Tenant referencing: What can affect it, and how to protect your profile

If you are a tenant of rented property in the UK, you are highly likely to have been subjected to a referencing process in order to successfully start your tenancy. Tenant referencing is a fact of the market, and a powerful tool landlords use to ensure that prospective tenants are not only legally allowed to rent property, but a safe bet for property maintenance and prompt rent payment. The state of your tenant reference check when applying to rent a new property can have a number of ramifications for your chances – but what are they, and how can you address them?

Why does tenant referencing matter for you as a tenant?

Tenant references, contrary to popular belief, are not singular, centralised profiles on each and every UK tenant. Rather, referencing is a multi-step process carried out by landlords to protect their property investment and monthly income.

The first step of the referencing process is relatively informal, and carried out by letting agents operating on the behalf of landlords; in asking for your personal details, they are not only ascertaining your suitability for properties on their roster, but they are also vetting your suitability for tenancy by gauging your income and family costs. The second step sees the start of the referencing process proper. Via a series of correspondences, forms and third-party checks, the landlord to whom you eventually apply ascertains: your legal status with regard to renting in the UK; your credit history, and rent affordability – and hence whether you will need a guarantor –; and your standing with your current and previous landlords. If the results of these checks line up with the landlord’s expectations for a tenant, you ‘pass’ the checks and will be able to sign a tenancy contract. But what would constitute a ‘failure’?

What can cause a negative tenant reference?

There are several steps in the tenant referencing process that could result in you ‘failing’, and being ineligible to rent a particular property. Most commonly, tenant reference failure stems from checks regarding your employment and rent affordability status. If the ratio of rent to income is too high, this indicates a higher likelihood that you may fail to pay rent on time owing to living costs. Even if your rent to income ratio is high, some landlords may still refuse your application if your employment is predicated on a zero-hours contract, as there is no guarantee your future income will remain high.

Another way you can be refused a tenancy is via references from your current or previous landlord. If a previous landlord reports late payment of rent, or problems with the state of the property during or following your tenancy, the landlord performing the checks may deem you too much of a risk.

How to protect your profile

To ensure you do not encounter future difficulties in applying for tenancies, there are a number of things you can do in the short term. Tenant’s insurance is an excellent first step, making sure that any damages are covered and removing the possibility of a negative reference. You can also ensure you have a willing guarantor on hand, if your rent-income ratio is expected to be high. This way, you can petition landlords to consider insuring their rent with your guarantor, and continue with a tenancy on those terms.