You’ve done all the essential checks, got the paperwork, spruced up the property ready for someone to make it a home. You think you’ve found the perfect tenants. You’re itching to sign the tenancy agreement so you can start receiving rent.
But one crucial step along the way is tenant referencing. How long does tenant referencing take is something landlords often ask us as they reach this final hurdle. In most cases, these vital checks can be completed quickly – but it’s important not to rush this step. Failure to check your prospective tenant’s financial situation could leave you out of pocket later on.
If you’re a landlord with property in the south east London areas of Bermondsey, Borough, Surrey Quays and beyond – and you’re wondering how long does tenant referencing take – read on.
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Tenant referencing is the process of making essential background checks regarding your prospective tenant’s character, employment status and financial position. It’s about doing everything possible to reassure yourself that they have the means to pay the rent and that they will behave in a responsible manner. Tenant referencing involves different type of check:
Want to be a more informed landlord? It’s worth knowing what happens when a tenant reference check fails and the wider process behind how to choose a tenant.
Tenant referencing is vital for raising any red flags before it’s too late. Once someone has signed the tenancy agreement and moved in, it will be much harder to get them to leave if problems emerge and the tenant fails to pay rent, for example.
Apart from the Right To Rent check, you’re not legally required to carry out referencing but it is strongly advised. If you are looking to take out rent guarantee insurance to cover any lost income as a result of arrears, comprehensive tenant referencing may be a condition of the policy.
Don’t forget, this is a legal requirement, and is therefore essential for you to follow as a landlord. It is possible to outsource this to a letting agent, but you will need to confirm this in writing, and specify whether the agent will be responsible for any follow up Right To Rent checks if the tenant requires them. Follow up checks may be necessary when the person is only given a limited Right To Rent by the government, due to their specific visa documentation.
Credit checks are conducted by referencing agencies without your prospective tenants needing to do anything apart from give permission. The three, approved agencies to choose from are Experian, Equifax and TransUnion. For other checks they will need to be ready to supply documentation.
This includes a passport or driving licence and utility bills to confirm their identity, plus bank statements and payslips for the past few months to show proof of employment and ability to the pay the rent.
On average tenant referencing takes around 48 hours – it might be as quick as a few hours if your tenant and their referees come back quickly. However, it could take as long as five days.
Make sure your prospective tenant understands that they can’t move in until the referencing process is properly completed and that they need to be ready with essential documentation.
Outsourcing tenant referencing to an experienced letting agent or a dedicated company should be quicker than doing the work yourself.
How much you pay will depend on how comprehensive you want the referencing to be and how much of the work you carry out yourself. If you take a DIY approach, you’ll need to pay a fee to the credit referencing agency and for other checks – such as with the Land Registry.
If you use a letting agent or dedicated service, costs will vary but expect to pay between £15 and £50 per tenant.
Thorough referencing should include checking your tenant’s right to rent, helping you avoid the costly business of managing void properties.
If you have plenty of time and are sure you understand the process, you can carry out much of the referencing yourself. It’s important to be thorough in your checks.
Remember it will be difficult to change things once your tenant is in place. Completing right to rent checks correctly is particularly vital as you could face a £3,000 if you fail to do so.
If you’re a south east London landlord wondering how long tenant referencing checks might take and how to get it right, we’d love to help. Give us a call today to talk about our services and your options.
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