Updated August 2026 for the Renters’ Rights Act. Good tenant referencing is your single best protection against rent arrears and problem tenancies — but the rules changed in 2026, and getting them wrong now carries real legal risk. This guide walks through how to reference a tenant properly, what you must and must not do under the Renters’ Rights Act and Right to Rent scheme, and how to read the results sensibly.
Last reviewed: 9 August 2026. Applies to England; other UK nations differ.
Key takeaways
- Reference on affordability, credit history, previous landlord and identity — and get consent first (UK GDPR).
- Right to Rent checks on every adult occupier are mandatory in England, with heavy civil penalties for getting them wrong.
- The Renters’ Rights Act bans discrimination against people on benefits or with children, and bans rental bidding.
- You can’t charge tenants for referencing (Tenant Fees Act 2019), and the deposit is capped at five weeks’ rent (rent under £50,000/yr).
- A failed check isn’t an automatic no — a guarantor or rent guarantee insurance can bridge the gap.
What tenant referencing actually checks
Referencing is simply a structured way to answer one question: can this person afford the rent and are they likely to be a reliable tenant? A thorough check covers:
- Identity and Right to Rent — passport, biometric residence permit or a share code, checked for every adult who’ll live there.
- Affordability — income evidence (payslips, bank statements or open banking) against the rent.
- Credit history — CCJs, defaults, bankruptcies and overall financial conduct.
- Employment — confirming the job and income are genuine and stable.
- Previous landlord reference — did they pay on time and look after the property?
Affordability: the sensible rule of thumb
The common benchmark is that a tenant’s gross annual income should be at least 2.5 to 3 times the annual rent — equivalently, rent shouldn’t swallow much more than around a third of take-home pay. So for rent of £1,200 a month (£14,400 a year), you’d typically want income of roughly £36,000–£43,000. Treat it as a guide, not a hard gate: someone with substantial savings, or a solid guarantor, can be a perfectly safe let even if their salary alone falls short. Base the figure on the actual local rent, not national averages.
The step-by-step referencing process
Referencing a tenant, step by step
Collect details on a form and get written consent for credit and reference checks.
Check every adult occupier’s documents or share code, and keep dated copies.
Verify income and run a credit check to confirm they can sustain the rent.
Confirm employment and speak to the previous landlord about conduct.
Weigh it all up, offer a guarantor route if needed, and record your reasons.
The law you must follow
Right to Rent
In England you must carry out a Right to Rent check on every adult who will live in the property, before the tenancy starts, and keep evidence. Penalties for getting it wrong were increased in 2024 and are now steep — up to £5,000 per lodger and £10,000 per occupier for a first breach, rising to £10,000 and £20,000 respectively for repeat breaches. Check everyone on the same basis to avoid discriminating.
The Renters’ Rights Act: what you can no longer do
This is the biggest change to referencing in years. Since the Renters’ Rights Act took effect in 2026, it is unlawful to discriminate against prospective tenants because they receive benefits or have children. Blanket ‘no DSS’ or ‘no children’ policies are banned — and so is doing it indirectly, for example by demanding applicants be in a ‘professional’ job. The Act also bans rental bidding: you must advertise a fixed rent and can’t invite or accept offers above it. Breaching these rules carries significant penalties, so make sure your adverts and screening criteria are compliant.
Reference everyone against the same fair, affordability-based criteria — that’s both good practice and your defence against a discrimination complaint.
Data protection, fees and deposits
- UK GDPR. Get consent, collect only what you need, keep it secure, and don’t hold it longer than necessary.
- Equality Act 2010. You must not discriminate on protected characteristics such as race, sex, disability or religion.
- Tenant Fees Act 2019. You cannot charge the tenant for referencing or credit checks — you cover the cost.
- Deposit cap. The deposit is capped at five weeks’ rent (six if annual rent is £50,000 or more) and must be protected within 30 days.
Guarantors and rent guarantee insurance
A failed or borderline reference doesn’t have to end the application. There are legitimate reasons someone falls short — a student or first-time renter with no credit history, someone recently self-employed, or a person returning from abroad. In those cases a guarantor — usually referenced to a higher income multiple — can make the let safe. Many landlords also take out rent guarantee insurance, which typically requires the tenant (or guarantor) to have passed affordability checks first. Just remember the anti-discrimination rules: you can’t require a guarantor only from benefit claimants or families.
Red flags worth pausing on
- Inconsistent documents, or reluctance to provide ID or income evidence.
- An offer to pay many months’ rent upfront to skip checks — a common fraud signal.
- A previous landlord who is evasive, or can’t be independently verified.
- Income that doesn’t match the lifestyle or the bank statements.
Treat red flags as prompts to ask more questions, not automatic rejections — and always apply the same standard to every applicant.
Frequently asked questions
Can I refuse a tenant because they receive benefits or have children?
No. Under the Renters’ Rights Act it is unlawful to discriminate against prospective tenants because they receive benefits or have children, whether directly (a ‘no DSS’ policy) or indirectly (requiring a ‘professional’ job). Assess everyone on the same affordability-based criteria.
Can I let a property to the highest bidder?
No. The Renters’ Rights Act bans rental bidding. You must advertise a fixed rent and cannot invite or accept offers above the advertised price.
Can I charge the tenant for referencing?
No. Under the Tenant Fees Act 2019 you cannot charge a tenant for referencing or credit checks in England — those costs fall to you or your agent.
How much should a tenant earn?
A common benchmark is gross income of 2.5 to 3 times the annual rent, so rent takes up no more than roughly a third of income. It’s a guide, not a rule — savings or a guarantor can make a lower-income applicant a safe let.
What if a tenant fails referencing?
It’s not an automatic no. Many people fail for benign reasons like thin credit history. A guarantor or rent guarantee insurance can bridge the gap — just apply any guarantor requirement consistently, not only to certain groups.
Written by the Landlords Portal team — experienced UK landlords covering the private rented sector. This is general information, not legal advice; take advice for a specific situation.
