Whether it’s a HMO or spare room in your property, renting out rooms can be a
great way to secure additional, passive income. But for many landlords—especially first time ones—it’s hard to know where to start once someone shows interest in renting your room.
The best place is, of course, with tenant screenings. Putting the right checks and balances in place increases your chances of securing a good tenant who pays the rent on time and takes care of the room, as well as the common areas in the property.
Here, we’ve got all you need to know about conducting tenant background checks, verifying income and following fair housing guidelines.
There’s plenty to discuss, so let’s get to it.
Crafting a Robust Tenant Screening Framework
It’s no exaggeration to say that a successful landlord-tenant relationship hinges on a robust tenant screening framework.
Your tenant screening process is not just a formality but your first line of defence against potential rent defaults and property mishandling. By implementing a comprehensive screening strategy, you’re also likelier to find tenants who will treat your property respectfully and adhere to their rental obligations. This underscores the importance of your role as a landlord in maintaining a harmonious arrangement with your tenants.
So, to help you hit the ground running, we’ve provided a comprehensive tenant screening framework for you to use:
1. Establish Your Tenant’s Criteria
First things first, you need to define the specific criteria you want from your tenants. For instance, you might consider their income level, employment stability, rental history, creditworthiness and any other specific preferences or restrictions.
Clear criteria, such as requiring a good credit score, strong employment history and a recommendation from previous landlords might rank high on your ‘must have’ list. But the most important aspect is that the renter earns enough money to pay the monthly rent.
For example, if you’re renting out a room for £875 per month, you’d want to ensure that the tenant’s gross annual income is at least 2.5 times the total annual rent. To calculate this:
- Multiply the monthly rent by 12 to get the annual rent: £875 × 12 = £10,500.
- Multiply the annual rent by 2.5 to determine the minimum income requirement: £10,500 × 2.5 = £26,250.
So, a prospective tenant should be earning at least £26,250 per year before taxes and other deductions to meet your criteria. This ensures they have sufficient income to comfortably cover the rent each month, alongside their other living expenses.
2. The Application Process
Transparency should be the central theme in the early stages of any landlord-tenant interaction.
This involves giving the prospective tenant a straightforward application form to fill out so you can gather some essential data, including their personal information, rental history, income, and references.
3. Background and Credit Checks
Next, you need to examine the prospective tenant’s financial history. Credit checks offer a window into the applicant’s financial responsibility, revealing patterns that could indicate future risks.
The best way to do this is to partner with reputable credit agencies or tenant screening services to obtain information about their:
- Credit scores
- Debt obligations
- Criminal records
- Eviction history
Rentguard is one such credit check and tenant screening service. Of course, there are others available, but if you’re looking for somewhere to kickstart your research, this is a great place to begin.
4. Verification of Income
Request recent pay slips, employment contracts, or bank statements to verify the tenant’s income is at least two and a half times the monthly rental amount. Consistent rent payments hinge on a tenant’s stable income, so this step helps mitigate the risk of non-payment or late payments.
5. Reference Checks
You’ll also want to contact the tenant’s previous landlords (if they have one) and employers to gain further insights into the applicant’s rental history, reliability and conduct as a tenant. So be sure to ask specific questions about their rent payment punctuality, property maintenance and any issues they may have had with neighbours or other tenants.
When it comes to room rental, however, there’s a chance that some applicants will be first-time renters. In this scenario, focus more on their current employment status and income stability, as well as personal references. You might consider asking for a guarantor, such as a parent or relative, who agrees to cover the rent if the tenant is unable to pay. This can provide an additional layer of security.
6. Clear Communication
Once you have selected a tenant, clearly communicate the tenancy agreement terms. This should include:
- Rent payment schedules
- Deposit requirements
- Maintenance responsibilities,
- Any other specific rules or restrictions
It goes without saying that open and transparent communication sets the tone for a positive tenancy, and your tenancy agreement plays a considerable role in this.
7. Right to Rent
As a landlord operating rental properties in the UK, it’s absolutely critical you possess a thorough understanding of the government’s Right to Rent legislation. This scheme places explicit responsibilities on housing providers to properly verify the legal immigration statuses of all prospective tenants before granting residency.
