Tenant referencing under the spotlight

Tenant referencing is often somewhat overlooked, whilst it is recognised as being essential for the vast majority of private landlords, it is rarely given much thought or attention. 

Recently however, tenant referencing has found itself dragged blushing and blinking into the media spotlight. 

Firstly due to the government’s new Landlord Checking Scheme, currently being trialled in the West Midlands, which requires landlords or letting agents to confirm that all of their tenants have the right to live in the UK.  With landlords understandably concerned that they may not have the expertise or knowledge required to make the correct decision, there is a clear opportunity for tenant referencing companies to step up and fill the gap.

Then there was the recent flurry of media interest regarding how to balance a tenant’s right to know the reasons behind a failed reference check and a referees right to confidentiality.  A leading consumer journalist writing in the Observer hauled a referencing company over the coals for their refusal to supply a tenant with a copy of their reference so they could understand why they failed and have the opportunity to challenge any factually incorrect information. 

According to the Competition and Markets Authority guidelines, the tenant’s right to know the reasons for a failed check outweigh a referee’s right to confidentiality. 

Steve Jones, managing director of Rentguard commented: “Our policy is fully in-line with the Competition & Markets Authority guidelines, meaning that we will always provide a tenant with as much information as possible so that they have a clear understanding of the reasons why they failed a check and then advise them on what they need to do if any of the information within the reference is incorrect.”

In reality, requests for this information are rare as the majority of tenants are all too aware of why they have failed a reference check.

Recent data from Rentguard Referencing shows that nearly 65% of references that fail are due to insufficient or irregular income with a further 19.7% declined due to a poor credit history.  It may be tempting for tenants to blame a failed check on a poor reference from a previous landlord or agent but this is actually relatively unusual with just 2.9% of references failed for this reason. 

“Many landlords and letting agents assume that all referencing companies basically offer the same thing.  However it is worth asking a few more questions when selecting a supplier as working with someone who offers a quality service will save both time and money in the long-term. 

I would always recommend using a company who uses highly-trained staff rather than relying on automated systems as it means customers have a point of contact and can ask questions along the way.  Rentguard are also already working on initiatives to help landlords and letting agents successfully navigate the new Landlord Checking Scheme if it is rolled out nationwide to further assist our customers,” concluded Jones.

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