How to Screen Tenants Properly: Credit Checks, References, and Red Flags

With Section 21 gone, getting the right tenant matters more than ever. Here's the complete screening process — and what to do when applicants don't pass.

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Under the Renters' Rights Act 2025, Section 21 "no-fault" evictions are abolished from 1 May 2026. Every eviction now requires documented grounds and evidence under Section 8. This fundamentally changes the calculus of tenant selection: getting the right tenant in the first place is no longer just good practice — it's essential risk management.

A thorough screening process takes a few hours. A bad tenant can cost you months of lost rent, thousands in legal fees, and years of stress.

The 5 Pillars of Tenant Screening

1. Right to Rent Verification

This is not optional. Since 1 February 2016, landlords in England must verify that every adult tenant has the legal right to rent residential property in the UK. Failure to comply is a criminal offence carrying fines of up to £3,000 per tenant for a first offence and up to 5 years' imprisonment for repeat offences or where there is reasonable cause to believe the tenant does not have the right to rent.

How to conduct a Right to Rent check:

1. Obtain original documents — You must see the original (not copies) of acceptable identity documents
2. Check validity — Documents must be genuine, belong to the prospective tenant, and allow them to live in the UK
3. Take copies — Make clear copies of relevant pages and record the date of the check
4. Use the online checking service — For tenants with a share code (biometric residence permits, EU Settlement Scheme status), use the GOV.UK online checking service
5. Keep records — Retain copies for the duration of the tenancy and for at least one year after it ends

Acceptable documents include:

For time-limited rights: You must conduct a follow-up check before the permission expires. Set a calendar reminder — forgetting a follow-up check removes your statutory excuse.

You cannot discriminate. You must apply the same process to every prospective tenant regardless of nationality, ethnicity, or appearance. Selecting which applicants to check based on how they look or sound is unlawful discrimination.

2. Credit Check

A credit check reveals an applicant's financial history: outstanding debts, County Court Judgments (CCJs), Individual Voluntary Arrangements (IVAs), bankruptcy, and payment patterns.

What to look for:

Important context: A credit check is one data point, not the whole picture. Some excellent tenants have imperfect credit histories (divorce, illness, redundancy). Some terrible tenants have clean credit files (they simply stop paying once they move in).

How to run a credit check:

• Use a tenant referencing service (OpenRent, Goodlord, Let Alliance, HomeLet)
• Costs typically £15-30 per applicant
• The applicant must consent (GDPR requirement)
• You cannot run a credit check without the applicant's knowledge and agreement

3. Employer Reference

An employer reference confirms that the applicant is employed, their stated income is accurate, and their employment is stable.

Request confirmation of:

• Job title and length of employment
• Whether the position is permanent, fixed-term, or temporary
• Gross annual salary or regular income
• Whether there are any pending disciplinary or redundancy processes (optional — some employers won't disclose)

For self-employed applicants:

• Request the last 2-3 years of tax returns (SA302s from HMRC)
• Request an accountant's reference
• Review bank statements showing regular income

For applicants on benefits:

• Request a benefits statement showing current entitlements
• Check that housing-related benefits will cover or contribute to the rent
• Note: refusing a tenant solely because they receive benefits is likely unlawful discrimination (see "Protected Characteristics" below)

4. Previous Landlord Reference

A reference from the applicant's current or most recent landlord is one of the most valuable screening tools available. Former landlords can tell you things a credit check cannot: whether rent was paid on time, whether the property was kept in good condition, whether there were noise complaints, and whether notice was given properly.

Ask the previous landlord:

• How long did the tenant live at the property?
• Was rent always paid on time and in full?
• Was the property maintained in good condition?
• Were there any complaints from neighbours?
• Were there any breaches of the tenancy agreement?
• Was the deposit returned in full? If not, why?
• Would you rent to this person again?

Red flags in landlord references:

• The previous landlord is uncontactable or doesn't respond
• The applicant provides a "landlord" reference that turns out to be a friend
• The previous landlord is evasive about payment history
• The tenant left owing rent or with deposit deductions for damage
• Very short tenancy followed by an unexplained gap

Verification tip: Independently verify that the reference is from the actual landlord. Cross-reference the contact details against the property's Land Registry record, or check against letting agent records if the property was managed.

5. Affordability Assessment

The affordability test ensures the applicant can comfortably cover the rent from their regular income. This is arguably the most important screening criterion — the single biggest predictor of future arrears is whether the tenant can genuinely afford the rent.

