Landlord’s guide to tenant background checks

Before handing over the keys to your property, carrying out thorough tenant background checks can help you find reliable tenants, reduce the risk of problems, and meet your legal obligations as a landlord.

• In this guide, we cover:
• What a tenant reference is
• Why tenant referencing is important
• A tenant referencing checklist
• How long tenant referencing takes
• Right to rent checks
• Consequences of not checking your tenants
• How much tenant referencing costs
• Whether you can charge tenants for reference checks
• How the Renters’ Rights Act affects tenant referencing

A tenant reference, sometimes called a tenant background check or tenant screening, is the process a landlord uses to assess a potential tenant before agreeing to let them a property.

It involves a series of checks and verifications that help you decide whether someone is a suitable tenant. These typically cover their credit history, employment status, affordability, and rental track record.

You can carry out these checks yourself, or you can use a letting agent or specialist referencing company to handle them on your behalf.

As a landlord, it’s important to know who will be living in your property. Tenant background checks give you a clearer picture of a potential tenant’s reliability, financial situation, and rental history, so you can make a more informed decision before signing a tenancy agreement.

In short, referencing helps you understand:

• Rental history: whether they’ve been a responsible tenant in the past
• Financial stability: whether they’re likely to pay rent on time
• Previous tenancy conduct: any issues raised by previous landlords or letting agents
• Employment and income: whether they have a reliable source of income to cover the rent

When carrying out a tenant background check, there are several things you may want to verify.

Here’s a list of the most common checks:

• Credit check: A credit check can confirm whether the tenant has a history of paying on time, as well as any outstanding debts or County Court Judgements (CCJs) that could affect their ability to meet rent payments
• Bank statements: Reviewing recent bank statements can give you a clearer idea of the applicant’s financial situation and whether they’re managing their money responsibly
• Employer reference: An employer reference confirms that the tenant is in work and can help verify their income level
• Proof of address: Checking previous and current addresses can help confirm the tenant’s residential history; acceptable documents can include utility bills, a UK driving licence, or a previous tenancy agreement, bank statements, or a council tax bill
• Proof of identity: Photo ID confirms the tenant is who they say they are
• Right to rent check: This is a legal requirement in England and confirms that the tenant has the right to rent a property in the UK (see below for more detail)

Previous landlord reference: A reference from a previous landlord can tell you whether the tenant paid rent on time, looked after the property, and caused any issues during their tenancy

The time it takes to complete a tenant background check can vary depending on how the checks are being carried out and who is involved in the process.

If you’re using a letting agent or specialist referencing company, the checks can often be completed within two to three days, though this may take longer if third parties are slow to respond.

If you’re carrying out the checks yourself, the timeline is more likely to depend on your own availability and how quickly you can obtain the relevant information.

Employment checks, for example, may take longer if the tenant’s employer is slow to respond to a reference request.

As well as carrying out your own referencing checks, landlords and letting agents in England have a legal obligation to verify that any new tenant has the right to rent a property in the UK. This applies to new tenancies, and in some cases follow-up checks may also be required for tenants with a time-limited right to rent.

You must carry out a right to rent check on every person aged 18 or over who will occupy the property, including family members, carers, and lodgers, even if they won’t be named on the tenancy agreement.

• British and Irish citizens: You can check their physical passport or passport card, or use a certified identity document validation technology (IDVT) provider to carry out digital identity checks.
• Non-UK nationals with digital status: Individuals with an eVisa or digital immigration status must prove their right to rent online via a Home Office secure “share code.” Most tenants with digital immigration status now prove their right to rent online using a Home Office share code, rather than physical biometric residence documents.
• Pending applications: If a tenant has an application or appeal pending with the Home Office, you can verify their status via the online Landlord’s Checking Service.

Important: Civil penalties for Right to Rent breaches have steepened dramatically.

Failing to carry out these checks can result in a fine of up to £10,000 per occupant for a first breach, rising to £20,000 per occupant for repeat offences. In criminal cases where a landlord knowingly rents to an illegal immigrant, they could face an unlimited fine and up to 5 years in prison.

