Identity Verification and Credit Checks with Online Letting Agents

Identification verification and credit checks are an essential part of letting a property.

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These checks are in place to prove that the person who rents is who they say they are , that they can afford to pay rent on time and consistently or that they are not attempting to launder any criminal money ( that sometime happens too )

These checks are a legal requirement for letting agents, and, as a result, everyone must do them.

In this blog we’ll delve deeper into:

• Landlord ID verification checks with online letting agents
• Credit checks with online letting agents
• Right to rent checks with online letting agents
• How do online letting agents do tenant referencing?

Landlord ID verification with online letting agents

All letting agents are required to carry out ID verification on landlords. This is to stay in line with 2017 The Money Laundering, Terrorist Financing and Transfer of Funds Regulations.  

As part of the compliance process, a Landlord must provide specific forms of identification and proof of addresses. One from of identification must be provided from List A, and one proof of address from List B:

List A – Identity Document

• Current signed passport
• Resident Permit Issue to EU nationality by Home Office
• Valid UK or EU photo driving licence
• State Pension of Benefits Book/notification letter
• HMRC tax notification

List B – Proof of Address

• Mortgage statement
• Local authority tax bill
• Local authority rent card or tenancy agreement
• Bank / building society / credit union statement
• Utility bill that includes your name (issued within the last 3 months)
• Current UK or EU photo driving licence
• Current UK or EU licence
• State pension of benefits book/notification letter
• National Identity Card

There are different requirements for properties being let where Trusts or Limited Companies are involved. A full list of these requirements can be found here.

To verify your identity, most high street letting agents will require landlords to bring these documents into the physical branch, often taking up a significant amount of time out of your day. This can be especially off-putting if you don’t live near your letting agent.

The good news — Mashroom offers this service via online software, allowing you to record a short video of yourself, coupled with a form of acceptable ID (from List A). By completing the checks in this way, you’ll save valuable time and money.

Credit checks with online letting agents

Credit checks performed by online letting agents are no different to the ones done by a high street letting agent.

To complete a credit check, a third party will check a prospective tenant’s credit history –any deviances or concerns will be flagged up to the letting agent.

The main concerns are usually:

• County Court Judgements (CCJs)
• High levels of existing debt
• A previous record of not paying rent on time
• And/or bankruptcy

These checks are done to make sure the prospective tenant passes the credit checks, meaning that they’re more likely to be a reliable renter who’s capable of meeting the required rent each month.

Under the Tenant Fees Act 2019 a landlord or letting agent performing credit checks can’t charge a prospective tenant any cost associated with credit checks.

Right to rent checks with online letting agents

Before a prospective tenant has their tenancy application approved, certain documents must be provided to make sure all adults living in the property have the ‘right to rent’ in the UK. 

This is a legal requirement that must be done by all landlords or letting agents renting out property in the UK.

This is a straightforward task, where a prospective tenant must provide a passport or immigration documents if required. Don’t panic if either of these can’t be provided – there are other forms of acceptable documentation. You can access the full list of acceptable documentation here. 

Once these documents have been verified by your letting agent or landlord, a tenancy will legally be allowed to start.

It’s illegal to grant a tenancy to any adult who can’t pass the checks that prove they have a ‘right to rent’ in the UK.

Mashroom provides this service via Rent Profile, who conduct all the preliminary checks to make sure a prospective tenant has a legal right to rent in the UK. These checks are only preliminary, and it’s still the landlord’s responsibility to confirm the checks.

The types of checks include:

• Credit Checks
• Tenant Affordability Checks
• Right to Rent Checks
• Previous Landlord References

Tenant Affordability checks

Tenant affordability checks consist of verifying the prospective tenant’s income, who their employer is, and their contract commencement date. A written reference from the employer might also be included, stating whether they believe the tenant will be reliable to rent a property.

This will help a landlord to understand whether their prospective tenant can afford the property or not.

If they can’t pass the affordability check, a tenant might need a guarantor sign an ultimate deed of guarantee. This allows a landlord to pursue both the renter and guarantor for any outstanding rent if ever in arrears.

If you want to accept a guarantor on a tenancy, make sure you complete the same references for the guarantor as the tenant – this is to check that the guarantor is reliable and can afford the rent if needed.

Previous landlord references

Landlords or letting agents might also want Previous Landlord referencing . This involves contacting a prospective tenant’s previous landlord and asking about how they behaved as a tenant. For example, you might ask how the tenant treated the property, or whether the landlord would recommend taking on the tenant.

This check can provide any crucial information when deciding whether to grant the tenancy or not.

Tenant referencing by online letting agents

Tenant referencing by online letting agents is done in the exact same way as high street letting agents.

Online letting agents won’t need any  face-to-face contact to complete the process; it can all be done quickly and easily online.

This is hassle free for a Landlord, and a report can be provided detailing the results for peace of mind.

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