Tenant’s Referencing
If you rent a property through a letting agent they will take up references on behalf of the Landlord. They may do this directly by writing to your employer and previous Landlord or more often these days outsource it to a specialist referencing company. It is always best to be honest when you complete the reference form as they are cross-referenced with other information sources and if you fail for something that hasn’t been disclosed you risk losing your holding deposit.
Some of the common reasons why prospective tenants fail the referencing process include:
County Court Judgments (CCJs) against their name
Even if these are satisfied they are likely to show up on a credit check for some years. Court decrees, Bankruptcy or Administration orders will also affect your chances.
Poor income to rent ratio
Referencing agencies will usually use a ratio of around 2.5. This means that your gross salary must be at least 2.5 times your share of the rent. If there is more than 1 tenant you should provide accurate details of your respective gross incomes to the agent. It may be possible for the rent to be proportioned unequally for referencing purposes.
If you are self employed your income will be measured as an average of the last 3 full years, as stated in your audited accounts. Undeclared payments received will not be classed as income.
Breaks in employment
Any breaks in employment over the previous 6 months (other than your holiday entitlement) may cause you to fail. Short term employment contracts are generally not acceptable for referencing purposes.
Previous Landlord’s reference
If you’ve miffed off your previous Landlord for some reason or other they may refuse to give a reference or just ignore the messages from the referencing company. If your previous rental property was managed by the agent it is them that will provide the Landlord’s reference.
Poor credit score
Missed payments on credit cards and loans will have a detrimental effect on your credit score although your credit score has to be very bad to fail the tenant referencing process.
Generally speaking the agent will want you to pass the referencing process but has a responsibility to the Landlord to be thorough. The ultimate decision lies with the Landlord and they always have the option to relax certain criteria if they choose. They are likely to be more amenable to this if you disclose the problems up front. Where your references are not straightforward it may be in your interests to suggest a meeting with the Landlord to explain your situation in person.
As a last resort you usually have the option to use a Guarantor. They will be required to sign a declaration stating that they will pay your rent if you default. The Guarantor will then be referenced using the same procedure.