and landlords.
How long does tenant reference take?
Reference checks for tenants can take as much or as little time as you need them to. Landlords can either complete the assessment themselves or via a third party. The chosen option will determine how long the results will take. Also, as the process requires feedback from additional individuals, such as previous landlords and referees, unforeseen delays occur. As a rule of thumb, tenants want the review to be completed quickly. Therefore, when using a professional or structured process, you can expect to receive feedback within 2-3 working days. AutoRefs is an automated reference checking tool that can help to speed up the tenant reference checking process further.
How much does tenant referencing cost?
The cost for scoping out the suitability of rental candidates can range anywhere between £15 and £40 per tenant. These fees, applicable when using a professional tenancy checking agency, provides you with the added security of knowing that the information has been proofed and sourced without hindrances. Personal assessments can also be completed and cost as little as £3 due to factors such as running credit checks and researching land registry details. However, with AutoRefs, you can create a free account and get 5 free tenant reference checks for free.
Can I charge tenants for reference checks?
Tenants cannot be charged for reference checks as stated by the Tenant Fees Bill 2019. This means any incurred charges must be covered by the landlord or managing agent, even if the completed check does not result in a tenancy agreement. Not only would not adhering to these rules be breaking the law, but it would also not make the best first impression with your future renters.
How to carry out a rental reference check using AutoRefs
Whether a landlord decides to complete the process themselves or with the support of an agency, the process should always cover two stages. The pre-screening and thorough checklist can also be completed to any desired level of information gathering, allowing landlords the option to tailor to their own needs fully.
Pre-screening, or initial assessment of suitability, covers the most basic requirements. As assessments cost both time and money, there is no point in completing a check on somebody likely not to be suitable. Questions at this stage are standard and consider aspects such as living arrangements and the number of people staying within the property. This is also the ideal time to make preferences clear around such issues as smoking, pets, and property maintenance expectations.
Using AutoRefs, you can create a set of personalised question profiles and then ask the reference to provide the relevant referees from professional, personal and previous landlords. The relevant referee would then receive an email with a link to complete the simple online questionnaire and once completed, the reference report will come back to you via email. It is a quick and simple reference checking process that is easy to use and also sends automated reminders doing all the chasing for you.
A tenant reference checklist
Initial pre-screening lets a list of only suitable prospective tenants proceed to the checklist phase of referencing. As already mentioned, the entire process can be as in-depth or top-level as required, meaning that this comprehensive list of tenant data gathering can be amended for personal needs.
The checks should cover four categories: transparent financial situation, personal character references, ID and recent residential history.
Financial investigations should include credit checks, bank statement collection, and employment history. Landlords should not have to worry about missed or delayed payments, so ensuring that individuals can confidently sign an agreement to pay on time each month is essential.
Credit checks showcase any missed payments or arrears, which would highlight current or previous issues. Bank statements from the last three months showcase how much disposable income is available to the prospective tenant each and every month. This is important as landlords need to know that if unexpected bills should arise, the renter can cover things without affecting rent payments. The rises in cost of living also make this an even more important factor in 2022 and beyond. Finally, job history allows for an assessment of working security to be made. This can be assessed by looking at the length of time with the company and the permanence of the employer.
Also important are personal character references, which provide an insight into how the individual is perceived in a range of settings. Results from this will highlight how easy the person will be to deal with, what their wider circle of contacts are likely to be like, and also allow for an interpretation to be made as to how they would fit into the surrounding area. After all, tenants are directly representing the property and landlord.
ID is essential to ensure the tenant is legally allowed to live within the UK and that they are providing only accurate and correct data.
Finally, looking into previous landlords and/or living arrangements highlights any gaps that could represent issues with any of the previous categories.
Should I use a professional tenant referencing company or a software like AutoRefs?
This is a personal preference but something that should most definitely be considered. Using a professional agency means that checks are comprehensive and prospective tenants will take you more seriously, but is expensive. Whilst landlords can carry out their checks; this can lead to issues further down the line if circumstances for either party should change. A professional check acts as a prelude to a tenancy agreement being created that protects both parties. AutoRefs is a solution in between. The landlord creates his own question profiles for the tenant using a list of predefined tenant questions. Then the system collects the reference from the tenant and their referees. It is cheaper and preserves the quality of reference. It is also a professional GDPR reference checking solution for landlords.
How to give your previous tenant a reference?
Just like a job reference, tenant feedback should be professional and not based on personal feelings. Instead, providing factual feedback based on character suitability, adherence to the signed agreement and feedback on suitability should be provided.
Try out AutoRefs with 5 free reference checking credits to see if AutoRefs suits your tenancy reference checking process. Our software is designed both for real-estate agents and individual tenants.