What is Tenant referencing for Landlords?

Date: 13 November 2025

Finding a good tenant is one of the most important decisions a landlord makes. Choose wisely, and you'll enjoy steady rent, minimal maintenance issues, and a professional relationship built on mutual respect. Choose poorly, and you risk rent arrears, property damage, legal disputes, and potentially lengthy eviction proceedings.

Tenant referencing is the process landlords use to verify that a prospective tenant is who they claim to be, can afford the rent, and has a reliable rental history. It's your first line of defence against risk, and when done properly, it provides peace of mind that your rental property investment is in safe hands.

This article explains what tenant referencing is, what checks can be carried out, how the Tenant Fees Act affects what you can charge, and when you might need to involve a guarantor. Whether you're a first-time landlord or managing multiple properties, understanding referencing is essential to protecting your investment and maintaining strong rental yields.

What is tenant referencing?

Tenant referencing is a systematic vetting process that helps landlords assess whether a prospective tenant is suitable before offering them a tenancy agreement. It combines identity verification, financial checks, rental history reviews, and legal compliance into a comprehensive assessment.

The process typically covers:

• Identity verification – Confirming the applicant is who they say they are

• Credit checks – Assessing financial reliability and existing debts

• Income verification – Ensuring the tenant can afford the rent

• Employment checks – Confirming stable employment or income source

• Previous landlord references – Understanding rental behaviour and payment history

• Right to Rent checks – Legal verification that the tenant can legally rent in England

• Address history – Checking residential stability and identifying gaps

We offer a number of free templates including previous landlord and employment references.

Referencing is about building a complete picture of the applicant so you can make an informed decision with confidence. Good referencing protects you from fraud, reduces the risk of rent arrears, and helps ensure your tenant will care for your property responsibly.

Why tenant referencing matters for landlords

Letting a property without proper referencing is like driving without insurance. You might get away with it, but the consequences of something going wrong can be catastrophic.

Tenant referencing helps you:

Reduce financial risk – Confirming income and creditworthiness makes rent arrears less likely. The industry standard is that tenants should earn at least 2.5 to 3 times the annual rent.

Protect your property – Previous landlord references reveal whether a tenant looked after their last home, paid rent on time, and left the property in good condition.

Stay legally compliant – Right to Rent checks are mandatory in England. Failing to verify a tenant's immigration status can result in fines of up to £3,000 per tenant, or even criminal prosecution for repeat offences.

Avoid costly evictions – Evicting a tenant is expensive, time-consuming, and stressful. Thorough referencing significantly reduces the chance you'll need to go down this route.

Improve tenant quality – Tenants who pass rigorous referencing are statistically more likely to pay rent on time, communicate problems early, and stay for longer tenancies.

In a market where landlords face increasing regulation and reduced profit margins, referencing is one of the few tools entirely within your control to mitigate risk.

What tenant referencing checks can be carried out?

Let's break down each component of a comprehensive tenant referencing process and what you're looking for at each stage.

Identity verification

Every referencing process begins with confirming the applicant's identity. This protects against fraud and ensures the person applying is who they claim to be.

Acceptable identity documents include:

• UK or international passport

• UK driving licence (photocard)

• National identity card (for EEA nationals)

• Biometric residence permit (for non-EEA nationals)

Check that documents are current, valid, and match the details provided in the application. Look for inconsistencies such as mismatched addresses, poor-quality scans, or reluctance to provide original documents for viewing.

Many modern referencing services now use digital identity verification, which cross-references documents against official databases and flags potential forgeries automatically.

Credit check

A credit check gives you insight into the tenant's financial reliability. It typically shows:

• Credit score and rating

• Outstanding debts (loans, credit cards, mortgages)

• County Court Judgements (CCJs)

• Bankruptcy or insolvency records

• Payment history and defaults

A poor credit score doesn't automatically disqualify a tenant, but it should prompt further investigation. Someone with a low score might have valid reasons, such as being young with limited credit history, recently self-employed, or recovering from a past financial difficulty.

What matters most is the pattern. Multiple recent defaults, ongoing CCJs, or evidence of irresponsible financial behaviour are red flags. A single old CCJ that's been settled may be less concerning, especially if supported by strong income and landlord references.

Credit reference agencies in the UK include Experian, Equifax, and TransUnion. Most professional referencing companies access all three to provide a complete picture.

Income and employment verification

Confirming that a tenant can afford the rent is fundamental. The standard rule of thumb is that the tenant's gross annual income should be at least 30 times the monthly rent, or 2.5 to 3 times the annual rent.

