Tenants could reduce the costs of renting a home by hundreds of pounds if a new ‘referencing passport’ scheme is introduced, it has been claimed.
The costs of renting a home – before a tenant has even stepped over the threshold – can run into thousands of pounds, including a month’s rent in advance and paying for a reference.
But a new ‘referencing passport’ aims to help reduce these costs as the checks could be transferable between letting agents.
Tenants can pay thousands of pounds in fees before they even step foot in a rented home
Some letting agents can charge tenants as much as £500 for the referencing checks to be made.
There is currently no guarantee that the tenant will secure the property once the checks have been made.
It means they may have to pay out again if they lose that property and have to provide a reference for a different rental home.
Rob Ellice, of easyproperty, who is campaigning for the passport idea, said: ‘The tenant would be able to buy such a referencing product from a letting agent or even your local convenience store. It would be valid in every lettings agency across the nation.’
He suggested that the referencing passport is designed to be valid for up to three months as long as there is no change to a tenant’s circumstances, such as a job loss.
It means that if an individual is not successful with one property, that they can still go on to use the referencing passport at other rental properties.
The scheme could be backed by insurers, who would provide a guarantee.
It would mean that a landlord could be paid for any loss should a tenant fail to comply with terms of their lease or provides incorrect information – such as about their employment.
WE HAD TO FIND £2,800 TO GET IN THE FRONT DOOR
Andy and Lucy paid almost £2,800 in fees
Andy Ramage, 34, recently rented a one bedroom flat in North London with his girlfriend Lucy Wicks, 30.
But before they had even stepped across the threshold, they had paid out more than £2,740 to cover a month’s deposit in advance, a reference fee of £360 and six weeks deposit.
The total paid by the couple – £2,797.50 – is the equivalent of a month’s salary (after tax) for someone earning £45,000.
‘Thankfully there are two of us to share the financial burden,’ Mr Ramage explained. ‘But it is still a large chunk of cash, which we would not be able to afford unless I had been living at home with my parents and had been able to save up.’
He added: ‘A referencing passport that you can transfer from one lettings agent to another is an excellent idea and could help to keep the rental market moving.’
The Association of Residential Letting Agents suggested a passport scheme had potential.
David Cox, managing director of the Association of Residential Letting Agents, said: ‘In principle, referencing passports sounds like a good idea, but its success will depend on how it works.
‘Anything can change in three months, including professional and personal circumstances, so having a reference which is three months old could yield a very different result to a more recent one.
‘For example, if a tenant has had an increase in their salary and are looking to rent a more expensive property as a result, a three-month old reference might not reflect their current circumstances, and may mean they do not meet requirements for the more expensive property, when in actual fact, they do.’