Should I Let to a Tenant Who Failed Reference Checks?
Reference checks are important. They give you, the landlord, confidence in knowing that your prospective tenant can afford to rent your flat (on paper at least).
But, if a prospective tenant happens to fail a reference check, it doesn’t mean that you should automatically refuse them. Why? Because people fail reference checks for all sorts of reasons.
Some of them are legitimate, but many of them aren’t actually that tenant’s fail. Sometimes they just fall through the cracks. In this article we will outline what some of those ‘accidental’ fails are and how they can be remedied.
First though, what’s involved in a reference check? Well, whichever agency you have asked to carry it out will want to see:
- written verification of employment and income
- a previous letting reference or homeownership check
- confirmation of residency
- an affordability calculation
- a full credit history check
- any outstanding County Court Judgements (CCJs)
Proof of Address
It could be that the tenant failed for having no proof of address. The reason for this being that he or she hasn’t been in their last property long enough to register on the electoral roll, they don’t have a copy of their tenancy agreement and the bills are in another tenant’s name. All of these are legitimate reasons for not passing this part of the check.
To remedy this situation its recommended that you ask the tenant for a letter from their bank. This will almost certainly have their address on it.
Low Credit Score
What if the tenant fails the credit score part of the test? Again, there could be good reasons for this. It could, for instance, be that the tenant doesn’t have a credit card and has never borrowed money in the past. This doesn’t make them a credit risk – quite the opposite, in fact. However, they aren’t coming up well in checks.
If the tenant is young then it’s obvious they won’t have had time to build up a credit history – especially if they are a student or have just graduated.
Fails Affordability Criteria
Most students don’t pass the affordability criteria for renting. Obviously, that’s because they are studying full-time so can’t work. Or, if they do work, it’s part-time and their income is very low. The standard is that their income (or salary) is 2.5 times the cost of the monthly rent.
They may, however, be able to afford the rent with a student loan, savings or with a guarantor in place. Most student landlords, in fact, ask for a UK-based parent as guarantor (meaning if the son or daughter who is the student can’t pay the rent then the parents will). The parents, however, will have to undergo an affordability check themselves where they must be able to pay their rent, as well as that of their offspring if need be. Failure to prove this means you’re right to refuse the tenancy. For a start, you wouldn’t be able to take out Rent Guarantee Insurance if that was the case.
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