For example:

• Monthly rent of £1,200 = Annual income of at least £36,000

• Monthly rent of £800 = Annual income of at least £24,000

For employed tenants, request:

• Recent payslips (usually the last three months)

• Employment contract or letter from employer

• Bank statements showing regular salary payments

For self-employed tenants, ask for:

• SA302 tax return summaries (last two years)

• Accountant's letter confirming income

• Business bank statements

• Proof of ongoing contracts or work

Retired tenants should provide pension statements, and students may need to show maintenance loans, parental support, or part-time work evidence.

If income doesn't meet the threshold, this is where guarantors come in.

Previous landlord reference

A reference from the tenant's current or previous landlord is one of the most valuable checks you can make. It tells you how they behaved as a tenant in the real world, not just on paper.

Ask the previous landlord:

• Did the tenant pay rent on time and in full?

• How long did they occupy the property?

• Did they maintain the property to a good standard?

• Were there any complaints from neighbours or breaches of the tenancy?

• Was the property returned in good condition at the end of the tenancy?

• Would you rent to this tenant again?

Be cautious of vague or overly positive references, especially if the landlord seems eager to help the tenant leave. Some landlords write glowing references to get rid of problematic tenants. Where possible, verify that the referee actually owns or manages the property by checking Land Registry records or asking for proof of ownership.

Right to Rent checks (England)

Right to Rent checks are a legal requirement for all landlords in England under the Immigration Act 2014. You must verify that every adult (aged 18 or over) who will live in the property has the legal right to rent in the UK.

The check confirms:

• British citizens have the right to rent indefinitely

• EEA nationals and other foreign nationals have appropriate immigration status

• Those with time-limited permission will need follow-up checks

How to conduct Right to Rent checks:

For British and Irish citizens, you can check:

• UK or Irish passport

• UK birth certificate plus proof of National Insurance number

• Certificate of registration or naturalisation

For non-EEA nationals, use the Home Office online checking service with the tenant's share code. This provides real-time verification and is now the standard method for most overseas tenants.

You must:

• Check original documents in the presence of the tenant (or via video link in some circumstances)

• Take copies of relevant pages

• Record the date you made the check

• Store copies securely for the duration of the tenancy plus one year

Penalties for non-compliance:

Failing to conduct Right to Rent checks properly can result in civil penalties of up to £3,000 per tenant for a first offence, or unlimited fines and even imprisonment for repeat or serious breaches. These are among the strictest landlord obligations, so treat them seriously.

Right to Rent checks must be completed before the tenancy starts. You cannot let to someone who fails this check, even if every other aspect of their application is perfect.

Address history verification

Checking a tenant's address history over the past three to five years helps identify residential stability and flags any gaps that might warrant explanation.

Look for:

• Frequent moves (which might indicate previous tenancy issues)

• Gaps in address history

• Inconsistencies between addresses provided and those on credit reports

• Overseas addresses that need further verification

Stability matters. A tenant who has lived in the same place for several years is statistically more likely to stay long-term than someone who moves every few months.

Fraud detection

Identity fraud and fake references are increasing problems in the rental sector. Modern referencing tools use technology to detect:

• Forged documents (passports, payslips, bank statements)

• Fake employer references (checking company registration, phone numbers, and contact details)

• Inconsistencies across multiple data sources

• Unusual patterns in financial documents

If something feels wrong, investigate further. Common warning signs include:

• Reluctance to provide original documents

• Poor-quality photocopies or scans

• Mismatched fonts or formatting on official documents

• Employer or landlord contact details that can't be verified

• Addresses that don't exist or are registered to multiple businesses

The Tenant Fees Act and charging for reference checks

One of the most important things landlords must understand is that under the Tenant Fees Act 2019, you cannot charge tenants for referencing or credit checks.

The Act banned most letting fees to make renting more affordable and transparent. Prohibited charges include:

• Referencing fees

• Credit check fees

• Administration fees

• Guarantor fees

• Inventory fees (for landlords to arrange)

• Check-in or check-out fees

What you can charge:

While referencing itself is free to the tenant, landlords can still request:

Holding deposit – Capped at one week's rent. This reserves the property while referencing and tenancy agreement preparation takes place.

Tenancy deposit – Capped at five weeks' rent where annual rent is under £50,000, or six weeks' rent above this threshold. The deposit must be protected in a government-approved scheme within 30 days.

Rent – The agreed monthly or weekly rent as stated in the tenancy agreement.

Utilities and council tax – If these are included in the tenancy (though most tenancies make tenants responsible).

Changes to the tenancy – Up to £50 if the tenant requests changes to the agreement after it's signed.

Early termination – If the tenant asks to leave early, you can charge reasonable costs you've incurred (such as lost rent and re-advertising costs).

Late rent – After 14 days of non-payment, you can charge interest capped at 3% above the Bank of England base rate.

Lost keys or security devices – The reasonable cost of replacement, supported by receipts.

