Referencing: what a landlord is actually checking

The points below about tenant referencing are ordered by how much difference they make, not by how often they get repeated.

Three separate questions

Referencing asks whether you can pay, whether you have paid before, and whether you are entitled to rent in that country. Each is checked differently, and a decline on one is not a decline on the others. Applicants who are refused rarely find out which test failed, though asking directly sometimes produces an answer.

The right to rent check exists in some jurisdictions and not others, and where it exists it is a legal obligation on the landlord.

Affordability is a ratio

Most referencing uses a multiple of the annual rent against gross income, and the threshold is set by the agent or insurer rather than by law. Self-employed applicants are typically assessed on accounts or tax returns covering a period, which is why recent self-employment causes difficulty. Where income is variable, seasonal or from multiple sources, providing organised evidence up front avoids a decline for lack of documentation.

For most people, benefits, pensions and maintenance are treated differently by different agents, and some policies here are subject to discrimination rules.

Previous landlord references

A reference from a former landlord tests rent payment history, condition of the property and whether notice was handled properly. First-time renters have no such history, which is a common reason for a guarantor being requested rather than a judgement about the person. Where a previous tenancy ended in dispute, addressing it before the reference is requested is better than being surprised by it.

Keeping contact details for past landlords, and leaving properties well, has a value that appears years later.

Guarantors are assessed as substitutes

A guarantor is usually tested against a higher income multiple, because they must cover their own housing costs as well as your rent. The liability is real, often joint and several, and can extend beyond the fixed term into any continuation of the tenancy. Guarantors should read what they are signing, particularly whether the obligation ends when the fixed term does.

The useful part is this: in a shared house, a guarantor may be liable for the whole rent rather than one share, which is a frequent and unpleasant discovery.

Presenting an application well

Having identification, proof of address, evidence of income and previous landlord details ready at the viewing puts you ahead of applicants who do not. In a competitive market, speed of documentation is often what decides between two acceptable tenants.

Offering to pay rent in advance is sometimes accepted, though several jurisdictions now restrict how much can be required. Never send documents or money before you have verified the property and the landlord or agent are genuine.

If that does not fit your week, it is not a failure of willpower.

If you are declined

Ask which check failed, since the remedy differs completely between affordability, history and documentation. A rent guarantee insurer, not the landlord, sets many of the thresholds, so the decision may not be the landlord to make. Discrimination law applies to letting in many jurisdictions and covers specified characteristics and, in some places, income source.

In practice, tenant advice services can tell you what protections apply where you live.

Everything above, in order of what to do first

1. Three separate questions. Referencing asks whether you can pay, whether you have paid before, and whether you are entitled to rent in that country.
2. Affordability is a ratio. Most referencing uses a multiple of the annual rent against gross income, and the threshold is set by the agent or insurer rather than by law.
3. Previous landlord references. A reference from a former landlord tests rent payment history, condition of the property and whether notice was handled properly.
4. Guarantors are assessed as substitutes. A guarantor is usually tested against a higher income multiple, because they must cover their own housing costs as well as your rent.
5. Presenting an application well. Having identification, proof of address, evidence of income and previous landlord details ready at the viewing puts you ahead of applicants who do not.
6. If you are declined. Ask which check failed, since the remedy differs completely between affordability, history and documentation.

The takeaway

Assemble the documents before you view, and find out which of the three checks failed if you are turned down.

Small and repeatable beats ambitious and abandoned, almost every time.