Landlords Guide: Credit & Referencing Checks

21/04/2025

Finding the right tenant is one of the most important aspects of being a successful landlord. While advertising the property and arranging viewings may seem like the bulk of the work, one of the most crucial step comes before handing over the keys is performing thorough tenant credit and referencing checks. Skipping this process or rushing through it can lead to missed rent payments, property damage, or lengthy legal battles.

Why Thorough Credit and Referencing Checks Matters More Under the Renters Rights Bill

The Renters Rights Bill, set to shake up the private rental sector in 2025, proposes abolishing Section 21 ‘no fault’ evictions. This means landlords will no longer be able to evict tenants without a specific reason. As a result, you’ll need a valid legal ground (such as rent arrears or breach of tenancy terms) to regain possession. Evicting problematic tenants could become more time-consuming and legally complex. This means that making the right tenant choice upfront is more critical than ever.

In short, under the new rules, if a tenant turns out to be unreliable or unsuitable, your ability to remove them quickly will be significantly limited. That makes your referencing process your first and strongest line of defence.

Here’s a guide to the essential checks landlords should complete before a tenant moves in:

Proof of Identity and Right to Rent

By law, landlords in England must check that a tenant has the legal right to rent in the UK. This involves verifying original documents and keeping copies.

Ask for:

Passport or national ID card
Visa or residence permit (if applicable)
Right to Rent share code (for non-British citizens)

Check the documents in person

Failure to comply with the Immigration Act 2014 could now result in a fine of up to £10,000.

Credit Check

A credit check provides a snapshot of a tenant’s financial history, including any:

Missed payments
County Court Judgments (CCJs)
Bankruptcies

Many landlords use a letting agent or referencing service to carry this out. While a poor credit history isn’t always a deal-breaker, it’s a useful tool in assessing risk.

Employment and Income Verification

Can the tenant afford the rent? Typically, a tenant should earn at least 2.5 time the monthly rent. For example, if the rent was £1,000PCM the tenant(s) combined income should be £36,000 per year.

Ask for:

Recent payslips (last 3 months)
Employment contract
Bank statements
A letter from their employer confirming income and job status

For self-employed applicants, request:

Tax returns or SA302s (last 2 years)
An accountant’s reference

Previous Landlord Reference

A tenant meeting with the affordability requirements does not necessarily make them a good tenant. Speaking to a previous landlord can offer valuable insight into a tenant’s behaviour.

Ask questions such as:

Did they pay rent on time?
Did they look after the property?
Were there any complaints or issues?

Tip: Be wary if a tenant refuses to provide contact details for their current or previous landlord.

Affordability Assessment

Even if a tenant’s income looks good on paper, consider their other financial commitments.

Look for signs of:

Heavy debt repayments
Irregular income (especially for freelancers or gig workers)
Reliance on benefits without a guarantor

Some referencing agencies provide a pass/fail affordability score based on full financial data.

Guarantor Check (if needed)

If the tenant is a student, has a low income, or poor credit history, consider requiring a guarantor.

A guarantor should:

Have a good credit history
Earn sufficient income (ideally 3x the rent)
Be a UK homeowner (preferably)

Make sure the guarantor signs a legally binding agreement confirming they’ll cover rent and damage costs if needed.

Final Thoughts

Taking time to reference your tenants properly is the best form of risk management. While no process can offer 100% certainty, thorough screening helps you find reliable tenants who’ll respect your property, pay on time, and stay long-term.

If you’re short on time or want added peace of mind, consider using a professional tenant referencing service or letting agent to handle the checks on your behalf.