The rent-to-income ratio:

Calculation example:

• Monthly rent: £1,200
• Gross monthly income: £3,500
• Ratio: £1,200 / £3,500 = 34% — Stretched

For joint tenancies: Use combined gross income of all tenants who are jointly liable for rent.

Considerations:

• Some landlords use net income rather than gross — this gives a more realistic picture but makes the ratios tighter
• London and high-cost areas may have higher acceptable ratios (35-40%) simply because housing costs are higher relative to incomes
• Students with guarantors should be assessed on the guarantor's affordability, not the student's
• Factor in other major financial commitments (large debts, childcare costs) if disclosed

Running the Process: Practical Steps

Step 1: Application Form

Use a structured application form that captures:

• Full name, date of birth, current address
• National Insurance number (for Right to Rent verification)
• Employment details (employer, position, salary, length of service)
• Previous addresses (last 3 years)
• Previous landlord contact details
• Bank details (for credit check consent)
• Emergency contact
• Any CCJs, IVAs, or bankruptcy history (self-declaration)
• Consent for credit check and reference checks (GDPR)

Step 2: Run All Checks in Parallel

Don't wait for one check before starting another. Run them simultaneously:

• Credit check via referencing service
• Right to Rent document verification (in person or via video call)
• Employer reference request sent
• Previous landlord reference request sent

Step 3: Assess Results Holistically

No single check tells the complete story. Assess the results together:

• All clear across all 5 pillars — Low risk. Proceed with confidence.
• One flag with explanation — Consider. A single historic CCJ from a divorce three years ago is different from an active debt spiral.
• Multiple flags — High risk. Consider whether a guarantor or other mitigation makes this viable.
• Right to Rent failure — Cannot proceed. This is a legal requirement with no flexibility.

Step 4: Make Your Decision

Document your decision and the reasons for it. This protects you against discrimination claims and provides a clear record if challenged.

What to Do If a Tenant Fails a Credit Check

A failed credit check doesn't always mean "reject." It means "investigate further." Consider:

Option 1: Ask for an Explanation

Contact the applicant and ask about the specific issues that appeared. Common explanations:

• Divorce — Joint debts assigned to one party; defaults on the other party's record
• Identity fraud — Previous fraud can leave marks on a credit file
• Student debt — Some defaults relate to historic student overdrafts
• Medical absence from work — Temporary income loss led to defaults that are now resolved
• Business failure — Self-employed applicants whose business failed

An honest explanation supported by documentation may be satisfactory.

Option 2: Request a Guarantor

A guarantor is a third party (usually a family member) who agrees to cover the rent if the tenant defaults. This is a legitimate and common solution for:

• Tenants with poor credit histories
• Young tenants with no credit history
• Students
• Recent arrivals to the UK
• Self-employed applicants with variable income

Guarantor requirements:

• UK homeowner (preferred) or UK resident with stable income
• Guarantor's rent liability should be below 30% of their gross income
• Run the same credit check on the guarantor as you would on the tenant
• The guarantee must be in a formal written agreement
• The guarantor should receive independent legal advice before signing

Option 3: Upfront Rent

Some tenants offer to pay several months' rent upfront to offset credit concerns. This is permitted, but consider:

• You still need a valid tenancy deposit (capped at 5 weeks' rent under the Tenant Fees Act 2019)
• Upfront rent is not a deposit — it's advance payment of rent
• After the upfront period ends, you're back to relying on the tenant's monthly income
• This approach masks the underlying affordability question rather than resolving it

Option 4: Decline the Application

If the risks are too high and no mitigation is adequate, decline the application. Be professional and brief:

"Thank you for your application. After completing our standard referencing process, we've decided not to proceed on this occasion. We wish you well in your search."

You are not required to give detailed reasons, but you must not discriminate based on protected characteristics.

GDPR and Data Handling

Tenant screening involves collecting and processing personal data. You must comply with GDPR:

What You Must Do

• Obtain explicit consent — Before running any checks, get the applicant's written consent
• State your purpose — Tell applicants why you're collecting the data (tenant referencing)
• Minimise data — Only collect information relevant to the screening decision
• Store securely — Keep screening data in a secure system, not loose paperwork
• Set retention limits — Delete unsuccessful applicants' data within 6 months; retain successful applicants' data for the tenancy duration plus 1 year
• Don't share unnecessarily — Screening data shouldn't be shared with anyone not involved in the letting decision

What You Must Not Do

• Share screening results with other landlords (without the applicant's explicit consent)
• Keep data indefinitely "just in case"
• Store sensitive documents (passports, bank statements) in unsecured email inboxes or WhatsApp chats
• Use screening data for any purpose other than the letting decision