Consequences of charging prohibited fees:

If you charge a tenant an illegal fee, you:

• Must repay it within 28 days

• Cannot serve a Section 21 notice (where these still apply) until the money is returned

• Face fines of up to £5,000 for a first breach, or £30,000 for repeated breaches

• Risk criminal prosecution for serious or persistent violations

Tenants can report prohibited fees to their local authority Trading Standards or apply to the First-tier Tribunal to recover the money.

Holding deposits: What landlords need to know

The holding deposit is an important part of the referencing timeline. It allows you to take the property off the market while you complete checks and prepare the tenancy agreement.

Rules for holding deposits:

• Amount: Maximum of one week's rent based on the total agreed rent

• Timing: Can be held for up to 15 days (the "deadline for agreement") unless both parties agree to extend this in writing

• Purpose: Covers the period while referencing, Right to Rent checks, and tenancy preparation take place

• Limit: Only one holding deposit per property at any time

When you must return the holding deposit:

Within seven days if:

• The tenancy proceeds and the tenant signs the agreement (it can be used towards the deposit or first month's rent by agreement)

• You decide not to proceed with the tenancy

• The deadline for agreement passes without a tenancy being signed (unless the tenant is at fault)

When you can keep the holding deposit:

Only if the tenant:

• Provides false or misleading information

• Fails Right to Rent checks

• Withdraws from the proposed tenancy

• Fails to take reasonable steps to proceed (for example, doesn't provide requested documents despite reasonable notice)

If you keep the holding deposit, you must provide written reasons within seven days of your decision.

Using a guarantor

Not every tenant will pass referencing on their own merit. Students, young professionals, the self-employed, or those with irregular income may need additional support. This is where guarantors come in.

What is a guarantor?

A guarantor is someone who agrees to be legally responsible for the tenant's obligations under the tenancy agreement. If the tenant fails to pay rent, damages the property, or breaches the agreement, the guarantor must cover these costs.

Guarantors are common for:

• Students – Parents often act as guarantors

• First-time renters – Those with no rental history

• Self-employed or contract workers – Those with variable or difficult-to-verify income

• Applicants with poor credit – Those rebuilding financial stability

• Foreign nationals – Those without UK credit history or employment

What checks should you run on a guarantor?

A guarantor must meet similar standards to the tenant themselves. Referencing checks should include:

• Identity verification

• Credit check

• Income verification (usually requiring income of at least 3 times the annual rent, sometimes more)

• Employment status or evidence of sufficient assets

• UK residency (most guarantors must be UK-based for enforcement purposes)

The guarantor must understand what they're signing up for. They should receive a copy of the tenancy agreement and sign a separate guarantor agreement that clearly sets out their obligations.

How long does a guarantor's responsibility last?

This is a critical question many landlords and guarantors get wrong.

A guarantor's liability typically continues for:

• The entire fixed term of the original tenancy

• Any statutory periodic tenancy that follows (when the fixed term ends and the tenancy continues month-to-month)

• Any agreed renewal where the guarantor signs a fresh agreement

If the tenancy is renewed with a new fixed-term agreement, the guarantor should sign a new guarantor agreement to remain liable. If they don't sign, their liability for the new agreement may not be enforceable.

Some guarantor agreements include automatic renewal clauses, making the guarantor liable for periodic extensions without requiring a new signature. Others require explicit renewal. Be clear about which approach your agreement takes.

If the tenant's circumstances improve significantly during the tenancy (for example, they secure permanent employment with a strong income), you may choose to release the guarantor from future obligations. This must be agreed in writing by all parties.

How to conduct tenant referencing: Step-by-step

Here's a practical workflow for landlords conducting their own referencing:

1. Application form

Ask prospective tenants to complete a detailed application form covering personal details, employment, income, address history, and references. This forms the basis of all subsequent checks.

2. Initial screening

Review the application for obvious red flags: incomplete information, unrealistic income claims, or concerning rental history. This saves time before investing in formal checks.

3. Identity verification

Request original documents and verify them in person or via video call. Take clear copies and record the date checked.

4. Right to Rent check

Complete this immediately using the appropriate method for the tenant's nationality. Document everything and keep records secure.

5. Credit and financial checks

Use a reputable credit reference agency or professional referencing service. Review the results carefully and follow up on any concerns.

6. Income verification

Request payslips, employment letters, or tax returns. Cross-check bank statements to confirm salary payments match claimed income.

7. Previous landlord reference

Contact the landlord directly (not through a phone number provided by the tenant). Verify they own or manage the property and ask specific questions about the tenant's conduct.

8. Decision time

Weigh all the information together. No single factor should automatically disqualify a tenant, but multiple concerns together might be decisive. If you're uncertain, request a guarantor or ask for additional information.

9. Feedback to tenant

If successful, proceed to the tenancy agreement stage. If unsuccessful, provide polite feedback explaining why you're not proceeding (though you're not legally required to give detailed reasons).

