How Let to Tenants Who Failed Referencing

A Failed Rental Reference Doesn’t Mean the End of the Road

It sounds confusing, but just because a tenant fails referencing or a credit check, it doesn’t necessarily mean that letting your property to them is a bad idea.

Finding the right tenants is the main challenge of being a private landlord, and referencing is the best tool at your disposal. But the Pass or Fail on your referencing report isn’t the be all and end all of whether an enquiry will turn out to be a good tenant.

Here we take you through how to interpret the result of your referencing report for high-risk tenants.


What Is Included in Referencing? 

Referencing provides a deep insight into a tenant’s background, including a written verification of employment and income, a previous letting reference or homeownership check, residency confirmation, affordability calculation and a full credit history check, including any outstanding County Court Judgements (CCJs).

Getting a tenant reference is not only in the landlord’s interest, but also assures the tenant that their new landlord has a professional approach and is interested in maintaining their property in the best condition.

Order tenant referencing from OpenRent

What if my tenant fails their reference?

As a landlord, you want as much information as possible before letting someone live in your property. The more you know, the less risky the tenancy is. Referencing is the best way to get this information.

Always remember, however, that who you decide to let to is your choice. Referencing is useful because it reveals possible problems, but in the end, it is ultimately the landlord’s decision, even if the tenant fails referencing.

A tenant could fail a reference for various reasons, in different areas, yet still be a good choice for the property. But how? Let’s look at some examples here.

Example One: Tenant Has Failed the Affordability Calculation

The affordability calculation is designed to tell landlords whether a tenant’s income is high enough for them to take on the rent of the property.

A tenant can fail an affordability calculation if their income is less than two and a half times the rental amount. However, they may have significant savings which they plan to use to make monthly payments or they may be financially supported by parents or student loans.

The Solution

Asking the tenant to provide a guarantor is a simple, fast way to proceed with confidence in this situation. The guarantor takes responsibility for paying the rent if the tenant defaults, protecting you from loss without adding to the tenant’s move-in moneys.

A suitable guarantor must be based in the UK, have a good credit history and should have sufficient income to cover their own living costs as well as the tenant’s rent. Although it’s not all over if a tenant fails a credit check, it is necessary for a guarantor to pass their referencing, as a landlord cannot take out Rent Guarantee Insurance without this, should they wish to do so.

A guarantor is particularly common for student tenants, tenants on low pay and tenants with a chequered employment history.

Example Two: My Tenant Has a Low Credit Check Score

Tenant referencing also includes a credit check. It is possible for a tenant to have a low credit score, and yet still be perfectly able to pay the rent. Once again, a failure on this section of the referencing doesn’t mean the end of the line for your tenancy.

The tenant may have a low score simply because they haven’t previously borrowed money or used a credit card. Although a low score raises a red flag initially, if it is caused by these factors, it needn’t be an impediment to your tenancy.

The Solution:

In this situation, simply putting the score in context is enough to help you make your decision. Students, recent graduates or other younger people may have very little credit history, yet be perfectly suitable.

Example Three: Students and Referencing

Of all tenants, students fit the mould of tenant referencing least. They move address often and usually have no credit history, meaning they will almost always have a low credit score. Plus they’re very unlikely to have a salary of 2.5 times the monthly rent, so will most likely fail the affordability rating.

The Solution

Obviously, this does not mean that students make bad tenants: 14% of landlords let to students, after all, and most of them have no problems. Here again, it is common practice to provide a guarantor – often a parent.

To provide extra assurance to landlords, it can be worthwhile to try to get a reference from the previous landlord or student housing association, confirming that they have paid their rent on time and were good tenants. If they’re able to supply this, it should be enough to persuade you of their suitability as tenants and of the guarantor’s ability to make payments.

Example Four: My Tenant Has No Proof of Address

Being able to prove the tenant’s current address is a key step in avoiding fraud, so it is an important part of referencing. A lack of proof of address can result in a fail, but there could be a number of legitimate explanations for a tenant not being able to supply it.

