Find below an explanation of the Tenant Referencing Report that would be sent to the landlord (Please download the sample tenant referencing report attached with this article).
Tenant Reference Report Explanation
1. Applicant Decision:
- This refers to the decision that L4L would recommend with relation to the tenant and the referencing conducted on them. L4L will state the decision outcome here with any further explanation given on page 2 (Point 9).
2. Applicant Details:
- This area displays the basic information provided by the tenant applicant. This information includes the tenant applicant's provided current address along with other information including DOB.
- L4L ask number of children under 18 years but do not take this into account for any of their affordability calculations.
- With the tick boxes for ‘smoker’ and ‘pets’ they do not attach any weighting to a tenant ticking Yes or No or hold any bearing on the referencing. They purely record and present this information based on the tenant's selection. If the landlord raises questions relating to these points then they must be checked with the tenant directly as none of these affect the referencing result.
3. Applicant Bank Account Details:
- L4L only ask for details of one account from the tenant no matter how many they have.
- L4L only wish to confirm they have one valid account in their name.
4. Tenancy Details:
- Applicant Share of Rent: The rent share will automatically be divided equally between any other associated tenants that have been referenced for the property, unless L4L have been instructed otherwise or if one applicant is discovered to earn significantly more and would therefore take a higher rent share.
- Upad's Pre Referencing Application Form has no effect on the share of rent for any tenants sent to L4L for referencing.
- This can come up when tenants ask the landlord first about any issues with the referencing report sent to them by L4L instead of asking us. - The L4L forms can be changed before tenants fill them in either by us or L4L, but L4L will always adjust rent share when required.
5. Results Overview:
Affordability: Pass or fail, though even if they earn enough to pass but have a CCJ/Bankruptcy within the last 6 years, they are given a ‘fail’ as their earnings can’t be trusted.
Risk Rating: relates purely to credit score, has nothing to do with any other factors.
Bank Account Status:
- Accept: The bank account is valid,
- Decline: When a bank account cannot be verified/found. In most cases this may be down to the tenant applicant providing incorrect information on their tenant referencing form.
- This check isn't a judgement on the bank account itself. If wrong details are taken down L4L can’t recheck them as they have no access to bank info once the form has been submitted.
- Credit Score:
- This is checked via Experian. L4L then conduct their own address validation.
- Typically speaking, no tenant achieves a score of 995. The highest seen to date is around 815.
- A score above "Low Risk" seen on the scale provided on Page 2 is deemed as a satisfactory and acceptable score.
- Zero Credit Score: <Explanation Required from L4L>. Typically, anyone who’s been in the UK for less than 12-18 months will likely come up as Zero Score or if they have no credit history or insufficient credit for a score to be generated permitting they have no CCJs or Bankruptcy Orders on their name either within the last 6 years.
- L4L see Zero Score as fine as long as they pass affordability and will still let a landlord get rent protection.
Auth Score Validation:
- Answer YES/NO determines whether credit and address checks were carried out properly or if they couldn’t be found (can be when proof of address hasn’t been provided).
Employment Ref Validated:
- Answer YES/NO determines whether any employment reference went through the L4L two stages of verification (company email/company landline/payslips etc) or not.
- This will never be ticked as L4L never see the tenants face-to-face to confirm it.
- They cannot say they’ve done something they haven’t, and ticking ‘no’ could make landlords believe they have failed verification.
- As L4L carry out checks for some clients who collect all info from tenants before supplying it to L4L for the checks their form automatically includes it.
- Landlords are advised to verify the tenant's ID themselves as part of their Rent To Rent obligations.
- This information is determined by Experian's Credit Check.
- In some cases the tenant may be on the Electoral Roll however may not reflect on the credit agencies records as they may have opted out from the public register.
Employment Reference/Landlords Reference:
- Ticked Yes or No if received or not.
6. Income Status:
- This reflects the income that has been verified and confirmed by L4L based on the information provided by the tenant applicant and by the employer.
- L4L only take into account of contracted hours and will not include; overtime, tips, bonuses or any other income which isn't guaranteed.
