Referencing tenants fairly: Reducing risk without falling foul of the new anti-discrimination rules
Since 1 May 2026, the Renters’ Rights Act 2025 has made it unlawful for landlords and letting agents in England to discriminate against prospective tenants on the basis that they have children under 18 or that they receive benefits. The change closed off practices that had become widespread in the private rented sector, most visibly the advertising of properties as unsuitable for benefit claimants or families, and it changed the legal framework within which tenant selection must now operate.
What the Act did not do is remove a landlord’s right to make an informed, evidence-based decision about who they let to. Landlords can still reference tenants. They can still assess affordability. They can still decline an application where the objective evidence does not support a sustainable tenancy. What has changed is that those decisions must be grounded in the individual’s specific circumstances rather than in categorical assumptions based on their family composition or income source.
What the law now prohibits
According to the gov.uk guide to the Renters’ Rights Act, landlords and agents must not prevent a prospective tenant from viewing, applying for, or being offered a tenancy on the basis that they have children or receive benefits. This includes the content of property advertisements, which must not state or imply that families or benefit claimants are excluded. It also includes the internal referencing process: applying a different standard or additional requirements to applicants specifically because of children or benefit status is discriminatory under the Act.
The rules look at the effect of a policy as well as its wording. A requirement that appears neutral but in practice shuts out families or people on benefits, without a genuine affordability reason behind it, is likely to fall foul of them. Breaches can result in a civil penalty from the local council of up to £7,000 per offence.
What landlords can still do
Thorough, individually assessed referencing remains entirely lawful. The key distinction is between categorical exclusion and individual assessment. A landlord who declines an application because the applicant cannot demonstrate sufficient income to sustain the tenancy, based on a review of their specific financial position, has applied a legitimate affordability test. A landlord who declines because the applicant receives housing benefit, without assessing their actual ability to afford the rent, has discriminated.
Affordability referencing should now account for all sources of income, including benefits. Where a prospective tenant’s income includes housing benefit or Universal Credit housing cost elements, the assessment of affordability should include that income alongside any other employment or other income they receive. The relevant question is whether the total income is sufficient to sustain the rent at an appropriate income-to-rent ratio, not whether any portion of it comes from a government source.
Credit referencing, employment verification, and previous landlord references remain standard and appropriate. A history of missed payments, County Court Judgments, or poor references from previous landlords are legitimate grounds for declining an application regardless of the applicant’s family status or benefit position.
Insurance, mortgage and lease terms
Any term in a buy-to-let mortgage or a superior lease that prohibits letting to benefit claimants has no effect, so it cannot be relied on as a reason to refuse an applicant. The only limited exception relates to landlord insurance. Where an existing insurance contract prohibits letting to families with children or benefit recipients, the landlord has a defence, but only until that contract ends or is renewed. If your policy contains such a clause, it is worth reviewing the market well before renewal.
Guarantors and other risk management tools
Guarantors remain a lawful and useful tool for managing tenancy risk, and requiring a guarantor is not discriminatory provided the requirement is applied on an equal basis rather than specifically because of benefit status or family composition. Where a landlord requires a guarantor for all applicants who cannot demonstrate income at a set multiple of the rent, applying that same threshold consistently across all applicants is a defensible, objective standard.
Some rent guarantee policies cover tenants receiving benefits, so it is worth checking the terms carefully. The right policy can provide comparable protection to the security that landlords previously sought through multiple months of advance rent, which is now capped at one month under the Act.
The practical standard
The test that sits beneath all of this is straightforward: every referencing decision should be capable of being explained and justified on objective, evidence-based grounds related to the applicant’s actual financial position and tenancy history. A decision that would read differently if the applicant did not have children or did not receive benefits is the decision the Act targets. In practice, that means keeping a brief written record of why each application was accepted or declined. If a decision is ever questioned, that record is your strongest protection.
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