Letting Agent Fees for Tenant Referencing

Introduction

Tenant referencing is a crucial step in the rental process, ensuring that landlords find reliable tenants who can pay rent on time and take care of the property. Letting agents typically handle this process, but their services come with fees. Understanding tenant referencing fees can help landlords budget effectively and avoid unexpected costs.

Table of Contents

1. What Are Tenant Referencing Fees?
2. What’s Included in Tenant Referencing?
3. How Much Do Letting Agents Charge for Tenant Referencing?
4. Who Pays Tenant Referencing Fees?
5. Are Tenant Referencing Fees Worth It?
6. How to Save on Tenant Referencing Costs
7. Frequently Asked Questions (FAQs)
8. Next Steps

What Are Tenant Referencing Fees?

Tenant referencing fees cover the cost of background checks that letting agents perform on potential tenants. These checks help landlords assess whether an applicant is financially stable and responsible before signing a tenancy agreement.

What’s Included in Tenant Referencing?

Letting agents typically conduct:

• Credit Checks: Reviewing the applicant’s credit history, outstanding debts, and previous defaults.
• Employment & Income Verification: Confirming the tenant’s job status and income level.
• Previous Landlord References: Checking the tenant’s rental history, including payment reliability and property care.
• Right to Rent Checks: Ensuring compliance with UK legal requirements by verifying immigration status.
• Affordability Assessment: Ensuring the tenant’s income meets the required rental threshold (typically 2.5–3 times the monthly rent).

How Much Do Letting Agents Charge for Tenant Referencing?

Tenant referencing fees can vary depending on the letting agent and the level of screening required. Average costs include:

• Basic Tenant Referencing: £15 – £50 per applicant.
• Comprehensive Tenant Referencing: £50 – £100 per applicant (includes full financial and rental history checks).
• Guarantor Referencing: £25 – £75 per guarantor (if needed).

Some letting agents include tenant referencing within their full management package, while others charge it as a separate service.

Who Pays Tenant Referencing Fees?

Since the introduction of the Tenant Fees Act 2019, tenants in England can no longer be charged for referencing checks. These costs must now be covered by the landlord or the letting agent. Landlords should clarify whether tenant referencing fees are included in their letting agent’s service package or if they are an additional cost.

Are Tenant Referencing Fees Worth It?

Tenant referencing reduces the risk of rent arrears and property damage by ensuring landlords choose responsible tenants. While some landlords may consider skipping this step to save money, failing to conduct proper checks can lead to costly issues in the long run.

How to Save on Tenant Referencing Costs

Compare Letting Agents – Some agents offer tenant referencing as part of their full management package.
Use Online Referencing Services – Platforms like RentProfile and HomeLet provide cost-effective tenant screening.
Ask Tenants for Their Own References – Some tenants may already have employer and previous landlord references ready.

Frequently Asked Questions (FAQs)

Can landlords conduct tenant referencing themselves? Yes, landlords can use third-party services to check tenants instead of paying letting agents.
Do all letting agents charge separately for tenant referencing? No, some include it in their full-service packages. Always check before signing a contract.
What happens if a tenant fails referencing checks? Landlords can request a guarantor, ask for a higher deposit (within legal limits), or reject the application.

Next Steps

Understanding tenant referencing fees helps landlords make informed decisions about their rental properties. If you’re looking for expert letting services, compare top-rated letting agents today.

For more insights on letting agent fees, visit Letting Agent Fees Explained

For expert property management services, visit FindLettingAgents.co.uk