Tenant Referencing: What Landlords Check and What It Costs
Since the Tenant Fees Act 2019, landlords and agents can't charge prospective tenants for referencing checks — the cost now sits with the landlord, typically £20-£50 per tenant. Here's what a proper referencing process actually covers.
Who Pays for Referencing Now
Before the Tenant Fees Act 2019 came into force in England (1 June 2019), it was common practice for letting agents to charge prospective tenants directly for referencing checks, often alongside a range of other administrative fees. The Act banned most of these tenant-facing fees, including referencing charges, meaning the cost of checking a prospective tenant's suitability now sits with the landlord — either paid directly if the landlord self-manages, or built into the fees charged by a letting agent managing the process on the landlord's behalf.
Wales and Scotland have their own, broadly similar restrictions on tenant fees under separate legislation, with the same general effect: landlords bear the cost of referencing, not the applicant.
What a Standard Referencing Check Covers
| Check | What's Verified |
|---|---|
| Identity verification | Confirming the applicant is who they say they are, typically via ID documents |
| Credit check | County Court Judgments, previous defaults, general credit history and score |
| Income and employment verification | Confirming income (commonly requiring 2.5x-3x the annual rent) and employment stability |
| Previous landlord reference | Rent payment history, general conduct during a previous tenancy, condition in which the property was left |
| Right to Rent check | Legal requirement (England) confirming the applicant has the right to rent under UK immigration rules |
| Bank statements / payslips | Often requested as supporting evidence for income verification |
Referencing services (whether provided by a letting agent or a standalone specialist referencing company) typically bundle these checks into a single process with a defined pass/fail/conditional outcome.
Typical Costs
| Referencing Route | Typical Cost per Applicant |
|---|---|
| Standalone referencing service | £20–£50 |
| Bundled within letting agent's management fee | Often included, but effectively priced into the agent's overall fee structure |
| DIY checks (landlord conducting checks personally) | Lower direct cost, but requires the landlord's own time and access to appropriate credit-checking tools |
For a property let to multiple joint tenants — a common arrangement for house-shares — referencing costs apply per applicant, which is worth factoring into the overall cost of letting to a larger group compared to a single tenant or couple.
Right to Rent: A Distinct Legal Requirement
Separately from the "optional but strongly recommended" credit and income checks, Right to Rent checking is a specific legal requirement for landlords letting property in England, introduced under the Immigration Act 2014:
| Requirement | Detail |
|---|---|
| Who must be checked | All adult occupiers intending to live in the property as their only or main home |
| What must be checked | Original identity/immigration documents confirming the right to rent in the UK |
| Records to keep | Copies of checked documents, retained for the duration of the tenancy plus a specified period afterward |
| Penalty for non-compliance | Civil penalties for landlords who fail to carry out and evidence a proper check; potential criminal liability for knowingly letting to someone without the right to rent |
This scheme currently applies specifically in England — Scotland, Wales and Northern Ireland have different arrangements, so landlords letting property outside England should confirm the specific requirements applicable in that nation rather than assuming the England scheme applies uniformly across the UK.
What Happens If a Tenant Fails Referencing
| Outcome | What It Means |
|---|---|
| Full pass | Tenancy proceeds on standard terms |
| Conditional pass (e.g. income slightly below threshold) | May proceed with a guarantor or additional safeguards |
| Fail (e.g. adverse credit history, insufficient income, negative previous landlord reference) | Landlord may decline, or consider a guarantor arrangement |
| Guarantor referencing | The guarantor is separately referenced (income, credit history) and legally agrees to cover rent if the tenant defaults |
Important: under the Tenant Fees Act, any request for additional funds as a condition of proceeding (beyond a standard deposit, which itself is capped, and rent in advance) is heavily restricted — landlords and agents cannot simply charge an extra "referencing risk fee" to a tenant who narrowly fails standard checks. A guarantor arrangement, rather than additional payment, is the standard route for proceeding with an applicant who doesn't fully pass initial referencing.
Practical Steps for Landlords
- Use a reputable referencing service rather than relying purely on informal checks, particularly for the credit and Right to Rent elements, which benefit from professional verification tools.
- Budget referencing costs into your letting process as a standard cost of finding a new tenant, rather than an afterthought.
- Keep clear records of Right to Rent checks specifically — given the distinct legal penalty regime, ensure this element is never skipped or treated as optional, unlike some of the other checks which are good practice but not independently a legal requirement in the same way.
- Have a clear, consistent policy for handling failed or conditional referencing outcomes — for example, a standard guarantor process — to ensure fair and consistent treatment of applicants and reduce the risk of unintentional discrimination claims.
- Reference every adult occupier, not just the lead applicant, since Right to Rent and, generally, good practice for income/credit checks should extend to all intended adult occupiers of the property.
Frequently asked questions
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