Landlords or letting agents typically pay for tenant referencing. Tenant referencing is a process in which a potential tenant’s suitability as a renter is evaluated by checking their credit history, employment status, and previous rental history.
Tenant referencing can help landlords avoid potential problems such as rent arrears, property damage, or eviction.
The cost of tenant referencing varies depending on the type of check carried out and the provider used. However, this is not common practice and is usually only done in exceptional circumstances.
Understanding Tenant Referencing
Tenant referencing is an essential part of the renting process that helps landlords ensure that their tenants meet specific eligibility requirements.
It involves several checks carried out on prospective tenants to make sure that they can afford the rent and will be responsible occupants.
What Is Tenant Referencing And Why Is It Important?
Tenant referencing is the process of obtaining detailed information about a prospective tenant’s background to ensure they are suitable tenants.
The process plays a vital role in safeguarding landlords’ assets and their investment in rental properties. Here are some of the reasons why tenant referencing is important:
- It helps landlords verify a prospective tenant’s identity, employment status, income, and credit history.
- It screens out potentially risky tenants who may default on their rent, cause damage to the property or cause disturbances to neighbors.
- It lowers the risk of rental arrears and evictions.
Types Of Tenant Referencing
Here are some of the different types of tenant referencing checks landlords might carry out:
Credit checks are conducted through credit reference agencies and help landlords determine a prospective tenant’s creditworthiness. It involves checking the tenant’s history of debt repayment and credit utilization.
Employment verification involves contacting the tenant’s employer to confirm their job title, salary, and job security. It helps landlords determine whether a tenant can afford the rent and is likely to remain employed.
Past Landlord References
Past landlord references involve contacting the tenant’s previous landlord to inquire about their conduct as a tenant. This check will help landlords learn about any past rental problems such as arrears or damages.
Criminal Background Checks
Criminal background checks involve looking up public records to determine whether a prospective tenant has a criminal history. This check helps ensure that landlords do not put other tenants or their property at risk.
Costs Of Tenant Referencing
Tenant referencing costs vary depending on the level of screening required and the industry standards. In general, landlords can expect to pay anywhere from £20 to £200 per tenant for referencing and screening services.
However, it’s important to note that the cost of tenant referencing is negligible compared to the fees that a landlord may incur due to problem tenants, such as unpaid rent or damage to property.
Tenant referencing is an essential tool for any landlord that wishes to protect their rental property investment.
By conducting background checks on prospective tenants, landlords can ensure that they only rent to responsible tenants, reduce the risk of rent arrears, and minimize the likelihood of property damage.
The different types of tenant referencing checks help landlords get a more comprehensive overview of a prospective tenant’s background, enabling them to make informed decisions on who to rent their property to.
Legal Responsibilities For Tenant Referencing
Tenant referencing is an essential part of the renting process, providing crucial information about potential tenants’ financial history, employment status, and previous rental experiences.
It protects both landlords and tenants and ensures a smooth tenancy for everyone involved. But who pays for tenant referencing?
Let’s explore the legal responsibilities involved with tenant referencing fees, including who is responsible for paying, the fees charged by lettings agents, and the alternative options available to tenants.
Who Is Responsible For Paying For Tenant Referencing?
It is common practice for letting agents charge tenants a referencing fee, covering the costs of carrying out necessary checks.
However, the recent tenant fee ban, introduced in 2019, prohibits letting agents and landlords from charging certain fees, including tenant referencing fees, to tenants.
This means that landlords are responsible for paying for tenant referencing fees unless they choose to carry out the referencing checks themselves or agree on an alternative arrangement with the tenants.
Landlord And Tenant Obligations During The Referencing Process
When it comes to tenant referencing, both landlords and tenants have certain obligations to fulfill.
Landlords must provide tenants with all necessary information about the referencing process. It includes the costs involved and ensures that they carry out checks in compliance with the law.
Tenants must provide all the information required for the referencing checks to be completed accurately and promptly.
If a tenant provides false or misleading information, they may be in breach of their tenancy agreement, and landlords may take legal action against them.
Legal Considerations For Tenant Referencing Fees
Under the tenant fees act 2019, letting agents and landlords are prohibited from charging tenants certain fees to ensure affordability and fairness in the renting process.
This includes charging tenants fees for referencing checks, which must be paid for by landlords.
Landlords who charge tenants these prohibited fees may face legal consequences, including fines and other penalties.
Fees Charged By Lettings Agents
Under the tenant fees act, landlords and letting agents are prohibited from charging tenants for tenant referencing fees.
This means that if landlords choose to use a lettings agent to carry out reference checks, they are responsible for paying the associated costs.
Letting agents are still entitled to charge landlords for their services, including tenant referencing, but these fees must be transparent and reasonable.
Regulations On Tenant Referencing Fees
New regulations make it clear that charging certain fees to tenants is against the law. However, landlords are still entitled to charge tenants for costs associated with early termination of a tenancy or late rent payment.
It is important to note that these fees must be clearly outlined in tenancy agreements, and tenants must agree to them in writing before paying.
Alternative Options Available For Tenants
For tenants who cannot afford to pay tenant referencing fees, several alternative options are available.
Some local authorities and charities offer programs that assist tenants in paying referencing fees, and there are numerous low-cost referencing agencies for tenants to utilize.
Tenants can also offer to provide their own references from previous landlords or employers, reducing the need for costly referencing checks.
Tenant referencing is a crucial part of the renting process, protecting both landlords and tenants from potential risks.
It is the responsibility of the landlord to cover the costs associated with tenant referencing, and any fees charged to tenants for these services are considered illegal.
Frequently Asked Questions For Who Pays For Tenant Referencing?
Who Is Responsible For Paying Tenant Referencing Fees?
In most cases, the tenant is responsible for paying these fees.
How Much Do Tenant Referencing Fees Typically Cost?
The cost can vary depending on the provider but usually ranges from £20-£75.
What Does Tenant Referencing Involve?
Tenant referencing involves checks on a tenant’s credit score, employment status, and rental history.
Is Tenant Referencing Necessary For All Rental Agreements?
Not all landlords require tenant referencing, but it is becoming increasingly common as a way to ensure reliable tenants.
Secure the right tenant, saving you headaches down the road. Remember, typically it’s the landlord or letting agency that picks up the bill for tenant referencing, seeing it as an essential investment in your property’s future.
They bear this cost to ensure you have a reliable, responsible tenant.