Tenancy Setup & Management
Tenant referencing for landlords: what it is and how it works
Published: November 2025. Last updated: June 2026. Reviewed by the August editorial team.
Tenant referencing is the process a landlord uses to confirm that a prospective tenant is who they claim to be, can afford the rent, and has a reliable renting history. It combines identity verification, credit and income checks, a previous-landlord reference and the mandatory Right to Rent check into a single picture of the applicant, so you can make an evidence-based decision before you offer a tenancy. Done properly it is your first line of defence against rent arrears, property damage and disputes.
It matters more now than it used to. Since the Renters’ Rights Act 2025 abolished Section 21 on 1 May 2026, you can no longer end a tenancy with a no-fault notice, and removing a tenant means relying on a specific Section 8 ground. Choosing the right tenant at the outset is therefore the single biggest risk control left in your hands, which is exactly what referencing is for. This guide explains what referencing involves, what you can and cannot charge, how long it takes, when to ask for a guarantor, and how the new rules change the way you assess applicants.
What tenant referencing involves
Referencing builds a complete picture of an applicant across a few connected checks, rather than relying on any single result. A thorough process covers:
Identity verification: confirming the applicant is who they say they are.
Credit check: assessing financial reliability, debts and any County Court Judgments.
Income and employment verification: confirming the rent is affordable.
Previous landlord reference: understanding real-world rental behaviour.
Right to Rent check: the legal verification that the person can rent in England.
Address history: checking residential stability and explaining any gaps.
This is closely related to the broader screening concept of tenant vetting, and the individual confirmations are sometimes called reference checks. The aim throughout is a confident, lawful decision, not a single pass-or-fail score. Good referencing reduces the risk of arrears and helps ensure the tenant treats the property responsibly. If you are buying a property with tenants already in place, approach it differently, as covered in our guide to a rental property with tenants in situ.
Why referencing matters more under the Renters’ Rights Act
Letting without proper referencing has always carried risk, but the abolition of Section 21 has raised the stakes. With no-fault possession gone, the quality of your tenant selection now determines how smoothly the tenancy runs and how exposed you are if it does not. Thorough referencing helps you reduce financial risk by confirming income and creditworthiness, protect the property by learning how the applicant treated their last home, stay legally compliant on Right to Rent, and avoid the cost and difficulty of possession proceedings. Tenants who pass robust referencing are also statistically more likely to pay on time and stay longer.
Referencing is a prerequisite for financial protection too: most insurers require a satisfactory report before issuing a policy, and rent guarantee insurance will only pay out if a proper reference was carried out before the tenancy began. In a market with rising regulation and tighter margins, referencing is one of the few risk controls entirely within your control. It follows the earlier work of finding reliable tenants and pre-qualifying enquiries; referencing is the formal stage that confirms the impression.
The checks explained
Identity verification
Every process starts by confirming identity, which protects against fraud. Acceptable documents include a UK or international passport, a UK photocard driving licence, a national identity card for EEA nationals, or a biometric residence permit for non-EEA nationals. Check that documents are current and match the application, and be wary of mismatched addresses, poor-quality scans or reluctance to show originals. Many services now use digital identity verification that cross-references documents against official databases and flags forgeries automatically.
Credit check
A credit check shows the applicant’s credit score, outstanding debts, any County Court Judgments, bankruptcy or insolvency records, and payment history. A low score does not automatically disqualify someone, as there may be valid reasons such as a thin credit file or past difficulty since resolved. What matters is the pattern: multiple recent defaults or ongoing CCJs are red flags, while a single old, settled CCJ supported by strong income and a good landlord reference is far less concerning. The main UK credit reference agencies are Experian, Equifax and TransUnion, and most professional services check all three.
Income and employment verification
Confirming affordability is fundamental. The common rule of thumb is that gross annual income should be at least 30 times the monthly rent, or 2.5 to 3 times the annual rent: a £1,200 monthly rent points to roughly £36,000 a year, and an £800 rent to about £24,000. Our rent-to-income affordability calculator runs this for any rent and household income, including joint applicants. For employed tenants, ask for recent payslips, an employment contract or employer letter, and bank statements showing salary. For the self-employed, ask for SA302 tax summaries for the last two years, an accountant’s letter, business bank statements and evidence of ongoing work. Retired applicants can show pension statements, and students can show maintenance loans, parental support or part-time income. Where income falls short, a guarantor is the usual answer.
Apply the affordability test consistently to every applicant. Since 1 May 2026 it is unlawful to reject someone simply because they receive benefits or have children, so affordability must be assessed individually rather than through blanket rules, a point covered in the section on the new rules below and in our guide to letting to tenants on benefits.
Previous landlord reference
A reference from the current or previous landlord is one of the most valuable checks, because it shows behaviour in the real world. Ask whether the tenant paid in full and on time, how long they stayed, whether they kept the property well, whether there were complaints or breaches, the condition at the end, and whether the landlord would let to them again. Be cautious of vague or unusually glowing references, since a landlord keen to move a difficult tenant on may oversell them, and verify that the referee genuinely owns or manages the property. Our list of questions to ask a previous landlord gives a ready-made script.