Proof is usually made through named utility bills, the electoral roll or the previous tenancy agreement. But it would not be unusual for a tenant to be unable to provide any of these three things.

The Solution:

Often, tenants are not responsible for paying any of their bills. They may also have lived at their address too short a time to be registered on the electoral roll. It is also not unusual for their name not to be the tenancy agreement: e.g. if they have moved in with a cohabiting partner and haven’t been added to the contract.

 In these scenarios, requesting the tenant to show a letter from their bank should be a simple way to confirm their address.

Understanding Why a Tenant Failed Referencing

If a tenant fails the referencing process, this doesn’t mean that you cannot let your property to them. The truth is, if you like the would-be tenant and feel they are a good fit for your property, there are many ways to get around a failed reference.

Referencing provides you with a risk assessment and helps you evaluate how risky letting to this individual could be. Ultimately, it’s your decision to investigate why the tenant failed the referencing check and to decide whether the reason for not passing is significant enough to not let to the tenant.

Why Passing Referencing Is Important

 For some Rent Guarantee & Legal Expenses Insurance policies, it is a requirement that the landlord carries out references before the tenants move into the property.

It may not be possible to buy these policies if the tenant in question fails their reference. Often, a suitable guarantor can make the policies available once more, so even here a fail isn’t the end of your options as a landlord.

Go to the OpenRent Help Centre for more advice on tenant referencing

 


Priya Gill, Rentguard referencing expert

Priya Gill is a referencing expert at UK property insurers, Rentguard. OpenRent partner with Rentguard to provide an unbeatable referencing service and Rent Guarantee Insurance offer to landlords across the UK!

 

 

46 Replies to “How Let to Tenants Who Failed Referencing”

  1. I have failed my reference from landlord for rent arrears years ago but all sorted. Been here ten years and passed everything else and good reference from my employer, is there any chance I will be accepted with new landlord?

    1. Hi Caroline – yes, absolutely. Landlords are usually very willing to make decisions based on the specific tenant they’re dealing with. Being up front about your circumstances is the best way to enter a tenancy that suits both parties.

  2. My boyfriend and i have just put a deposit down on a property, however he does not have a bank account so cannot provide these details. My wages alone cover the rent for the property, would the landlord take this into account or refuse us altogether?

    1. Hi Jojo, if this is an OpenRent property then you’re able to discuss these things directly with the landlord by using the contact information on the property listing. Many landlords would be happy with such an arrangement, although depending on the rental value of the property, and your regular income, you may not be able to pass the affordability section of tenant referencing.

  3. Hi.I failed reference and I did found an guarantor. Agency told me he should have his wages 27000£, but he does only 25-26000 p.a . What If guarantor will failed as well?Do I pay rent in advance for How many months?Thank you

    1. Hi Carmen, it’s possible that your guarantor will also fail referencing if they don’t earn enough money. Most agencies are very inflexible about this and won’t let you proceed with the property without a guarantor. With OpenRent, you are free to offer landlords rent in advance because we allow you to speak to them directly. Best of luck with your search for a new home.

  4. Hi,

    I have got 3 CCJ’s but I earn well over the amount needed and certain my landlord will give a good reference as my rent has been paid on time for the last 2 years I have been there. I have a guarantor but would that be accepted considering the CCJ’s ? Also, does the guarantor need to be a homeowner?

    1. Hey – so CCJs only come into play when you are referenced by a landlord/agent. They may make you fail referencing. That’s not the end of the world, however, since as long as you can provide a guarantor who passes referencing, this will satisfy most landlords/insurers. Guarantors do not need to be homeowners, but they do need to be earning enough money to (in theory) pay your rent on top of their own housing costs. Homeowners are best placed to do this, since their ongoing housing costs are very low.

  5. I have been a remnant for many years paying the rent no problem. My partner worked away and stayed at the weekends but used the address for mail, bank accounts etc. I have now asked my current letting agent to add him to my tenancy. They are charging me 150 for a check. He hasn’t been on my previous tenancies as he always worked away. Will he fail the check because he isn’t on the electoral roll etc? I am the lead tenant and the rent is always paid on time.

