{"id":9830,"date":"2017-02-02T15:15:52","date_gmt":"2017-02-02T15:15:52","guid":{"rendered":"https:\/\/www.benhams.com\/news\/?p=9830"},"modified":"2024-12-31T11:41:41","modified_gmt":"2024-12-31T11:41:41","slug":"what-should-a-landlord-do-if-a-potential-tenant-fails-a-reference-check","status":"publish","type":"post","link":"https:\/\/www.benhams.com\/news\/property-advice\/what-should-a-landlord-do-if-a-potential-tenant-fails-a-reference-check\/","title":{"rendered":"What should a landlord do if a potential tenant fails a reference check?"},"content":{"rendered":"

Our monthly \u2018Advice Clinic<\/a>\u2019 series shares the answers to questions our landlords have been asking. This month, Marc von Grundherr, Lettings\u00a0Director, looks at the issue of tenants failing a reference check.<\/p>\n

What should a landlord do if a potential tenant fails a reference check?<\/h2>\n

One of a letting agent\u2019s most important roles is to find a reliable tenant for their landlord \u2013 a tenant they are confident will pay the rent on time and look after their rental property. The only way to do this is to carry out watertight tenant referencing<\/a>.<\/p>\n

Many landlords don\u2019t understand just how much work goes into vetting potential tenants. \u00a0A tenant\u2019s financial situation is investigated in minute detail to minimise the risk of non-payment of rent and unsurprisingly there are times when a problem may crop up. \u00a0But what exactly do we do in these situations? \u00a0Is the only course of action to reject the tenant or are there are other solutions?<\/p>\n

Tenant referencing – what is it?<\/h2>\n

We use a specialist referencing agency to carry out strict checks on potential tenants \u2013 they request and verify bank statements, employer references and references from previous landlords as well as carrying out a full credit reference. \u00a0They also carry out checks to verify passports as forgeries are becoming increasingly convincing and hard for even those with a well-trained eye to spot.\u00a0 This helps landlords to comply with checks required by the new Immigration Act (often called Right to Rent) which ascertain whether an applicant has the right to live in the UK. Failure to accurately reference a tenant and a landlord may need to seek repossession of the property through the courts, a long and costly process.<\/p>\n

<\/div>\n

\"consequences<\/p>\n

The consequences of inadequate tenant referencing<\/h2>\n

A few months ago we were looking for a new tenant for one of our landlords, who owns a three bed flat in Colindale with an asking rental of \u00a3600 per week. \u00a0An applicant failed\u00a0our strict reference checks and we advised the landlord not to accept them. As such we rejected the tenant.\u00a0 The same tenant went to another local agent and managed to pass their referencing procedures and the Landlord accepted him.\u00a0 From the outset, the tenant didn\u2019t pay any rent and the landlord was forced to go to court to evict the tenant, an expensive process which went on for several months, during which time the landlord received no income from the property. An expensive error and one which clearly illustrates the risks taken by letting agents who cut corners.<\/p>\n

Identifying fraud<\/h2>\n

Fraud<\/a> is a serious and growing problem. We see at least one forged passport and one set of forged bank statements each month with fakes \u00a0becoming increasingly sophisticated and harder to spot. Without the stringent checking carried out by our referencing company, I am sure some dishonest applicants would slip through the net. However, not all letting agencies carry out such rigorous checks.<\/p>\n

Failing a reference check<\/h2>\n

Of course, any applicant presenting false documents will fail a reference check and we always advise our landlord to reject such an application.\u00a0 No exceptions.\u00a0\u00a0 A tenant who has a County Court Judgement against them or someone who fails the Right to Rent checks would also be rejected. But there are other reasons why a tenant may fail a reference check and these can be less black and white.\u00a0 Sometimes it is possible to find a workable solution.<\/p>\n

‘Legitimate’ reasons for failing a reference check<\/h2>\n

One of the most common \u2018legitimate\u2019 reasons to fail a reference check concerns income. Applicants, particularly young professionals, new graduates and anyone moving to the UK from overseas, may not have a full employment history or a UK credit history. Those working on temporary contracts or on a freelance basis may face a similar problem.\u00a0 They will still make a perfectly reliable tenant though \u2013 so what should the landlord do?<\/p>\n

What should a landlord do if a tenant fails reference checks?<\/h2>\n