In this in-depth article we look at tenant referencing costs and who pays for tenant referencing, to give landlords and tenants all the information they need to understand the referencing process and to find out…
How much does tenant referencing cost?
Tenant referencing costs can vary quite significantly depending on a number of factors – because of this, you could be expected to pay anywhere from £10 to £100 depending on your exact circumstances. Before we go into detail about the payment process for tenant referencing, the differences between landlords and letting agents, and how tenants cannot be asked to pay for the checks, let’s take a moment to understand what tenant referencing is and why you will have to pass a reference check to secure a new property.
What is tenant referencing?
The vast majority of landlords and letting agents will perform a background check on potential tenants before they commit to renting out their property. Tenant referencing is an essential part of the rental application process and renters will usually need to successfully pass at least a minimal vetting check before they can move into a property.
A tenant referencing check will usually include a credit check, affordability calculations, employer reference, past landlord reference and identity verification. But different referencing providers and agencies will use different variations of the standard check and may include additional extras to thoroughly vet potential tenants.
Find out more here:
Some landlords or letting agents will choose to perform these checks themselves by manually contacting credit referencing agencies, employers, landlords and other official bodies to verify a tenant’s details. But the majority of landlords and agents will use a third party referencing agency to perform the checks for them.
Who pays for tenant referencing?
Since 1st June 2019, tenants can no longer be expected to pay for their reference checks. This cost must be covered by the landlord of letting agency, including the cost of any guarantor references that could be required. If the tenant fails the reference check they still cannot be charged for the service.
While there are a number of private landlords who will screen potential tenants themselves, most reference checks are conducted by specialist tenant referencing agencies who re-sell their services to both landlords and letting agents. The tenant referencing agency will charge the letting agent or landlord to carry out the checks directly.
At TheHouseShop.com, we offer two different reference checks, £24.99 for a comprehensive reference report, or £9.99 for a basic check. Either reference costs must be covered by the landlord or letting agent.
Find out more about TheHouseShop’s tenant referencing services here: Tenant Referencing
Tenant referencing with private landlords vs letting agents
If you are renting from a private landlord, they will decide whether or not to perform a reference check on new tenants. If they do decide to go ahead, they will need to cover the full cost even if the tenant fails the checks. They will also need to get the tenants written permission to perform the checks.
If, however, you are renting a property from a letting agent, they will most certainly require a reference check to be carried out on the tenant. Again this cost must be fully covered by the agency and they cannot ask a tenant to pay the fee for the check. They too will need written permission from the tenant before being allowed to perform any checks.
What is a letting agent ‘admin fee’ for renting?
Since 1st June 2019, letting agents are no longer allowed to charge tenants ‘admin fees’ when renting out a property. The only things they can charge a tenant before moving into a new property are:
- Holding fee – Capped at 1 weeks rent, this fee ensures the property is taken off the market and reserved while checks are carried out on the tenants.
- Tenancy deposit – Capped at 5 weeks rent, this refundable deposit for the agent to keep in a deposit scheme for the duration of your tenancy.
Letting agents were criticized for charging extortionate admin fees to tenants, which led to tenants actively seeking property managed by private landlords. With the Tenant Fees Act coming into place in June 2019, this has stopped high fees charged by agents to the tenants but in many instances, these charges are still there but being charged directly to the landlords.
How much do tenant referencing checks cost?
The costs of tenant referencing checks can vary significantly depending on the referencing company being used to carry out the checks and the level of detail included in the reference report.
For a simple tenant credit check, the fee can be anywhere from £5 – £20. All of the UK’s leading credit reference agencies offer a tenant check service where they will perform a credit check on the potential tenant and return a short report to the landlord or letting agent giving a recommendation on whether the tenant is suitable for the property in question.
Some of the main credit report companies in the UK are:
If your landlord or letting agent wants a more detailed assessment of your suitability for a property, they will employ a specialist tenant referencing agency who will perform not just a credit check, but also employer references, previous landlord references, affordability calculations and more. Tenant referencing agencies will charge anywhere from £15 – £90 for a professional tenant reference check, depending on the level of detail involved and how complex the tenant background checks are.
The above fees are the amount that your landlord or letting agent will pay for the reference checks, it is their choice as to which company they decide to complete the reference.
How much should I expect to pay for tenant referencing?
If you are a tenant applying for a rental property, you should not be expected to pay any monies towards the reference check. If a private landlord or letting agent asks you to pay for the reference check, this is now illegal since June 2019. It would be advisable to remind them of the Tenants Fee’s Act before jumping to any form of complaints.
You need to bear in mind, that before the reference checks are carried, it is highly likely you will be asked to pay a holding fee to remove the property from the market. This fee is capped at 1 weeks rent and should you go forward to live in the property will be deducted from the deposit or rent.
Who pays for guarantor referencing?
If you know that you will need a guarantor to rent the property, or if your solo reference report comes back saying you will need a guarantor to secure the property – the landlord or letting agent will need to pay for the guarantor reference as well.
If you know or suspect that you will require a guarantor to be eligible to rent a property, you should let the landlord or lettings agent know in the beginning.
Find out more here: Tenant Referencing and Guarantors
Our tenant referencing service is simple to use and is as little as £9.99