- Commission can be accepted given the tenant applicant has been within the role for longer than 12 months.
- This relates to the tenant applicant's start date of their current position with this employer specifically.
- If they’ve been promoted or moved to another department or location then L4L use the start date for the change in role/location.
- Some landlords will question this if the tenant has told them they’ve been at a company longer than the checks advise, but it is easy to resolve when explaining why.
- The start date can be a future date as L4L will take a signed contract or an offer letter with a confirmed start date; they do not attach any weight or judgment to the tenant not having started yet as they merely seek to prove if they can afford the required amount to pass.
- If the employer remarks upon their chances of passing probation then this will be passed on, but if not then it has no effect on the result.
How employment status and income is verified:
- Company landline/ email (no mobiles or personal emails)
- 3 months of payslips and bank statements
- Signed contract or offer letter with certain start date if not started yet.
- Self-employed over 12 months:
- Accountant reference (no personal emails).
- Tax return.
- 6 months of personal bank statements (business accounts not accepted).
- Rental Income (if tenant applicant is a landlord/property owner themselves):
- AST for each property
- 6 months of bank statements
- Mortgage statements or proof of no mortgage – for each property.
- Additional Incomes:
- Benefits: must show letter confirming receipt of these, 3 months’ bank statements, can’t use housing benefit.
- Pension: award letter, 3 months’ bank statements.
- Savings: screenshot of personal account(s) in tenant’s own name, last 30 days of transactions.
(As a general point L4L won’t take any information or offer any judgment on it if it falls outside their criteria. For example L4L will not say they have seen payslips for a tenant who is on a zero-hour contract, they’ll only confirm information that relates to referencing criteria being passed or failed. This prevents false impressions being given to landlords about unofficial ‘approval’ from L4L being given to tenants through information being listed in this manner, and also relates to their data protection policy as they can only take, process and store what is absolutely necessary to the referencing criteria.)
7. Right to Rent:
- This does not alleviate the landlord from doing the Right to Rent check that they are required to do as per legislation responsibilities.
- A Right to Rent check marked as "No" is not a comment on the suitability of the tenant based on Right to Rent legislative standards. If tenant's provide an expiry date on their application form then this will be in the expiry date box, so the landlord can confirm what has been advised here with what the tenant must show them later.
- This date can aid the landlord with their Right to Rent check to make sure it matches against the ID provided by the tenant.
- Tenants often tick ‘no’ to these answers if they have trouble with the L4L application form. L4L simply relay these answers as the landlord will always have to do a Right to Rent check on their prospective tenants.
8. Landlord Reference:
- If they’ve been good tenants then they receive a standard response.
- If they’ve been bad then L4L will list all information given relating to what they have and haven’t done.
- If they’re currently in another tenancy and haven’t given notice then they’ll be an accept with guarantor automatically, no matter what rent was paid previously or what earnings they currently have. This will likely be mentioned in the Decision Comments (Point 9).
- L4L will only ask for the previous landlord reference only and do not do a historical landlord reference check.
- The landlord is required to confirm that an AST was signed and the landlord cannot be a family member either.
9. Decision Comments:
- This section will provide a bit of context and further comments relating to the tenant applicant's referencing.
- If any special requirements need to be pointed out for rent protection insurance to be taken out they’ll be mentioned here (proof of savings shown, rent paid up front to reduce share referenced on, etc).
- CCJ/bankruptcy details will go in this box.
- For CCJs they’ll list the date, amount and if records have been updated to show any amount paid back.
- L4L will not provide a reason for the CCJ.
- L4L do not check the relationship of the guarantor to the tenant.
- L4L check and determine the suitability of the guarantor based on the checks conducted on them.
- No guarantor or co-tenant can cover for a decline.
- They are deemed too much of a risk to be present in the tenancy, no matter what their earnings.
- Declined Decisions typically occur when a CCJ over £10K is found or bad landlord reference is given.
- The L4L application form can only be supplied to L4L with the tenant’s written consent.
- All information must come from the tenant directly and with consent.