Skipping tenant background checks can lead to significant problems. If you’re found to be renting to someone who does not have the legal right to rent in the UK, you could face civil penalties or, in serious cases, criminal prosecution.

Without references, you may also find yourself with a tenant who doesn’t respect the property or other residents. This could lead to:

• Property damage, causing you financial and personal stress
• Disputes with neighbours
• Difficulties removing a tenant who’s breaching the terms of their tenancy

In cases of malicious damage or theft by a tenant, having a suitable landlord insurance policy in place may help protect you financially. It’s worth checking exactly what your policy covers before you let your property.

The cost of a tenant background check can vary depending on who carries it out and the level of detail involved.

If you use a letting agent or specialist referencing company, fees typically range from around £15 to £70 per tenant depending on the package you choose, covering anything from a basic credit check to a full screening that includes employment history and previous landlord references.

If you carry out the checks yourself, there are still costs to consider. Accessing HM Land Registry records to verify that a previous landlord owns the property they’re referencing,for example, usually involves a small fee, as does running a basic credit check through one of the main credit reference agencies.

No. Under the Tenant Fees Act 2019, landlords in England are no longer permitted to charge tenants for reference checks. The cost must be covered by the landlord or letting agency.

Even if an applicant fails the reference check, they still can’t be charged for it.

The Renters’ Rights Act is introducing significant changes to the private rented sector. While the process of carrying out tenant checks is unlikely to change dramatically, landlords will need to be more careful about how they use referencing information when making tenancy decisions.

1. Discrimination and affordability checks

Landlords should avoid blanket bans on tenants with children or those who receive benefits, as this may breach discrimination laws and upcoming Renters’ Rights reforms.

When assessing affordability:

• Benefit income should be considered alongside salary and other sources of income when determining whether a tenant can afford the rent.
• Landlords should avoid automatically rejecting applicants solely because they receive Universal Credit, Housing Benefit, or other forms of state support.
• Any affordability criteria or credit checks should be applied consistently and fairly to all applicants.

2. Requests for pets

Under the Renters’ Rights Act, tenants will have stronger rights to request permission to keep a pet, and landlords will need a reasonable justification for refusing.

Although landlords may no longer be able to rely on blanket “no pets” policies in many situations, tenant referencing can still help assess potential risks. For example, landlords may wish to:

• Ask previous landlords whether a pet caused damage or complaints.
• Request basic information about the pet, such as its age, breed, or training.

The reforms are also expected to allow landlords to require tenants to have suitable pet insurance, or to cover reasonable increases in the landlord’s insurance costs relating to pet damage.

Please refer to our Renter Right Act guide for further information.

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Below are some frequently asked questions about tenant background checks.

Please note that these frequently asked questions are not a substitute for the policy wording. For full terms and conditions, please see the policy documentation.

An affordability check is a way of confirming that a tenant earns enough to comfortably cover the rent. Most landlords and referencing companies look for a tenant whose gross annual income is typically around 2.5 to 3 times the annual rent.

Yes, in some cases. If a tenant fails a reference check, it may still be possible to proceed with the tenancy if they can provide a suitable guarantor. A guarantor is someone who agrees to cover the rent if the tenant fails to pay. Some landlords may also request additional checks or a larger deposit, subject to the legal limits on deposits.

It depends on your policy. Some landlord insurance policies, including rent guarantee insurance, may require proof that you’ve carried out full background checks before a claim can be validated. It’s worth reviewing your policy documents carefully, or speaking to your insurer, to understand exactly what’s required.

Using a letting agent or specialist referencing company can save you time and may give you access to a more thorough level of checking than you could carry out on your own.

Many providers offer tiered packages, ranging from basic credit checks through to full background checks that include employment history, affordability checks, credit history, and previous landlord references.

Whether it’s worth the cost will depend on how much time you have available and the level of reassurance you want before letting your property.

Landlords can decline a tenant for legitimate reasons, such as affordability concerns or a poor rental history. However, it’s important to be mindful of discrimination law.

Under the Equality Act 2010, landlords can’t refuse to rent to someone on the basis of protected characteristics such as race, religion, disability, or sex. Decisions should always be based on objective, legitimate referencing criteria.

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Just Landlords accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.