With Section 21 abolished and landlords now relying on a more limited set of possession grounds, removing a tenant who falls into arrears or causes problems is likely to be a longer and more expensive process than in the past.<\/p>\n
Goodlord, which provides referencing and tenancy services to landlords and letting agents, has produced a comprehensive tenant referencing guide covering the due diligence landlords and agents should carry out before a tenancy begins.<\/p>\n
The firm warns that the Renters’ Rights Act, rising fraud risks and growing compliance obligations have made tenant selection one of the most important stages of the letting process.<\/p>\n
For many years, landlords could take comfort from the fact that serious tenant problems could mostly be resolved using a Section 21 notice.<\/p>\n
That safety net no longer exists.<\/p>\n
The new rules mean landlords must now rely on the grounds available under Section 8. While they can still evict tenants in cases such as serious rent arrears or where they intend to sell, the process is longer and more expensive than under the previous system. That puts an even greater emphasis on avoiding problems from the outset.<\/p>\n
At the same time, rental fraud is becoming more sophisticated. Digitally altered payslips, fake employment records and manipulated bank statements are creating new challenges for agents and landlords trying to assess applicants quickly.<\/p>\n
A tenant who falls into arrears, leaves unexpectedly or cannot sustain the rent can result in lost income, legal costs and extended void periods.<\/p>\n
A comprehensive referencing process aims to establish whether a tenant is financially capable of maintaining the tenancy, legally eligible to rent and accurately represented by the information provided in their application.<\/p>\n
Identity checks are the starting point. Verifying passports, driving licences, and proof of address helps confirm that applicants are who they claim to be and reduces the risk of fraud.<\/p>\n
Landlords and agents must also complete Right to Rent checks, which are a legal requirement in England. Failure to carry out these checks correctly can result in significant penalties.<\/p>\n
Financial checks are equally important. Credit reports can reveal County Court Judgments, insolvencies and evidence of missed payments, while affordability assessments examine whether a tenant’s income is sufficient to support the rent alongside their other financial commitments.<\/p>\n
Goodlord adds that affordability should not be viewed in isolation from credit history. Assessments typically look beyond headline salary figures to examine income, existing borrowing commitments and monthly outgoings, with many agents and landlords applying income-to-rent ratios to determine whether a property is realistically within an applicant’s budget. Bank statements, payslips and Open Banking technology can help build a clearer picture of a tenant’s finances.<\/p>\n
Employment verification helps confirm that income is genuine and ongoing. For self-employed applicants, additional evidence may be required to demonstrate earnings stability.<\/p>\n
While financial checks are crucial, previous tenancy history can also provide useful insights.<\/p>\n
References from former landlords can help establish whether rent was paid on time, whether the property was looked after and if any disputes arose during the tenancy.<\/p>\n
While references should be viewed in context, patterns of behaviour can often reveal more than a credit score alone.<\/p>\n
Where applicants rely on guarantors, Goodlord recommends landlords apply the same level of scrutiny to those individuals. Identity, income and affordability are just as important because the guarantor effectively acts as a financial backstop if problems arise.<\/p>\n
Students, overseas applicants and tenants with limited credit histories are among those most likely to rely on guarantors when applying for a property.<\/p>\n
One area that is often overlooked is record-keeping.<\/p>\n
Goodlord says landlords and agents should maintain a clear audit trail covering identity checks, Right to Rent documentation, affordability assessments and communication records.<\/p>\n
Should a dispute arise later, those records can provide important evidence that the correct procedures were followed.<\/p>\n
The economics of letting have changed. With evictions potentially taking longer, compliance obligations increasing and rental fraud becoming more sophisticated, landlords have more to lose from a poor tenant selection decision.<\/p>\n
That does not mean excluding applicants unnecessarily or applying blanket rules to particular groups. The Renters’ Rights Act specifically prevents discrimination against tenants receiving benefits or those with children.<\/p>\n
A well-structured referencing process is one of the most effective ways landlords can protect both their income and their investment. For many, though, that means relying on professional referencing providers to carry out the checks and maintain the audit trail needed to support compliance and reduce risk.<\/p>\n
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