Tenant referencing: the checks that actually predict arrears

England. Right to rent checks are an England-only duty; the rest applies across the UK, though the discrimination rules below are those introduced by the Renters’ Rights Act.

What a full reference actually covers

Check	What it proves	How much it predicts arrears
Identity and right to rent	That the person is who they say they are and may legally rent in England	None — but skipping it is the only one of the four that can cost you £10,000
Credit check	CCJs, bankruptcies, IVAs, and a borrowing history	Moderate. A CCJ or bankruptcy is a real signal. A thin file on a 23-year-old is not.
Income and employment	That the rent is affordable against verified income	High — this is the single most useful number you will get
Previous landlord	Whether they paid on time and left the place in order	Highest, and the one most often skipped because it takes a phone call

The affordability calculation

The industry convention is that gross annual income should be at least 30 times the monthly rent — equivalent to rent being about a third of gross income. On a £1,200 a month property that means £36,000 a year.

It is a blunt instrument. It ignores existing debt, childcare, commuting and the fact that a £36,000 salary in London and in Hull are not the same thing. A better sanity check is to look at rent as a share of net monthly income: under 35% is comfortable, 35–45% is workable for a single person with no debt, and over 45% will fail the first time anything goes wrong.

What you may no longer do

Practice	Position since 1 May 2026
“No DSS”, or asking for a guarantor only from benefit claimants	Unlawful. This includes advertising, and applying stricter terms rather than an outright refusal.
Refusing tenants with children	Unlawful.
Asking for six or twelve months’ rent up front	Not permitted. One month’s rent in advance is the maximum.
Inviting or accepting offers above the advertised rent	Rental bidding is banned. You must advertise a price and cannot accept more.
Charging a referencing or admin fee to the tenant	Prohibited since the Tenant Fees Act 2019. You pay for referencing.
Checking only applicants who “look foreign”	Unlawful discrimination. Right to rent checks must be done on every adult occupier.

Guarantors, done properly

A guarantor agreement is a contract and it needs to be treated like one.

• Reference the guarantor, not just the tenant. Income, credit and homeownership. A guarantor who cannot cover their own outgoings plus your rent is decoration.
• Make the liability explicit. State whether it covers rent only or rent plus damage, and whether it continues after the tenancy becomes periodic — which, since May 2026, is from day one.
• Get it signed before the tenancy starts. A guarantee signed afterwards may fail for want of consideration.
• Joint tenants need clarity. Say whether each guarantor covers their own tenant’s share or the whole rent. Ambiguity here is why guarantees fail in court.
• UK-based, ideally a homeowner. Enforcing against someone overseas is theoretical comfort.

Data protection

Referencing generates a lot of personal data about people you may never house. Collect only what you need to make the decision, tell applicants what you are doing with it, and delete unsuccessful applicants’ data once the decision is made rather than keeping a folder indefinitely. The exception is right to rent evidence for tenants you accept, which must be kept for the length of the tenancy and one year after.

Where referencing ends

A good reference reduces risk; it does not remove it. Circumstances change, and the possession routes available to you when they do are narrower than they were — there is no section 21, and Ground 8 now needs three months of arrears and four weeks’ notice. That makes the front end matter more than it used to, and it makes early intervention on arrears matter even more.

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