10. Documentation

Store all referencing documents securely in line with GDPR requirements. Keep them for the duration of the tenancy plus six years for legal and tax purposes.

Professional referencing services vs DIY referencing

Landlords can either conduct referencing themselves or use a professional service. Each approach has advantages.

DIY referencing

Pros:

• Lower cost (usually just credit report fees)

• Direct control over the process

• Can ask follow-up questions immediately

Cons:

• Time-consuming

• Requires knowledge of what to check and how

• Risk of missing red flags or fraud

• No professional liability cover

Professional referencing services

Pros:

• Comprehensive checks completed quickly (often within 24-48 hours)

• Expert fraud detection

• Standardised reports

• Professional indemnity if something goes wrong

• Automated Right to Rent verification

Cons:

• Costs typically £20-£50 per tenant (paid by the landlord)

• Less personal oversight

• May flag minor issues that require explanation

For small landlords managing one or two properties, DIY referencing with credit reports from services like CheckMyFile or Experian can work well. For larger portfolios or HMO properties, professional services save significant time and reduce risk.

Common referencing mistakes landlords make

Even experienced landlords sometimes make avoidable errors. Watch out for:

Skipping Right to Rent checks – This is illegal and carries severe penalties. Never assume someone has the right to rent based on appearance or accent.

Accepting references from friends or family – Previous landlord references should come from actual landlords, not personal references. Verify ownership.

Ignoring gut instinct – If something feels wrong despite paperwork looking good, investigate further. Fraud is sophisticated.

Charging prohibited fees – Even accidentally charging a tenant for referencing violates the Tenant Fees Act. Understand what you can and cannot charge.

Not checking guarantors properly – A guarantor is only as good as their ability to pay. Reference them as thoroughly as the tenant.

Poor record keeping – GDPR requires proper storage and handling of personal data. Keep documents secure and don't share them inappropriately.

Taking decisions too quickly – Rushing to fill a void can lead to poor tenant selection. Take time to reference properly.

Data protection and tenant referencing

Tenant referencing involves processing sensitive personal data, so you must comply with UK GDPR and Data Protection Act 2018 requirements.

Key obligations:

• Lawful basis: You must have a lawful reason to process personal data (usually "legitimate interests" or "contract necessity")

• Transparency: Tell applicants what information you'll collect, how you'll use it, and who you'll share it with

• Consent: Where required (for example, contacting previous employers), obtain clear consent

• Security: Store documents securely, whether digitally or in paper form

• Retention: Don't keep data longer than necessary. Six years is typical for rental records

• Rights: Tenants can request copies of their data and ask for corrections

If you use a professional referencing service, ensure they're also GDPR-compliant and have appropriate data processing agreements in place.

The future of tenant referencing

Tenant referencing is becoming increasingly digital and automated. Developments reshaping the landscape include:

Open Banking – Tenants can now share verified bank data securely, speeding up income verification and reducing fraud. Services like August offer rent tracking via an Open Banking integration.

Digital Right to Rent – The Home Office's online checking service is now the standard for most non-UK nationals, making verification faster and more secure.

AI fraud detection – Advanced algorithms can spot forged documents and fake references more reliably than human review alone.

Tenant passports – Some services now allow tenants to complete referencing once and share results with multiple landlords, speeding up applications.

These innovations make referencing faster, cheaper, and more reliable, but they don't eliminate the need for landlords to review results carefully and apply common sense.

Staying organised with August

Managing tenant referencing, documents, compliance certificates, and tenancy records can quickly become overwhelming, especially if you manage multiple properties.

August is designed to help small landlords stay on top of every detail. Upload your tenancy agreements, store referencing documents securely, set reminders for compliance renewals, track rent payments, and manage maintenance requests all in one simple app.

When August's AI scans your tenancy agreement, it automatically extracts key dates and suggests renewal reminders, so you never miss an EICR, Gas Safety Certificate, or tenancy review. Everything is in one place, accessible wherever you are.

Final thoughts

Tenant referencing is one of the most important responsibilities a landlord has. Done properly, it protects your investment, reduces risk, and gives you confidence that you're letting to someone reliable and trustworthy.

Take time to understand each component of the referencing process: identity checks, credit reports, income verification, landlord references, and Right to Rent compliance. Follow the rules set out in the Tenant Fees Act, document everything carefully, and don't rush the process.

Whether you choose DIY referencing or professional services, the goal is the same: to make an informed, evidence-based decision about who you trust with your property. With thorough referencing and good record-keeping, you'll build a portfolio of quality tenants who pay rent reliably, treat your properties with respect, and make landlording a sustainable, rewarding business.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Always speak to a suitably qualified professional if you require specific advice or information.