Under Right to Rent rules, you need to follow several steps whenever screening new tenant applicants:
Request qualifying documents
Before offering any tenancy, landlords are legally obligated to see documentation confirming the potential tenant’s right to rent and reside in the UK. Acceptable proofs include passports, visas, biometric residence permits and other Home Office materials.
Verify document authenticity
It’s not enough to simply view these items—you must also exercise thorough due diligence to validate that the documents are genuine and belong to the applicant presenting them. In-person verification, whenever possible, is strongly advised.
Copy and retain records
Finally, you need to make copies of the relevant pages of the documents (e.g. passport pages with an expiry date, nationality, date of birth, photograph, and any relevant visa endorsements).
Be sure to record the date when the copy was made and then store the copies securely for the duration of the tenancy and for at least a year after any subsequent tenancy ends as proof of compliance.
While there are some limited exemptions for certain housing accommodations like social services or hospices, private landlords strictly adhering to this screening process around Right to Rent verification isn’t optional—it’s compulsory under UK law.
Failing to follow these mandates can expose you as the housing provider to potential civil penalties, fines and other legal actions if you’re discovered letting properties to tenants without valid rights to rent.
8. Inventory, Check-in and Deposit Management
Lastly, you must consider your property’s inventory, tenant check-in process and deposit management. Below, we’ve listed the main steps you need to take to ensure all the above goes smoothly:
Inventory Preparatio
- Create a detailed inventory report before the tenant moves in, listing and describing the condition of all fixtures, fittings, and property contents.
- Include high-quality photographs in the report to document the property’s initial condition.
- Consider using a professional, independent inventory clerk to create an unbiased report.
Check-In Process
- Schedule the check-in a few days before the tenant moves in (after the property has been cleaned and prepared). Meet with them at the property to go through the inventory together.
- Allow the tenant to review the inventory and make any necessary amendments.
- Only hand over the keys once both parties fully agree upon and sign the inventory.
Deposit Management
- Collect the tenant’s deposit before they move in.
- Within 30 days of receiving the deposit, place it in a government-approved tenancy deposit protection scheme. Three such schemes are available: The Deposit Protection Service (DPS), MyDeposits, or The Tenancy Deposit Scheme (TDS).
- Provide the tenant with information about the deposit protection scheme you’re using.
A well-managed inventory and check-in process is crucial for fair deposit deductions and resolving potential tenant conflicts.
That is to say, by following these steps, landlords increase their likelihood of preventing disputes, protecting their property, and ensuring a smooth tenancy process from the start.
Ongoing Monitoring
In addition to a thorough tenant screening process, it’s essential to continually monitor your tenants with periodic inspections. It’s worth scheduling an inspection once every three to six months to check for maintenance issues or damage. This helps to identify and address problems early and encourages tenants to maintain the property properly. During these inspections, you can also discuss any concerns or issues the tenant may have, fostering a positive landlord-tenant relationship.
Fair Housing Laws in Tenant Screening
The aim of fair housing laws is to prevent discrimination and ensure equal access to housing. As such, you’ll need to be mindful of these regulations when creating and executing your tenant screening process.
Below, we’ve listed a few things to bear in mind:
- Protected characteristics: The Equality Act 2010 prohibits discrimination based on protected characteristics, including race, colour, nationality, religion, sex, disability, gender reassignment, pregnancy/maternity, and sexual orientation.
- Equal treatment: Landlords must treat all prospective tenants equally throughout the rental process, from advertising to tenant selection and tenancy terms.
- Advertising: Property listings must comply with anti-discrimination laws by focusing on property features rather than potential tenants’ personal characteristics.
- Tenant selection: Landlords should base tenant selection solely on objective criteria like rental history, creditworthiness, and references, avoiding discriminatory practices.
- Blanket bans: It’s illegal for landlords to impose blanket bans on renting to tenants receiving benefits or tenants that have children.
