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Referencing criteria for Self-Employed Tenants

So, you’ve found the perfect tenant but then they drop the bombshell: they’re self-employed.

This can be a worry for many landlords, especially in terms of getting rent on time. Additionally, the tenant may not be as secure job-wise as somebody on payroll working for a company.

Referencing for the latter is as easy as contacting their employer to confirm they actually work for the company and earn as much as they are claiming to. So, what do we do in these cases?

How to Reference Self-Employed Income:

To reference a self-employed prospective tenant, landlords should ask for a reference from the prospective tenant’s accountant. You can conduct this in the same way you would a typical work reference or landlord reference.

If they do not have an accountant, the previous year’s tax return will suffice. This will give proof that the tenant earns as much as they claim to. However, they may submit evidence of earnings and income via bank statements if the business hasn’t been running for long enough to have a tax return. Landlords could also ask for a UK-based guarantor as a backup for affordability.

On the basis that they are a self-assessing sole trader, landlords should ask to see copies of the HMRC self-assessment.

Right to Rent Checks:

Remember, to also conduct usual Right to Rent checks, checking their UK immigration status via a passport/driving license if they’re a UK national or their settlement status if they’re not. You should also conduct landlord references in the usual way. This is done by contacting the applicant’s current or past landlords.

Make sure to confirm that the tenant pays rent on time and determine whether the landlord would rent to the applicant again.

All in all, referencing self-employed tenants barely differs from referencing those on a PAYE system. You shouldn’t disregard them for a property solely because of this. However, it goes without saying to follow your gut and reference correctly to ensure the tenants are going to be your dream ones!

Any other question about referencing Self-Employed tenants? Drop us a message here, we usually answer within 24 hours.