Right to Rent check
The Right to Rent check is a legal requirement for all landlords in England under the Immigration Act 2014, and you must verify that every adult who will live in the property has the right to rent before the tenancy begins. For British and Irish citizens you can check a passport, or a birth certificate with proof of a National Insurance number. For most other nationals, use the Home Office online checking service with the tenant’s share code, which gives real-time verification. Check originals in the tenant’s presence or by permitted video method, record the date, and store copies securely for the tenancy plus one year. Our guide explains how to carry out a Right to Rent check in full.
The penalties are severe and were increased on 13 February 2024. A first breach now attracts a civil penalty of up to £5,000 per lodger and £10,000 per occupier, rising to £10,000 and £20,000 for repeat breaches, with criminal prosecution and an unlimited fine or imprisonment for knowingly letting to someone without the right to rent (the figures are set out in the GOV.UK right to rent code of practice). The check must be completed before the tenancy starts, and you cannot let to anyone who fails it. Because tenancies are now periodic with no fixed end date, follow-up checks for occupiers with time-limited permission must continue through the tenancy rather than only at a renewal point.
Address history and fraud detection
Checking three to five years of address history flags residential stability and any unexplained gaps or inconsistencies against the credit report. Identity fraud and fake references are growing problems, so modern tools look for forged passports, payslips and bank statements, unverifiable employer or landlord contacts, and inconsistencies across data sources. The warning signs are consistent: reluctance to provide originals, poor-quality scans, mismatched fonts on official documents, and contact details that cannot be verified. If something feels wrong, investigate before you proceed.
What you can and cannot charge
Under the Tenant Fees Act 2019 you cannot charge a tenant for referencing or credit checks. The Act banned most letting fees, so referencing fees, credit-check fees, administration fees, guarantor fees, inventory fees and check-in or check-out fees are all prohibited.
You can still take a holding deposit capped at one week’s rent, a tenancy deposit capped at five weeks’ rent where annual rent is under £50,000 or six weeks’ where it is £50,000 or more, the agreed rent, and a small number of permitted default charges such as up to £50 for a tenant-requested change to the agreement, reasonable early-termination costs, interest on rent more than 14 days late capped at 3 percent above base rate, and the receipted cost of replacing lost keys.
Charging a prohibited fee is costly. You must repay it within 28 days and face a penalty of up to £5,000 for a first breach or £30,000 for repeated breaches, with possible criminal prosecution. Note too that since Section 21 was abolished on 1 May 2026, possession now runs entirely through the Section 8 grounds, and you cannot rely on the relevant possession route while you are still holding an unlawfully charged payment, so repay it promptly. Tenants can report prohibited fees to Trading Standards or recover them through the First-tier Tribunal.
Holding deposits and the referencing timeline
The holding deposit takes the property off the market while you reference the applicant and prepare the tenancy agreement. It is capped at one week’s rent, only one can be held per property at a time, and it can be held for up to 15 days (the deadline for agreement) unless both parties agree in writing to extend. You must return it within seven days if the tenancy proceeds (it can be put towards the deposit or first rent by agreement), if you decide not to proceed, or if the deadline passes without an agreement through no fault of the tenant. You may keep it only if the tenant provides false or misleading information, fails the Right to Rent check, withdraws, or fails to take reasonable steps to proceed, and you must give written reasons within seven days.
Using a guarantor
Not every applicant passes on their own merit. Students, first-time renters, the self-employed with variable income, those rebuilding credit, and foreign nationals without a UK history often need a guarantor. Someone who agrees to be legally responsible for the tenant’s obligations if the tenant does not pay or breaches the agreement. Reference a guarantor to a similar standard as the tenant, including identity, credit and income (usually at least three times the annual rent), and they should normally be UK-based so the agreement can be enforced. Give them a copy of the tenancy agreement and a separate guarantor agreement that sets out their obligations clearly.
Guarantors matter more under the new rules. Rent in advance is now capped, so you can no longer ask for several months upfront to offset a weak reference, which means a guarantor is often the right way to support an applicant whose income or history is borderline. A guarantor’s liability continues through the periodic tenancy, and if you later sign a fresh fixed-term agreement the guarantor should sign a new guarantor agreement to remain liable, since liability for a new agreement they have not signed may not be enforceable. If a tenant’s circumstances improve markedly during the tenancy, you can release the guarantor from future obligations, agreed in writing by all parties.
Tenant referencing under the Renters’ Rights Act 2025
Three changes under the Act bear directly on how you reference. First, with Section 21 abolished, no-fault possession is gone, so getting the decision right at referencing is now the main protection against a difficult tenancy. Second, the Act makes it unlawful to discriminate against applicants because they receive benefits or have children, so you cannot screen them out with blanket rules such as “no DSS” or “no children”; instead you assess every applicant on the same affordability and reference criteria and record your reasons. Third, rent in advance is restricted: a landlord cannot require more than one month’s rent up front, and councils can require repayment of a prohibited rent-in-advance payment and impose a civil penalty of up to £5,000. The full framework sits in the Act on legislation.gov.uk, with plain-English GOV.UK guidance for landlords. The practical effect is that referencing and, where needed, a guarantor now carry the weight that large upfront payments used to.