- Model Tenancy Agreement: In 2021, the UK government introduced a new model tenancy agreement encouraging landlords to be more pet-friendly. This agreement includes a default position of allowing pets, but landlords can still refuse with good reason
Landlords should develop clear anti-discrimination policies, maintain detailed records, and seek legal advice to ensure compliance with fair housing laws. By understanding and adhering to these regulations, landlords can create a fair and inclusive rental environment while avoiding potential legal issues.
What Happens if Landlords Don’t Comply with Fair Housing Laws?
To elaborate on some of the legal consequences hinted at in the previous section, below are some of the potential repercussions for failing to adhere to fair housing laws:
- Civil penalties: Local authorities can impose fines of up to £30,000 for offences related to housing discrimination.
- Prosecution: Serious or repeat offences can lead to criminal prosecution.
- Banning orders: For serious offences, landlords can be banned from letting properties or engaging in property management work in England.
- Database listing: Landlords who receive banning orders or multiple civil penalties may be added to a national database of rogue landlords.
Reflecting on Your First Landlord Experience
The conclusion of your first year as a landlord presents the ideal opportunity for reflection. It’s important to consider what went well, what could have been better, and how to improve moving forward.
Needless to say, building solid relationships with tenants, understanding your legal duties, and staying abreast of property management practices are all part of this learning curve.
Pro Tip: Landlords don’t have to operate in isolation; enlisting professional property management services can help you stay within the boundaries of the law while streamlining operational tasks, freeing you to focus on other aspects of property management. This can be particularly beneficial if you’re managing multiple properties or are new to the landlord role and need guidance on legal and operational matters.
Lastly, due to the ever-shifting nature of property law, it’s worth committing to continuous learning. Fortunately, many resources are available online—from webinars to industry publications to landlord-focused Facebook groups and local landlord associations. Do what you can to stay abreast of the evolving standards and regulations pertaining to landlords so that you can act accordingly.
Are You Ready to Start Screening Your Tenants?
We hope that having read this guide, you can better understand how to master the complexities of tenant screening and fair housing laws.
To recap:
- A comprehensive tenant screening process will include background checks, credit assessments, and income and employment verification. All of this is essential to establishing a reliable tenant-landlord relationship.
- Landlords must strictly comply with fair housing laws and other regulations to ensure equal housing opportunities and avoid discrimination.
Now, it’s time to put this knowledge into action and start screening your tenants with confidence!
Frequently Asked Questions
Before you go, we’ve listed the answers to a few frequently asked questions about this topic that you may find helpful:
What factors should you consider when setting the rent for a property?
When setting the rent for a property, it’s essential to consider local rental rates, the property’s unique features, amenities, and your target tenant demographic. This will help you land on a fair yet competitive price that aligns with market trends.
How can landlords ensure compliance during tenant screening?
To ensure compliance during tenant screening, landlords should avoid discrimination, use a uniform application process, and avoid blanket bans. This is essential in providing fair and equal housing opportunities.
What questions should I ask the potential tenant’s references?
When checking references for a potential tenant, it’s essential to ask questions to help you assess the tenant’s reliability, responsibility, and compatibility. With that said, here’s a list of questions you might consider asking a reference:
Landlord-specific questions:
- How do you know the applicant?
- How long have you known them?
- Did the tenant pay rent on time?
- Were there any instances of late payment? If so, how were they handled?
- How did the tenant maintain the property?
- Did the tenant cause any damage beyond normal wear and tear?
- Did the tenant follow all the property rules and lease agreements?
- Were there any complaints from neighbours or other tenants?
- How would you describe the tenant’s behaviour towards you and others?
- Why did the tenant leave your property?
- Was the property left in good condition at the end of the lease?
- Can you comment on the tenant’s reliability and responsibility?
- Would you rent to this tenant again?
- What was your overall experience with this tenant?
- Is there anything else I should know before making a leasing decision?
Employer-specific questions:
- Can you confirm that the applicant is currently employed at your company?
- What is the applicant’s job title/position?
- When did the applicant start working for your company?
- Is the applicant employed full-time or part-time?
- What is the applicant’s current salary or hourly wage?
- What are the terms of the applicant’s employment (e.g. permanent, contract)?
- Is the applicant punctual and reliable?
- What are the applicant’s regular work hours each week?
- Has the applicant ever had any issues or been reprimanded at work?
