Can A Landlord Ask For Bank Statements?

Landlords often want confirmation that their tenants are reliable and financially stable, particularly when it comes to paying rent. For reassurance, landlords may want to know what a tenant has in their bank account - but is this legal? Can landlords ask their tenants for a bank statement? Below, we will offer guidance for both tenants, landlords and letting agents on this subject.

Navigating the realm of property letting involves a balance between due diligence and respecting tenant rights. The practice of asking prospective tenants for their recent bank statements, while common, brings up various considerations surrounding privacy, legality, and financial transparency. Landlords want to ensure their tenant is able to pay the rent, while also staying clear of any discriminatory practices when choosing a potential tenant. However, even if you avoid the risk of discrimination, this can damage your relationship with a prospective tenant.

In this short guide, the landlord law experts at Percy Hughes & Roberts Solicitors explain the nuances of requesting bank statements from tenants. We outline the legal landscape, the rationale behind such requests, and how to approach this aspect of tenant screening with professionalism and fairness. If you have any questions we have not covered, our specialist landlord solicitors are able to answer your landlord query. You can contact us by completing the enquiry form below or by calling 0151 666 9090.

Is a Landlord Able to Ask for Bank Statements?

As a landlord in the UK, it is essential to find out whether potential tenants can reliably meet their rental obligations. A key aspect of this verification process often involves assessing the financial stability of each applicant.

Requesting bank statements during the tenant screening process is not prohibited by UK law, meaning that a landlord is permitted to ask for a recent bank statement. These financial checks, including requests for applicants' bank statements or recent payslips, are standard industry practices by which to gauge a tenant’s ability to pay the rent. These documents can offer a clear insight into a person's income stability and financial health, which can help property owners to evaluate the level of risk they will take on by leasing to the tenant.

Can a Tenant Refuse the Request for Bank Statements?

It is important to remember that while landlords are entitled to ask for these financial statements, tenants must first consent to provide these documents. Potential tenants are also within their rights to decline to provide them. 

However, this refusal can influence the landlord's decision regarding the person's application. If a tenant refuses to provide the relevant documentation, a landlord is allowed to close their potential tenancy application. Alternatively, if an applicant does not want to provide bank statements, proof of their financial stability may be established by other means. It is at the landlord's discretion as to whether or not they are happy to accept other types of evidence.

While the law supports a landlord's request for financial evidence, it must be exercised within the bounds of fairness and privacy considerations. Therefore, while it is legally permissible to ask for bank statements, landlords must also be aware of how they use this information and ensure that their requests are reasonable and proportionate to the tenancy in question. Handling any personal financial information requires a high level of discretion and security to protect the tenant's privacy and data.

Why Might a Landlord Ask Prospective Tenants for Bank Statements?

Understanding a tenant’s financial stability is one of the cornerstones of successful property management. As a landlord, you are not just offering a property but also entering into a financial agreement with the tenant. Bank statements can be instrumental in helping you to make informed decisions. Here are some key advantages landlords can gain by requesting these documents:

Assessing Affordability

The primary reason for requesting bank statements is to verify that the prospective tenant has a stable income and can afford the rent. Similar to a credit check, bank statements provide a more detailed picture of the tenant's financial health, including income sources, spending habits, and existing financial commitments.

Consistency of Income

Bank statements allow landlords to observe the regularity and reliability of a tenant’s income. For instance, consistent monthly deposits can indicate a stable job or a regular source of income, which is reassuring from a rental payment perspective.

Understanding Financial Behaviour

Patterns in a tenant's bank statements can also reveal insights into their financial responsibility. Regular payments, controlled spending, and evidence of savings can suggest a reliable tenant who is likely to be diligent in meeting rental obligations.

Mitigating Risks

By scrutinising a tenant’s financial history, landlords can mitigate the risks associated with financial instability, including unpaid rent. This is particularly crucial in the current economic climate, where a tenant's ability to maintain rent payments can fluctuate, and where a landlord may need to evaluate the risk of gaps in their rental income.

Evidence Against Fraud

Recently, there has been an unfortunate rise in rental fraud, including the use of fake documents like payslips. Bank statements provide a more reliable method for verifying a tenant’s financial declarations. These statements are harder to falsify and offer a truthful snapshot of the tenant’s financial status.

Legal and Financial Protection

Finally, requesting bank statements is a step towards legal and financial protection for the landlord. It may be part of due diligence in the tenant selection process that is required by an insurance policy. In addition to this, a tenant's financial instability could lead to missed rent payments, legal disputes, and potential property repossession, all of which impact the landlord's investment and peace of mind.

Avoiding Discrimination When Choosing a Tenant 

While it is crucial to conduct thorough checks to ascertain a potential tenant's ability to meet rental commitments, it is equally important for a landlord to navigate this process within the confines of anti-discrimination laws. 

Ensuring fairness and legality when choosing a tenant, including when asking for bank statements, protects not only the tenant but also the landlord from potential legal complications. Here is how landlords can avoid discriminatory practices:

• Adhere to Equality Laws - The Equality Act 2010 lays down a framework for preventing discrimination against individuals based on protected characteristics such as race, gender, disability, religion, or sexual orientation. Understanding and following this legislation can help landlords avoid discrimination.
• Consistent Screening Criteria - Implement a standardised screening process that is fair for all prospective tenants, regardless of the above characteristics. 
• Objective Decision-Making - Base tenancy decisions on factual and financial information rather than assumptions or stereotypes.
• Provide Reasonable Adjustments - Be mindful of circumstances where a tenant might not have regular banking records or traditional forms of identification due to their background, disability, or recent arrival in the UK.
• Transparent Communication - Clearly explain to potential tenants why certain information, like bank statements, is necessary. Advise them that if they refuse to provide financial evidence, this could affect their application.

While conducting your financial checks is a critical part of the tenant screening process, whether that means requesting bank statements or other types of checks, it is important to conduct these checks in a manner that is fair, transparent, and respectful of legal guidelines. This approach not only fosters a positive landlord-tenant relationship but also upholds the integrity and reputation of the landlord and can help them to avoid legal repercussions.

How Can Percy Hughes & Roberts Help?

At Percy Hughes & Roberts, we understand that your relationship with your tenants can be complex, particularly when it comes to legalities such as tenant screening and financial checks. While landlords are within their rights to ask applicants for financial proof, including bank statements, to ensure the tenant's ability to pay rent, this must be balanced with strict adherence to non-discriminatory practices and respect for tenant privacy.

At Percy Hughes and Roberts, our team of experienced landlord solicitors is here to provide expert legal advice and guidance to ensure that you, as a landlord, navigate these issues with confidence and compliance.

Whether you need assistance in drafting tenancy agreements, advice on how to conduct tenant checks legally, or support in dealing with disputes, our legal experts are adept in all facets of property and landlord-tenant law.

For more information on our landlord services, do not hesitate to contact our expert solicitors today. Call us on 0151 666 9090, or send us your query by email by filling in our online contact form.