A landlord’s guide to referencing a tenant

Whether you are a landlord that doesn't use a letting agent or you do but want to know exactly what they do for you it’s very important to fully understand the process of referencing a tenant. Our article helps you avoid the pit falls and check its being done correctly.

As a landlord it's your business that suffers when tenants pay so it's very important you fully understand not only how to check and reference but also how to understand the information returned to you. Even if you use a letting agent it's wise to go over their procedures and call them up on anything you think could be improved.

Your landlord insurance can cover a loss of rent and cost of legal fees in event of the worst but prevention is always the best cure so we have broken down the process with which all tenants should be checked before signing anything.

Renting your property through a letting agent will usually mean that the referencing of perspective tenants will be handled by them, but some landlords prefer to do this themselves. It is after all one of the most important functions of renting out a property because trusting your tenants to look after your property and provide your income by paying rent is vital to a secure investment and smooth running business.

The main function of a tenant reference is to check they have the income and credit they claim to; this means you can be confident they have enough money to easily meet their monthly rent payments.

Application Form

Delays happen quite easily when you must go back to the applicant for more information. Make sure your form gathers everything you need to know and requests ALL the accompanying documentation. It is here also that the applicant will give written permission for you to seek personal and professional references as well as carry out credit checks.

References from employer

As a rough guide when checking tenant's earnings is to insure they make at least 2.5 times their portion of the rent. For example, if they are renting an apartment for £6000 per year, they should be making at least £15000 after tax. You can use an online calculator to work out what tax they pay.

It's quite easy these days to print off a headed letter so it's important that you follow through with employer references. Look into the company online and call or email directly. Confirm the person does indeed work there, for how long and what their salary is.

You should not accept a personal reference from anyone other than an employer. These are too easily forged so count for very little. You can however spend some time with the person and get to know them. Use your instinct and gain some insight into their character.

References from previous addresses

Bear in mind that a landlord might give a bad tenant a glowing reference in order to get rid of them so if possible also check with the previous landlord too especially with private rented. Take some time to double check who you are talking with, the legitimacy of the agencies and the accuracy of the information given by the tenant.

Credit Check

Credit checks can be made relatively quickly and cheaply with many companies competing over prices, and of course everything can be requested and returned conveniently online. If you are willing to pay for more comprehensive services you can also verify and check previous addresses, names, family and businesses.

It's important to remember that credit checks will return a credit score that is marked on repayments and a history of financial issues. It is an indicator to a person's financial situation which could be as it is for many different reasons, only one of these being that they are poorly organised with finances or dishonest with repayments. Likewise, is not a complete character reference and whilst being strongly taken into consideration shouldn't be the only factor.

Towergate’s tenant referencing service offered through MARAS  for example, can be included in a package of services including rent guarantee and landlord insurance.


Accepting a guarantor in place of a credit check or for letting to students is your decision to make. If you do the guarantors should be checked as thoroughly as the tenants. Remember - guarantors should be home owners and this should also be verified.

Letting to a business

You can gain reports and copies of accounts on any limited company from Companies House, this will give you a good steer on the financial stability of the company but you can also check previous addresses and landlord reference the same as a private tenant too. Also avoid invoicing or 'letters of guarantee' - secure a deposit and cleared funds in a similar fashion to a person.

It's always important to remember that a 'glowing' credit score is just one factor you must consider when accepting a new tenant. Likewise, a friendly smile should be taken into consideration among the other contributing factors that will allow you to make a judged decision. The aim should always be to reduce the risk to your business and while this is not an exact science a thorough process and a fair judge of character should help pair you up with the right tenants.

This is a marketing article by Towergate Insurance.

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