Quick guide to renting when self-employed

It’s great being self-employed, with all the flexibility and freedoms that working for yourself brings. But what about renting when self employed? Does your employment status make things complicated? What do you need to provide as proof or evidence of your income? Is there anything else you have to do to seal the deal on self employed renting? Read on to discover everything you need to know about renting when self employed. Our comprehensive self employed renting guide reveals all.

Character and employment references

One of the most important parts of the process involves providing references to show the agency or landlord you have a trustworthy character and are eligible to rent. They’ll want to confirm your legal right to rent property in the UK, your identity, your employment status, and check your credit score.

You might need to arrange a reference from your previous landlord to prove you’re a responsible tenant. This might include information about how reliable you are with the rent and how well you’ve taken care of the property.

It’ll probably involve providing the landlord with a written copy of your references along with the contact details of the people who have given you the references. If the agent or landlord uses an external company to handle tenant references, you’ll need to give the contact details of your referees to the relevant people so they can get in touch with your referees directly by email or phone.

So what will you be asked for in your character and employment references? The most basic is your photographic ID, usually either a driving licence or passport. This officially confirms your identity.

A new landlord will often ask for a previous landlord reference, if you have one, going back 1-3 years. This will show them you’ve paid the rent on time, taken care of the property, and are a good future bet for letting.

What if you haven’t rented before and this is your first rental? You might be asked for a personal character reference from someone you’ve worked for before, or someone else trustworthy who has known you for a long time. In some circumstances you might need to provide a guarantor. More about that later.    

Documents that show your income and employment status

A frequent question renters will have is how to prove your employment status when renting? As a self-employed person, proof of your earnings is essential. The landlord or rental agency will probably need to see proof over one to three years. You could provide the information via bank statements, trading records, or tax returns. If you have an accountant the landlord will probably want to hear from them that your finances are in good order, either in writing or verbally.

For self employed people who haven’t been in business long enough to hand over 1-3 years’ worth of accounts, your landlord will ask for a detailed breakdown of all your income and will ask to see your HMRC self-assessment forms. This information is crucial because it lets the landlord carry out an affordability check to make sure you can afford the rent.

Your earnings will need to be 30 times more than the monthly rent. If the rent is £500 a month, for example, you’ll need to earn £15,000 a year to cover it. If you’re moving in with other people the affordability check will take everyone’s income into account.

If you can’t provide suitable references the landlord will ask for a guarantor who agrees to pay the rent if you can’t. Your guarantor will need to provide their own references to the landlord.  

Documents that confirm your identity and right to rent

There are more renting documents when self employed to take into account, this time around those that confirm your ID and right to rent. Private landlords are legally obliged to carry out a right to rent check to make sure you are in the UK legally. If you’re originally from abroad this could involve your immigration papers or a copy of your visa, national ID card or immigration status document. If there’s anyone over 18 who will be living in the property with you, the landlord will have to check their documents, too. If you’re from the UK and don’t have a passport your birth certificate plus another kind of ID, for example a utility bill, will do the trick.

Credit references

Most private landlords will do a credit check on potential tenants, but they can’t do it without your permission. Many ask their letting agency to check tenant credit status on their behalf.

A credit score is a number between 300–850. It reveals how credit-worthy you are.  The higher you score, the better you look to a landlord. The score is based on your credit history, namely how many debts you have, your total debt, your repayment history and more. If you’ve run into trouble with missed payments, unpaid loans or defaults on loan accounts it rings alarm bells so it’s really important to maintain a good credit score. If yours isn’t that good, you might still be able to rent a home but the landlord might apply conditions. Maybe you’ll need to pay the rent up front, or get a guarantor to co-sign your rental agreement. They’ll sign up to pay the rent for you if you can’t.  

Now you know about renting when self employed

Now you know all about self employed renting, how to prove your employment status when renting, and the renting documents when self employed paperwork you’ll need. Hopefully it isn’t as complicated as you might have imagined to rent a home when self-employed. As long as your credit history is good and you have the necessary paperwork, there’s no reason why you shouldn’t be successful. And if you are a good tenant, the next reference you get will be excellent – which stands you in very good stead for the future. Good luck!