Tenant Referencing – who do you use for a thorough check these days?

Hi Lord,
I currently have the same issue. I'm thinking of giving Vouch a go next time. One thing I'm keen to find though is one who actually does verification of the person that they're dealing with at the other end. For high value transactions like AST's you need confirmation that the person is who they say they are, especially the guarantor who you usually don't ever meet.

It would be good to find a better service, at the moment I'm asking applicants to send me a copy of their credit report.

I've used https://www.openrent.co.uk/tenant-referencing?affiliate=1170536 in the past and not had any issues.

Hi Pete,
I use Openrent a lot, I think they are great but I'm a little sceptical about the amount of effort they put into verifying the identity of any guarantors. They may do full validation that would stand up in court but I'm not aware of any. It didn't used to concern me that much as their referencing was satisfactory for their RGI provider but now that RGI is hard to come by, it means that the risk is 100% mine so I want all of the Ts dotted.

Just out of interest, when you say you've never had any issues with Openrent's offering, have you ever had to use it in anger? Have you ever had to use the information in court for example?

Just to reiterate, Openrent are probably the best out there. No issues with them whatsoever. Just provoking healthy debate.

I am happy for my agents to use any company who will stand by their own referencing by offering comprehensive and competitively priced Rent Guarantee insurance. This strategy has served me well for over a decade now. I’ve had very few rent arrears issues and when they have occurred the RGI has always paid out.

The agents I use are LettingSupermarket.com

I use OpenRent for property advertising, but certainly NOT for referencing. All they do is a credit check and an address search.

The problem I had when I used them occurred when their credit check/address search turned up non-disclosed addresses on a nice at face-value, middle-aged prospective tenant couple. At the other addresses they were found to have two CCJs.

OpenRent's reference company assured me that their application would be fine, as long as they provided a guarantor.

That wasn't fine with me! I didn't go seeking a long standing relationship with a faceless guarantor.

On a paper or PDF application form completed by prospective tenants I would expect to see a disclaimer stating that any false answers found on full referencing will render the application for a tenancy null and void. All the previous tenancy application forms I have used ask the question: Do you have any CCJs? Tick Y or N. There was space to elaborate if the Y was ticked. A signed form meant that the prospective tenant knew what they were agreeing to and I could decline them for the obvious reason that they weren't upfront about their situation from dot.

With landlords having to fork out for the referencing, being able to look at the detail in a tenancy application is all the more important to me as a self-managing landlord.

In the case with OpenRent, they collected the week's holding fee from the prospective tenants while the referencing got underway, not me. That's how their system works.

I told OpenRent that I didn't wish to proceed with a remote faceless guarantor for a couple who hadn't been 100% honest with their application. I had plenty of other 'suitable' applicants - I'd have just offered the house to the next person on a long list of interested parties.

OpenRent refused to refund me the tenant's one-week holding fee on the basis that a tenancy could be offered to the couple, all it needed was a guarantor (for which I was expected to pay another referencing fee!)

It didn't matter that the middle-aged couple expecting a long tenancy had been economical with the truth. Or that the landlord of 35 years standing didn't wish to proceed with them on that basis.

OpenRent wouldn't back down. They refunded the prospective tenants their week's holding fee and obviously didn't refund me for the wasted reference costs.

Decide for yourselves how you rate them - but their advertising, they're absolutely not fit for any purpose of mine beyond that.

Openrent are OK for standard people with permanent contracts and high incomes.
For anyone else they are problematic. Absolutely no understanding of self employed income and a tendancy to base decisions on 6 months bank receipts (including the current month). If done early in the month that effectively means 5 months net income. They then double the figure and base affordability on that as the annual income. In the case of one of my tenants they decided his income was the equivalent of 10 months bank receipts and failed to factor in that he was a construction worker on the CIS scheme so would normally receive a tax rebate at some point. That knocked his income by at least £8000 so he failed on affordability.

Of the last 5 I have referenced through Openrent only one has actually passed.
The ones who failed are a Supply Teacher, a scientist for a government department, a PhD student with a guaranteed PhD stipend and the construction worker. All decent people with bright futures and good employment prospects.

I'd love to find a referencing company who will actually pass people with slightly non standard income or employment contracts. The really bizarre thing is that people can get mortgages with a wide range of income and employment types but can't clear referencing for a rental property.

The real problem is that although we can't charge a tenant for referencing if they pass I believe we can keep their holding fee if they fail and we decide not to proceed with the tenancy. Someone correct me if I'm wrong on that point please.

The ones that failed were highly embarrassed they had failed and simply couldn't understand why. In most of the above cases they are graduate professionals with flawless credit histories. I proceeded with tenancies in all those cases and so far all is good.

Reply to the comment left by Jo Westlake at 08/09/2021 - 18:44
Hi Jo

To clarify: "I believe we can keep their holding fee if they fail and we decide not to proceed with the tenancy."

Only true if prospective tenant provided false information.

LordOf The Manor is quite correct. If the Openrent application form does not ask about CCJs, but referencing subsequently fails due to a CCJ, the holding fee cannot legally be retained.

The NRLA tenancy application process is also a complete mess.
They leave the landlord to make the choice of the prospective being sent a link to complete their application online or..... the landlord can download a PDF of the application form, let the tenants complete it and then the landlord can key in the information.
However, the questions on the PDF application form DON'T MATCH the questions of the online application!! It would never be possible for a landlord to upload the information correctly from it. The two applications just aren't the same!
1. The online application asks the nationality of the tenant applicant. This is NOT A QUESTION on the PDF. How would the landlord know which country to pick from the dropdown box online? All the PDF asks is whether the tenant has the right to rent in the UK. That is not the same question!
2. The PDF doesn't ask about CCJs. WHY NOT? It's a game changer. The online application can throw these up - all too late when the referencing has been paid for. Why is this question being deliberately avoided?
3. The PDF application makes no reference to PETS at all!! WHY NOT? It is clearly a pertinent question on the online form. What would a landlord filling out the online form do? How can a PDF tenancy application be assessed without that information?
4. The online application asks for the payroll number of the applicant. What's the point?
5. The PDF asks for the rent figure of the tenants' current tenancy. This isn't a question on the online form. What's the point?
6. The forwarding address for the end of the tenancy on the PDF isn't a question on the online form. Why not?
7. The personal reference for the application on the PDF isn't a question on the online form. What weight was this supposed to carry? Is it relevant??
8. The next of kin/emergency contact details on the PDF isn't a question on the online form. Nice to know, but it's not relevant to the tenancy being granted, is it?
No points for any effort on the part of NRLA in getting the referencing process efficient, slick and fit for purpose. It's all very poor show!!