  6. Am a British citizen but been living outside country in Africa for about 8years and I came back been living with family and now I got a job of 2000 a month and willing to rent a property of between 950-1000. I can get good references from my work place , Is it possible to get a property now.

  7. I will have to use a guarantor, however they are self employed will that affect things? They meet all the other requirements financial or otherwise.

    1. Hi Gee, Great Question. Self-employed income can count towards a guarantor’s (or tenant’s) affordability score in the referencing process. The details depend on which referencing company is being used.

      With our referencing partner, Rentguard, self-employed income is fully taken into account, as long as the guarantor has been operating for longer than one year, and they can prove their income.

      More info here.

  8. 5/6 yrs ago I was in arrears with my rent due to work related issues. Is that something I declare now, or is it that long ago its pointless?

    1. Hi Gee,

      There’s need to declare anything unless asked up front, and you can always decline to answer any questions. You can also decline permission for someone to run referencing on you. This can harm your application, however, and it’s best to be upfront – not least in case you get caught out later on.

      Referencing agencies usually contact your current/most recent landlord to get a reference, so if this incident happened several tenancies ago, then it might not come up if you don’t mention it.

  9. hi, my question is I’M on IVA
    due to finance situation in the past now I’m financially stable me an my partner planning to move house by renting but due to being on IVA would that impact anything.?
    thanks

    1. Hi Francisca, an IVA will affect your credit rating. But all this means is that you’re less likely to pass tenant referencing. As the post explains, it’s possible to let to tenants who fail referencing – especially through OpenRent, where you’re free to contact landlords directly.

  10. I’ve never had store cards or ever got a credit card as I have always adopted only pay for with what you have, however if that affects scores when being referenced how can one best explain this to the property owners. The place I’ve applied for I am good for the affordability as my salary is over the 2.5 times rental being asked.

    Should the credit check be an issue? Or is it down to owner’s view point.

    1. Hi Gee, if the rest of your report is looking good, then it would be unusual for this alone to cause you to fail referencing.

      The credit rating aspect of tenant referencing is there because it shows your track record of paying money you owe. If you haven’t ever owed any money (e.g. if you have never had a credit card or a loan), then this increases the risk of letting to you, because you have no history of fulfilling your payment duties on the record. It usually isn’t enough to make you fail referencing, though, and if you are earning above the affordability threshold (and all the rest of your report is in order) then you’ll usually pass.

      With OpenRent, it is indeed down to the owner’s decision. Other agents may have a blanket policy of rejecting those who fail referencing.

  11. Hi,

    My husband and I are renting with another couple, and they have a cat, the thing is that we made an offer and everything was OK, even with the cat, the landlord at the moment requested 2 weeks more deposit and we agreed. Anyways, at the end, the landlord did not move forward with the letting because of the cat, after saying yes and after we agreed the 2 weeks deposit.

    My question is, can the agency charge us for the reference checks when is the landlord that said no. They did the job for the landlord, and he was the one who step back. Is that right, fair?

    Thanks

  12. Hi, Neither the referencing agency or I can get a response from my current landlord re reference. Does this mean I will fail referencing even though I have had no problems with my landlord and pass all other elements?

    1. Hi Tony, you won’t necessarily fail just because of this. If you’re going through referencing with OpenRent, then I’d recommend getting in touch with our referencing partners. You can call Rentguard on 01227 467 250.

  13. Hi there,
    There are 3 applicants to go through credit referencing for a property to rent. I have failed mine as I have 3 CCJ’s but always paid rent on time and work full time and earn a reasonable salary. I have a guarantor in place, but would the guarantor be responsible for the other 2 tenants or just myself. Would it be possible for the other 2 to have the property in their sole names and me be a sub-tenant.
    Look forward to hearing from you.
    Kind regards
    Catherine

    1. Hi Catherine,

      Yes – in joint tenancies, every guarantor/tenant can be held responsible for the rent of the entire property. We’d always recommend that every adult living in the property is a named tenant on the tenancy agreement, because this ensures your tenant rights (as well as your tenant responsibilities).

