Tenant Referencing: What Landlords Check and What It Costs

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.

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What a Standard Referencing Check Covers

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.

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Typical Costs

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.

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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:

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.

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What Happens If a Tenant Fails Referencing

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.

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Practical Steps for Landlords

1. 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.
2. Budget referencing costs into your letting process as a standard cost of finding a new tenant, rather than an afterthought.
3. 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.
4. 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.
5. 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.