Discrimination: What You Cannot Do

The Equality Act 2010 prohibits discrimination in housing based on protected characteristics. You cannot refuse a tenant because of:

• Age
• Disability
• Gender reassignment
• Marriage and civil partnership
• Pregnancy and maternity
• Race (including ethnicity, nationality, and colour)
• Religion or belief
• Sex
• Sexual orientation

Common Discrimination Pitfalls

• Benefits discrimination — Refusing tenants solely because they receive housing benefits or Universal Credit is increasingly treated as indirect discrimination (often correlated with disability, sex, or race). Several court rulings have found blanket "no DSS" policies unlawful.
• Family status — Refusing families with children (unless the property is genuinely unsuitable for safety reasons, e.g., a studio flat for a family of four)
• Nationality — The Right to Rent check verifies legal right to rent, not nationality. Treating applicants differently based on their accent, appearance, or country of origin is unlawful.

Best Practice

Apply the same screening criteria to every applicant. Document your process. If challenged, you should be able to demonstrate that your decision was based on the 5 screening pillars — not on any protected characteristic.

Screening Red Flags Summary

Building Your Screening Process with Technology

Structured screening protects you and your applicants. Platforms like Togal help you maintain evidence-grade records of your screening process — from application through to tenancy commencement — with tamper-evident timestamps on every step. This documentation can be invaluable if a screening decision is ever challenged.

Regardless of what tools you use, the principle is the same: document everything, apply criteria consistently, and never discriminate.

Summary Checklist

Before offering a tenancy, confirm:

• Right to Rent verified with original documents and copies retained
• Credit check completed with applicant's consent
• Employer reference received confirming income and stability
• Previous landlord reference received with positive indicators
• Affordability assessed: rent is below 40% of gross income (ideally below 30%)
• Application form completed with all required information
• GDPR consent obtained for all data processing
• Decision documented with reasoning based on screening criteria
• No discrimination based on protected characteristics
• For borderline applicants: guarantor, additional references, or other mitigation in place

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Frequently Asked Questions

Q: How do I properly screen tenants to avoid problems? A: Use the 5-pillar approach: Right to Rent verification, credit check, employer reference, previous landlord reference, and affordability assessment (rent below 30% of gross income is comfortable). Run all checks in parallel, assess results holistically, and document your process. No single check tells the complete story — but skipping any of them leaves gaps.

Q: What should I do if a tenant fails a credit check? A: A failed credit check doesn't automatically mean "reject." Ask the applicant for an explanation — many adverse marks have legitimate causes (divorce, historic illness, identity fraud). If the explanation is satisfactory, consider proceeding with a guarantor as additional security. If the risks remain too high, decline professionally and document your reasoning.

Q: Can I refuse a tenant who receives Universal Credit? A: Refusing a tenant solely because they receive benefits is increasingly treated as indirect discrimination by courts, as benefit receipt disproportionately correlates with protected characteristics such as disability and sex. Assess benefit-receiving applicants using the same criteria as any other applicant: can they afford the rent, and do they pass your other screening checks?

Q: Is a Right to Rent check really that important? A: Yes. Failure to conduct Right to Rent checks is a criminal offence. First offences carry fines of up to £3,000 per tenant. Repeated offences or knowingly renting to someone without the right to rent can result in up to 5 years' imprisonment. Apply the same process to every applicant — selective checking based on appearance or nationality is discrimination.

Q: What if an applicant has no credit history at all? A: No credit history is common among young adults, recent arrivals to the UK, and people who have always used cash. It's not the same as bad credit — it simply means there's no data. Request stronger references from employers and previous landlords, consider a guarantor, and assess affordability carefully using bank statements showing regular income.

Q: How long should I keep tenant screening data? A: Under GDPR, retain unsuccessful applicants' data for no more than 6 months, then delete securely. For successful applicants, keep screening records for the duration of the tenancy plus 1 year. Right to Rent document copies must be kept for the tenancy duration plus at least 1 year after the tenancy ends.

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This guide is for informational purposes and does not constitute legal advice. Tenant screening involves legal obligations including Right to Rent compliance, GDPR data protection, and equality law. For specific situations, consult a qualified property solicitor.

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Further Reading:

• Renters' Rights Act 2025 Landlord Guide
• Section 8 Evidence Guide: What You Need to Prove Each Ground
• WhatsApp vs Evidence Platforms

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Sources:

• GOV.UK Right to Rent Checks
• GOV.UK Immigration Act 2014 — Right to Rent
• Equality Act 2010
• Tenant Fees Act 2019
• ICO GDPR Guidance for Landlords
• NRLA Tenant Referencing Guidance