      You can read more about the duties of guarantors here.

  14. Hi,
    I’ve had a bad reference from my last letting agency but it’s because they are stating:
    my husband moved in permanently because ‘his car is often on the drive’ (he uses mine but works away/back alternative weekends) that I paid late (when I called to tell them I changed jobs) a section 21 was served as the utility room on the side was condemned so it’s unsafe/damp.
    I have a guarantour who is on a very high wage with low rental costs & I have passed all other credit checks… i’ve Been turned down twice because of this purely because of the agency reference who are now charging me £25 per reference! Any advice? I have no bad debt & I own x2 properties rented out in another part of the UK. My husband is self employed but lives & works away…. many thanks

    1. Hi TJ, If you think the agent is not acting properly when they are being asked for about you during your tenancy referencing, then you could raise a complaint with the redress scheme they are a member of. Otherwise, you might try finding a property with a landlord (or agent) who is willing to listen to your situation and take a tenant who won’t necessarily pass all sections of a normal tenant referencing check. Landlords are much more likely to do this than agents.

      If you find a suitable property via OpenRent, then you can message the landlord directly to explain the situation up front. You can search here.

      Best of luck!

  15. Hi!
    Me and my partner are under the ref.process for a property at the moment. Even if we provided the info required from our current landlady, they ask for the previous landlord info as well as we haven’t had 6 months at our current address.
    We haven’t had any issues at our previous address, however the landlady wasn’t treating us properly and fairly most of the times. Our firs referencing process a few months ago had failed because she stated something complete different than she should have.
    Our current landlady said that she will give us good reference, however I want to know what could happen if one landlord says something and the other one claims something totally different.

    Thanks

    1. Hi Maria,

      They will only be in touch with one landlord, so there’s no need to worry about them being in touch with two. You could wait until you have been at your current address 6 months, or you could just not give your previous landlord’s details.

  16. They said they’ll be in touch with both as we haven’t lived at our current address for more than half a year.
    We also don’t have the info from our previous landlady as we don’t have the former tenancy agreement with us as well she changed her mobile no.

    Regards

    1. Hi Pamela,

      In our experience, many landlords are happy to accept rent in advance in lieu of guarantor. If you find a property on the OpenRent site, you’ll be able to message the landlord before viewing the property to ask them if they would be happy with this arrangement.

  17. I am a new landlord. The agents are putting forward a 24yr old autistic boy on disability benefit. He shows no sign of any physical or intellectual disability. His grandmother is going to be a guarantor. Do you think I should accept him if the refs are all passed? Do you think the agency is asking me to take him coz no other landlord wants him. He doesnt receice housing benefits and doesn’t have a carer. I am unfamiliar with benefits and don’t know what to do. I’d like to give him a chance but I don’t want to be hoodwinked if he is a drug addict or something similar and that’s the reason he is receiving the benefit. Please advise.

    1. Hi Pauline, I’d suggest that if the tenant is 24, then he is a man, not a boy!

      I don’t see why his having any disabilities should affect your consideration of him as a tenant. In fact, it is illegal for landlords to discriminate against tenants on the grounds of disability. All that really matters when considering a tenant is that they can pay the rent on time and will treat the property responsibly and in a tenant-like manner.

      The agency is probably recommending him because he and his guarantor have passed tenant referencing and have been found able to pay the rent, and him to be a low-risk tenant. I’d always recommend meeting your tenants before signing a tenancy agreement. This is something OpenRent facilitates, but I appreciate other agents do not like the idea of tenant and landlord communicating directly.

      We have extensive help for landlords who are looking at renting to tenants who claim benefits here.

      You can find out more about autism here.

  18. We are a couple moving to the UK in about 1 month and will be looking for a flat in London. Obviously we will not have any references, credit history etc. If we wanted to rent a property for 6 months and were prepared to pay all of the rent in Advance would it be relatively easy to find a property?

