Letting agents taking on post-RRA referencing burden

Letting agents are taking on more of the burden around tenant checks post-Renters Righters Act, research from Leaders has found.

Under the Renters’ Rights Act, advance rent is restricted to one month meaning landlords can no longer rely on financial buffers to manage that risk after a tenancy begins.

In a survey of 717 landlords, and 860 tenants, Leaders found that letting agents are now bearing the brunt of this.

Some 41.7% of landlords say they rely on their letting agent to manage the referencing process — the single most common response.

Of those landlords taking a more active view, 37.4% say referencing has become significantly more important since the advance rent ban, with a further 7.8% saying slightly more important.

Only 13.1% say it was always their primary consideration and nothing has changed.

When asked to identify the single most important factor in deciding whether to accept a tenant application, employment status and income came first at 40.6%, followed closely by the referencing report provided by their letting agent at 38.8%.

For tenants, 82% of respondents say they have always passed referencing without issue.

Of the minority who have been refused, income level is the most common reason at 4%, followed by employment type at 2.2% and credit history at 1.6%.

On the question of whether rigorous referencing works for both sides, 36.8% of tenants say it benefits landlords and tenants equally, recognising that thorough checks can prevent tenants committing to a tenancy they cannot sustain.

A further 21% say it benefits landlords more but acknowledges some tenant benefit. Only 25.9% see it purely as a landlord protection tool.

“The volume of CCJs and adverse credit markers in the population is rising, and landlords are right to take the referencing process seriously,” said Allison Thompson, chief lettings officer at Leaders, part of LRG.

“But the data also shows something encouraging: most tenants pass, and thorough referencing done well protects both sides.

“That is where professional agents add real value — running a process that is rigorous, fair and documented, and that gives both sides confidence before the tenancy starts.”