We have a duty of care to our landlords and this includes ensuring prospective tenants can adequately cover the cost of the rent. To see how we work this out and how much rent you can afford based on your income, we use a simple calculation.
We use a third-party provider called 'Goodlord' to carry out all our referencing checks. The affordability criteria for tenants and guarantors is based on income. You can use multiple guarantors on a tenancy and for joint tenancy and you can combine your income totals. The equation for this is as follows:
Tenants - Monthly Rent x 30 = Minimum required annual income
Guarantors - Monthly Rent x 33 = Minimum required annual income
If you’re moving into a property on a joint tenancy, which is with someone else who will share the rental obligations with you, we will base the rent you can afford on your combined income totals. The article, 'When are Guarantors are needed' helps explain what circumstances might make having a guarantor relevant.
Our referencing fees are £165 for one person, £225 for 2 people and each guarantor, if required, is an additional £35.
In addition to affordability, tenants must also meet the following criteria:
Positive landlord reference, with no past concerns of arrears, property damage or early, unilateral vacancy (if previous address was a tenancy)
Positive credit check. CCJs that have been satisfied over 2 years from search date, and that total to under £500, may be approved if other requirements are met
Verification of citizenship, or visa status permitting limited ability to reside within the UK
A guarantor may be required if a tenant:
- Does not meet aforementioned affordability ratio (2.5)
- Has adverse credit
- Has demonstrated a previous inability to pay rent punctually
- Receives benefits that account for more than 50% of total income
- If tenant is in their probationary period for employment
- Is a student, barring few exceptions noted below
If a past landlord reference has highlighted property damage or dereliction, a tenant cannot be approved, even with a guarantor.
If the applicant has an active CCJ or adverse credit totalling over £2,500.00, the tenant cannot be approved even with a guarantor.
Alternatively, tenants can choose to pay the entire rent upfront, thereby negating the need for a guarantor. An identification check would still be required.
Goodlord, if necessary, may require further documentation (e.g. pension statement) from any applicant to verify specific elements of a reference.
Guarantor requirements are as follows :
- Affordability ratio of 3.0 or higher
- Positive credit check
- UK homeowner
- ID and address verification
- Guarantor cannot be a student
- Verification of annual income, position, status, and time at company with managing director / senior manager or payroll / HR representative
- If response is received from a personal email (e.g. Yahoo, Gmail), pay slips and/or additional bank statements may be required
- Accountant – Verification of annual income (dividends + salary), company name, position, and incorporation date
- Self Assessed – 4 months of previous bank statements showing inflow of income; recent SA302s/SA100s (HMRC Self Assessment) may be required, as well
- Tenants who are self-employed and unable to provide an accountant who can verify a previous fiscal year’s account or an HMRC self-assessment form will require a guarantor
- All unemployed tenants will require a guarantor
- Tenants employed on a fixed contract will need to have contract length, start and end dates, and salary (or hourly wage and average work hours per week) confirmed
- Contract length must meet or exceed tenancy expiration date. If contract ends 1 month earlier than tenancy expiration date, Goodlord can approve the tenant if other requirements are met
- Tenants working in an on-going, but impermanent or as-required capacity (e.g. with a temp or student agency) will require a guarantor
- UK students under 27 and/or with an affordability ratio less than 3.0 will require a guarantor
- Maintenance loans provided by SLC, or other lenders, will not be included as annual income for students, through bursaries or stipends for PhD candidates may be assessed on a case-by-case basis
- International students will require a guarantor, or alternatively be asked to pay the full rental amount upfront
Benefits / Tax Credits
- 3 months of bank statements highlighting recurring income of benefits/tax credits will be required
Verification from a benefit-issuing authority highlighting length and income may also be mandated
For tenants to proceed without a guarantor, income received from benefits cannot make up more than 50% of total annual income
For guarantors, income received from benefits will not be assessed with regard to total income
- Applicant must provide 4 months of bank statements highlighting recurring income from a specific pension, or alternative means, that would demonstrate an acceptable affordability ratio
- A letter or direct reference from a private pension provider may also be required
- Bank statements from the last 6 months highlighting a balance that equates to a term-adjusted affordability ratio of 3.0 or higher is required
- Example: If a tenant were applying to let a property for 6 months, with monthly rent set at £750/month, a consistent account balance of £13,500 would be required to obtain a positive reference (6 X £750 X 3 = £13,500)
- Any applicant who has been living in the UK for 4 or more months and unable to be located via a credit search will be recommended to supply a guarantor
- Any UK citizen who cannot be located via a credit search will be recommended to supply a guarantor
- Any applicant who is employed within their probationary period, or has recently begun employment in the last 3 months, and without a credit report, will be recommended to supply a guarantor
- Tenants/Guarantors who are homeowners will be verified via a Land Registry check.
- Applicants who have recently become self-employed (within a year of start/incorporation date), require an affordability ratio of 3.5 or greater to proceed