Right to Rent and Referencing
15 September 2021 257 Views
It’s an exciting time when prospective tenants show an interest in your listed property. However, it's important not to let that initial excitement override your judgement about what is best for you, your landlord and the property. When letting the property to a prospective tenant it’s important, and in some instances required, that you carry out checks on that individual. This article will outline what checks you should conduct and the steps to follow to complete them.
1. Right to Rent
When considering the suitability of a prospective tenant, you are legally required to carry out a Right to Rent check on tenants in residential properties to confirm that they have a right to rent in the UK. Letting agents must check the immigration status of the prospective tenant and deny lodgings to those that cannot prove that they have a right to live in rented accommodation in the UK. These checks are mandatory on all adults (over the age of 18) who will list the property as their main residences, including permitted occupiers that may not be directly listed on the future tenancy agreement. These checks also apply to lodgers.
To complete a Right to Rent check, prospective tenants were traditionally asked to provide the letting agent with original documents that prove their immigration status. The letting agent was then required to meet with the prospective tenant to ensure that the documents were genuine, in date and were genuinely those of the tenant. They must also check that the prospective tenant’s permission has not ended and that any discrepancies on the documents (excluding date of birth) are supported by documents explaining the difference, for example marriage or divorce certificates. Once satisfied, the letting agent was required to make a copy of the document, keeping this in storage for the duration of the tenancy and for one year after the tenancy.
The Home Office has produced a list of acceptable documents, that can be found here, and include documentation such as passports, registration certificates and residency cards. Note that from 1st July 2021, changes were introduced to Right to Rent checks on EEA citizens, following the end of the grace period post-Brexit. Previously, EEA citizens could use their EEA passports and/or national identity cards as evidence of their Right to Rent. Following Brexit, these citizens must now require evidence, like any other foreign national, of their immigration status. The only exception for these changes are Irish nationals who can continue to use their Irish passports, cards or birth or adoption certificates.
However, under emergency Coronavirus legislation, several changes were introduced to Right to Rent processes on 30th March 2020. These are scheduled to remain in place until 5th April 2022. Under these changes, Right to Rent checks can be carried out over video calls with the prospective tenant and tenants could send documents electronically, as opposed to providing them with the original documentation. Letting agents are still required to check the documentation in the same way and record the date of the check whilst marking it as an ‘adjusted check undertaken on [date] due to Covid-19’.
2. Credit Checks
Whilst not a legal requirement, it is commonplace for letting agents to complete credit checks on tenants. This will give you and the landlord confidence that the tenant will be able to afford, and budget for, the property’s rent. To do so, the letting agent must ask for the written consent of the tenant. When deciding to let to a tenant, credit checks might be particularly important if the property is subject to a mortgage as if a tenant fails to pay, a landlord may struggle with repayments.
Whilst also not a legal requirement, receiving references from the prospective tenant’s employer or previous landlord or letting agent is a good way to check that the tenant has a suitable income to rent the property, and that they are likely to remain in their job for the duration of the rental period. If following a credit check or employment reference check, you are hesitant about the prospective tenant’s ability to pay for the rental period, you can approach the tenant and request a guarantor who will promise to pay where the tenant fails to do so.
By taking a reference from the prospective tenant’s previous landlord, you can also check to see whether the tenant ran into any problems with rent or whether there were any circumstances where they were in breach of their tenancy agreement, such as causing damage, failing to pay for repairs or partaking in antisocial behaviour.
When completing these reference checks, it is important you get permission from the prospective tenant and that they have also checked with the relevant parties that it is okay for them to pass their details onto you. Having completed these checks, you can ensure that you fulfil your legal obligations and ensure that you have sourced a good tenant for your landlord.
4. Seal the deal: Legislate your contracts
Following these checks, it is crucial that you provide a robust, fair and up to date contract to the prospective tenant: we recommend Legislate. On the Legislate app, landlords and letting agents can simply fill out responses asked on the platform to auto-generate a personalised, lawyer-reviewed, tenancy agreement. This contract can then be shared via the Legislate platform with the tenant who is then invited to review and sign the contract. Legislate’s contracts are easy to understand, filled with explanations of the terms of the agreement, to ensure that you and the tenant are on the same footing.
Legislate’s patented technology provides key insights into the user’s contracts, making contract management across properties easier than ever. The Legislate contract library grows every month so that you can create all the essential documents you need to grow your business. To get started, sign up, watch a tutorial or book a demo.