How to reference a tenant, step by step
Application form: collect personal details, employment, income, address history and references.
Initial screening: review for obvious red flags before investing in formal checks.
Identity verification: confirm originals in person or by video and record the date.
Right to Rent check: complete it using the right method for the applicant’s status, and document everything.
Credit and financial checks: use a reputable agency or service and follow up on concerns.
Income verification: cross-check payslips, employer letters or tax returns against bank statements.
Previous landlord reference: contact the landlord directly, not via a number supplied by the tenant, and verify ownership.
Decision: weigh everything together; no single factor is automatically decisive, but several concerns together may be. Ask for a guarantor or more information if you are unsure.
Feedback: if successful, move to the tenancy agreement; if not, give brief, polite feedback.
Documentation: store referencing records securely under UK GDPR. Keep Right to Rent copies for the tenancy plus one year, and financial records for up to six years for tax purposes.
How long does tenant referencing take?
For a professional service, referencing is usually completed within 24 to 72 hours, with credit and address checks often returning inside 48 hours. The slowest part is almost always the human element: waiting for an employer to confirm salary or a previous landlord to reply. You can speed things up by asking the applicant for payslips and contact details up front and by setting clear deadlines for references, while the holding deposit keeps the property reserved in the meantime.
DIY referencing or a professional service?
You can reference applicants yourself or use a service, and each suits different landlords. Doing it yourself costs little beyond credit-report fees and gives you direct control and the chance to ask follow-up questions, but it is time-consuming and relies on knowing what to look for. A professional service returns comprehensive, standardised checks quickly, usually for £15 to £50 per tenant paid by the landlord, with stronger fraud detection and automated Right to Rent verification, at the cost of less personal oversight. For one or two properties, careful DIY referencing with reports from a service such as CheckMyFile or Experian works well; for larger or HMO portfolios, a professional service saves time and reduces risk. Whichever route you choose, good property management software keeps the records traceable.
Common referencing mistakes
The avoidable errors are consistent: skipping or rushing the Right to Rent check, which is unlawful and never to be based on appearance or accent; accepting “references” from friends or family rather than genuine landlords; ignoring a gut sense that something is wrong despite tidy paperwork; charging a prohibited fee, even by accident; failing to reference a guarantor as thoroughly as the tenant; poor record-keeping under GDPR; and deciding too quickly to fill a void. Take the time to do it properly, because a bad tenant is now far harder to remove than a short void is to fill.
Data protection when referencing
Referencing processes sensitive personal data, so it must comply with UK GDPR and the Data Protection Act 2018. You need a lawful basis (usually legitimate interests or contract necessity), you must tell applicants what you collect and why, obtain consent where required such as for contacting an employer, store documents securely, keep them no longer than necessary, and honour requests for access or correction. If you use a referencing service, confirm that it is GDPR-compliant and has the right data-processing agreements in place.
Staying organised with August
Referencing generates documents you must keep, securely and traceably, alongside the tenancy agreement and compliance certificates. August keeps that in one place for self-managing landlords: store referencing records and agreements in document management, track rent through an Open Banking rent-tracking integration once the tenant moves in, and let August’s AI read an uploaded tenancy agreement to pull out key dates and set renewal and compliance reminders automatically.
Frequently asked questions
What is tenant referencing?
It is the process a landlord uses to confirm that a prospective tenant is who they say they are, can afford the rent, and has a reliable renting history, combining identity, credit, income, previous-landlord and Right to Rent checks into one assessment before a tenancy is offered.
How long does tenant referencing take?
Usually 24 to 72 hours through a professional service, with credit and address checks often back within 48 hours. Delays nearly always come from waiting on an employer or previous landlord, so gather documents and contacts up front.
Can a landlord charge a tenant for referencing?
No. Under the Tenant Fees Act 2019 you cannot charge a tenant for referencing or credit checks. The landlord pays for any professional service. You may still take a holding deposit of up to one week’s rent while checks are completed.
Can you refuse a tenant because they receive benefits?
No. Since 1 May 2026 it is unlawful to reject an applicant simply because they receive benefits or have children. Assess every applicant on the same affordability and reference criteria, and where income is borderline consider a guarantor rather than a blanket rule.
What happens if a tenant fails referencing?
You can decline, ask for a guarantor to cover the shortfall, or, within the deposit cap, agree suitable terms. You cannot require several months’ rent in advance to compensate, as rent in advance is now capped. If you want a single place to keep every referencing record and compliance date, you can start with August for free.
Final thoughts
Tenant referencing is one of the most important responsibilities a landlord has, and it matters more now that no-fault possession has gone. Work through each component, identity, credit, income, the landlord reference and Right to Rent, apply your affordability test consistently and lawfully, document everything, and do not rush to fill a void. Whether you reference yourself or use a service, the goal is the same: an informed, evidence-based decision about who you trust with your property, which is what makes a tenancy sustainable.
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.
Author
August Team
The August editorial team lives and breathes rental property. They work closely with a panel of experienced landlords and industry partners across the UK, turning real-world portfolio and tenancy experience into clear, practical guidance for small landlords.