    Thanks

  19. Hi I am currently filling an application for a lettings agency however I have some concern as I am on the arrears section. 3 years ago I privetly rented and stopped paying rent in my final two months this is due to the heating not working and someone had tried to break into my home while I was working away the door was badly damaged and letting in cold air and moisture after trying for 2 months to get the heating and door fixed with no success I stopped paying rent and informed him I was leaving. He had my phone number and email as well as my work address but not once chased me up on the money I didn’t pay. Do I have to fill in the arrears section or just put no.

  20. I have got back an ‘experian risk score’ during referencing that is described as ‘medium risk’ and is about 250. Usually scores are from 1-999 and 250 would be high risk. What is the scale of this risk score, is it different from usual credit score? Does this mean my credit rating is bad or good?

    1. Rentguard uses Equifax, not Experian.
      Weirdly enough I have an Excellent credit score with Experian but am also ranked ‘Medium risk’ by Equifax (despite having scrutinised my credit report and everything is in perfect order).
      Credit agencies operate with no accountability and little transparency and should be abolished. Your score has nothing to do with how you manage your financial affairs, and all we can try to do is educate people on this point. I do have fears that landlords will take these reports at face value when they are complete nonsense. What really matters should be references from your employer and recent landlord.

      1. Good points, Tone! It is always tempting for landlords to take reports at face value. We always advice they should be the starting point for a wider conversation about the suitability of the tenant for the property.

  21. Hi
    My prospective tenant’s guarantor’s reference has failed. I have yet to receive the summary report for my tenant. How do you think they might score if they are self employed and receive some benefits? The tenant has been in the same rented property for 5 years and is now moving area because her business is moving, she is a single parent with a daughter of approx. 6yrs of age.
    Any tips making such a decision and what other questions I ought to ask?

    1. Hi Marie, definitely worth waiting until you have that referencing report before making any decisions. It will give you the two most insightful things: her income and a reference from her current landlord. My top tip is not to be put off by the benefits. Some landlords always prefer not to let to tenants who claim benefits wherever possible, but single parents can be doing very well and still qualify for benefits, which they are fully entitled to claim in order to get the best for their children. Best of luck letting your property!

  22. I’ve been in my current property for 8 years. We are having to move as the house is being sold unfortunately. However we’re finding it tricky as we have a ccj. Our current rent has always been paid as has previous years without a bother. Our predicament is we are unable to get a guarantor on a new property as our parents are now retired and we are not in a position to provide 6mths extra up front. Is there anyway around this?

  23. Hello,

    Is there a reason why the affordability test is 35% of salary, regardless of what that salary is? I asked Rentguard this question directly, and the answer was “oh we’ve always done it this way”. I’d be interested to hear the rationale; Why is it calculated this way? What assumptions are made? I can easily afford to pay half my salary in rent, so for me it made no sense at all.

    Can I also ask why Rentguard does not adapt its application form to ensure all required information is taken into account? There is not option to add savings on the form and Rentguard will not contact the applicant to ask the question. There is also no free text box to add additional information that doesn’t fit into the narrow parameters of the other fields (which will not allow text, though there is no error message to tell you that).

    I would strongly advise all applicants to immediately obtain a copy of the report and scrutinise it to ensure that it is accurate.

  24. It is good that i came across this.
    I previously got rejected by a landlord from openrent when referencing was done by rentguard due to a CCJ.
    I was told that for the landlord to accept me, is due to their discretion. I tried explaining to the landlord whom i met and they really liked me, that i was not aware of the CCJ and that i will get them a guarantor from my work place, of which the landlord refused. In as much as i explained to the landlord that i own the property that i live in and will also be letting out to a tenant, and i also have not missed mortgage payment since 2007 since i have been living in that property. All these were to no avail. I now cannot confidently approach another estate agent due to this and i need a property urgently. I only just found out about the CCJ, which was not that i took a deliberate debt, but of commission paid to me from my former self employed job that i needed to payback, if a client cancel the policy that they took. This is very unfortunate though as i left the job two years ago.
    Please, can i get an advice on what to do or a way forward.

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