Criminal Tenants Expose Gaps in Reference Checks

Criminal tenants exploiting reference checks

Tenant referencing is an expensive sham that criminal gangs can easily circumvent when they are looking for properties to turn into drug factories, brothels or illegal shared houses, according to a new BBC TV Panorama investigation.

The documentary was a huge shock for landlords diligently handing over cash to carry out the checks, as many fraudulent letting applicants had passed standard background checks, hinting that passing a check is meaningless if the prospective renter has criminal intent.

What does tenant referencing do?

Tenant referencing aims to verify the applicant’s identity, confirm they can afford the rent, and ensure they have a reliable rental and job history.

The check aims to highlight financial risks for landlords, such as rent arrears and the chance of property damage, and to ensure the property qualifies for rent guarantee insurance.

Referencing typically consists of four checks:

• Affordability and Income: Verifying a tenant has enough regular income to pay the monthly rent.
• Credit History: Checking debts, county court judgments (CCJs or defaults), and whether a tenant has a history of late payment.
• Previous Landlord References: Contacting past landlords to see if the tenant paid rent on time, respected the lease, and maintained the property.
• Identity and Right to Rent Checks: Confirming the tenant's identity and, in England, verifying their right to rent a property.

The problem with standard tenant referencing

Passing a reference check does not offer absolute protection. The process assesses financial history, credit scores, employment, and prior tenancies, but does not authenticate whether applicants are who they claim to be or whether referencing documents are forgeries.

Tenant referencing is the foundation of a multi-level check, which should cover:

• Tenant Referencing: Evaluates financial risk, employment history, and past tenancy conduct.
• Identity Verification: Authenticates government documents and confirms the applicant is who they say they are.
• Right to Rent Check: A legal requirement in England verifying an individual's right to live in the UK.

The bad news is that three-layered referencing catches most risks, but it is no guarantee that nothing will go wrong.

Tenant referencing prices vary by provider and package. Some popular providers charge the following:

• Guild of Residential Landlords: 900 credits (equivalent to £9.00 + VAT), standard credit check per tenant or guarantor.
• OpenRent: £30 per tenant or guarantor.
• NRLA Tenant Referencing: From £21.60 for members and £38.40 for non-members.
• LettingaProperty.com: Offers comprehensive background and credit checks from £59.

Comprehensive referencing packages will include affordability calculations, employment verification, landlord/character references, and credit history.

Questions every landlord should ask

To ensure pre-tenancy vetting offers the best result, ask your letting agent or provider these essential questions before handing over the keys:

• Document authentication: Were identity documents digitally authenticated, or just recorded?
• Biometric verification: Was the applicant matched to their ID using live video or biometric face-matching?
• Independent checks: Were landlord and employment references verified independently through official corporate channels?
• Data cross-referencing: Do bank details, address history, and employment records align across all submitted documents?
• Detailed reporting: Does the final report highlight warnings and limitations, rather than a simple pass/fail?
• Audit trails: Are digital evidence and verification logs accessible if fraud is discovered later?