You’ve found a property to rent, secured it with a holding deposit, and received your offer letter. Next up: referencing.
Referencing is the process that letting agents or landlords go through to make sure you’ll be a good tenant and a suitable fit for the home you want to rent, before you sign the contract. Many agencies use other companies to handle the referencing process.
There are several checks involved: to confirm your identity, and make sure you have enough funds to cover your tenancy, you have good credit, and your previous landlord thought you were a good tenant.
Collecting the relevant information can take anything from 24 hours to up to a week. You can help by being open and honest and providing as much detail as you can. Incorrect details could delay your move in date.
Documents and checks
Proof of identity
Your letting agent or landlord needs to confirm that you are who you say you are, so you’ll need to provide identification. In England, you’ll also have to show you have the right to rent. You can give this in the form of a passport, driver’s license, a UK birth certificate, or a permit card/visa. You can find the full list of valid forms of identification at gov.uk.
Proof of income and/or employment
Recent pay slips, bank statements, and/or proof from your employer of your current salary will determine if your funds can cover the rent for your new tenancy. Your salary would normally need to be 2.5 times your share of the rent for this to be accepted. You can let your employer know in advance that they may need to give this information to speed up the process.
If you are self employed, you will need to provide a tax return or reference from your accountant.
With certain online banking providers, you can also opt in to Open Banking, and grant permission for the relevant information on rental payments and income to be shared. You can learn more about open banking at openbanking.org.uk.
If there’s an issue at this stage, you may require a guarantor. They agree to pay the rent or any damages if you cannot and so will have to undergo a similar referencing process and credit check. These checks will require a higher salary to rent ratio, to demonstrate your guarantor’s ability to cover their own living costs, as well as any potential extras you may not be able to cover. You should keep in mind someone who could fulfil this role.
Previous landlord’s reference
Your last landlord may be asked to comment on your tenancy. You can let them know in advance that this information will be requested to get a speedy response. You may also be asked to provide a bank statement, showing your latest rent payment, and current tenancy agreement.
Credit checks
These checks require your permission to go ahead. Your agency or landlord will use a credit reference agency to do a ‘soft check’ of your credit history. This gives an overview using publicly available data, such as if you’re listed on the electoral roll, rather than the in-depth ‘hard check’ required for a full credit application, and so your credit score won’t be affected.
Once your letting agent or landlord is happy with all the information you’ve proved, they will send you the tenancy agreement to sign and you can start preparing to move in.