Tenant referencing is essential if you’re a landlord and you want to protect your property as well as avoid eviction costs or legal costs when you encounter tenants who do not pay their rent. Ensuring that you have reliable and responsible tenants is crucial to protecting your rental property and maintaining a steady income. 

Tenant referencing is an essential step in this process, but how much does it cost, and who should bear the expense? 

In this guide, we’ll explore the costs associated with tenant referencing and the parties responsible for paying these costs, and why it is a vital practice for landlords. 

How much does tenant referencing cost? 

The cost of tenant referencing can vary depending on several factors, including the depths of checks performed and whether you use a professional service or conduct them yourself. 

On average, tenant referencing costs can range from £15 to £50 per tenant. 

Factors influencing tenant referencing cost 

There are a number of factors that can affect the cost of tenant referencing. 

• Type of checks: Comprehensive checks, including credit checks, employment verification, and rental history will cost more than basic checks. 
• Service provider: Professional tenant referencing services typically charge a fee for their comprehensive and efficient services. 
• Number of tenants: The cost may increase with the number of tenants being references, as each tenant undergoes the same thorough checks. 
• Depth of background checks: More in-depth checks that look into criminal records, detailed financial history, and previous rental disputes can add to the cost. 
• Speed of service: Some referencing services offer expedited processing for an additional fee, which can be beneficial if you need to fill a vacancy quickly. 
• Additional services: Some providers bundle additional services like tenant insurance or lease drafting, which can influence the overall cost. 
• Geographic location: Costs can vary by region due to differences in service pricing and the cost of living. 
• Customised reports: Tailored referencing reports that provide more detailed insights can also come at a higher price. 

DIY tenant referencing 

You might choose to conduct tenant referencing yourself to save on costs. While this can be cheaper, it requires significant time and effort to perform thorough and accurate checks. Additionally, DIY referencing might lack the comprehensive nature of professional services, potentially leading to missed red flags.

Who pays for tenant referencing? 

Under the Tenant Fees Act 2019, landlords and letting agents in England are prohibited from charging tenants for most fees associated with renting a property, including tenant referencing. This means that landlords must cover the cost of tenant referencing. 

Why landlords should pay for tenant referencing 

Legal compliance 

Charging prospective tenants for referencing can lead to significant fines and legal issues under the Tenant Fees Act 2019. 

Investment in security 

Tenant referencing is an investment in the security and protection of your property. Ensuring you have reliable tenants can save you money in the long run by avoiding issues such as rent arrears and property damage. 

Attracting tenants 

Covering the cost of tenant referencing can make your property more attractive to potential tenants, as it reduces the upfront costs they need to pay. 

For more information on why tenant referencing is important, take a look at our blog: Tenant referencing guide for landlords. 

Costs covered by landlords 

Given that landlords must cover the cost of tenant referencing, it’s important to budget for this expense as part of your overall property management strategy. While it may seem like an additional cost, the benefits of thorough tenant referencing far outweigh the expenses involved. 

How can LetsInsure help? 

Understanding the costs associated with tenant referencing and who should pay for it is crucial for landlords in the UK. while the Tenant Fees Act 2019 places the responsibility on landlords, the investment in tenant referencing is invaluable for ensuring reliable and responsible tenants. 

At LetsInsure, we understand the challenges landlords face and offer tailored solutions to meet your needs. Here’s why we’re the best choice for your landlord insurance and tenant referencing needs: 

1. Expertise: we have extensive experience in tenant referencing and landlord insurance. 
2. Comprehensive coverage: we provide policies that cover rent protection, legal expenses, and property damage. 
3. Efficient service: we provide fast and thorough tenant referencing to minimise delays. 
4. Dedicated support: we provide a team of experts to assist you at every step. 

For reliable tenant referencing and comprehensive landlord insurance services, trust LetsInsure. Contact us today to learn more about how we can help you safeguard your rental investment.   

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