Commercial Tenant References UK: Landlord Guide

At a glance

• No statutory reference checklist. Unlike some consumer contexts, there is no prescribed list of commercial tenant references — landlords and agents decide what to request.
• Typical reference pack: bank reference, trade references, accountant's reference or filed accounts, previous landlord reference, and (where covenant strength is weak) a personal or parent company guarantee.
• Security of tenure: most business tenancies have statutory security of tenure under Part II of the Landlord and Tenant Act 1954 (ss.24–28) unless the parties validly contract out.
• Contracting out procedure: under section 38A of the 1954 Act (inserted by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003, SI 2003/3096), the landlord must serve a warning notice, and the tenant must make a simple declaration (if the notice was given at least 14 days before completion) or a statutory declaration (if given later).
• Guarantees on assignment: under section 16 of the Landlord and Tenant (Covenants) Act 1995, a landlord can require an outgoing tenant to enter an Authorised Guarantee Agreement (AGA) as a condition of consenting to an assignment, but the guarantee only covers the immediate assignee's own period as tenant.
• Data protection: collecting and processing references involves personal data, so UK GDPR and the Data Protection Act 2018 apply throughout the process.
• Fees: the Tenant Fees Act 2019 restrictions on charging for referencing apply to residential lettings, not commercial ones.

What a tenant reference request is, in a commercial context

A tenant reference request is a formal enquiry made by a prospective landlord (or their agent) to a third party who can vouch for the applicant's reliability, financial standing, or character. In a commercial setting, references serve a different purpose from residential ones.

You are not just checking whether someone pays rent on time — you are often assessing a business entity whose trading performance, balance sheet, and management team will determine whether the rent gets paid for the next five, ten, or fifteen years. Commercial references typically combine hard financial data (bank statements, filed accounts, credit reports) with softer evidence of conduct (previous landlord feedback, trade references, director character references).

Commercial landlords are not bound by the tenant fees legislation that restricts what can be charged in residential lettings, and they have broader freedom to set their own vetting criteria. The process usually runs alongside heads of terms negotiation for the agreement for lease and should be completed before the lease is engrossed and signed.

The references landlords typically request

• Bank reference. A short statement from the tenant's bank on how the account has been conducted. Banks tend to give brief, heavily caveated answers, so treat this as corroboration rather than a standalone check.
• Trade references. Statements from the tenant's suppliers confirming payment history and the length and nature of the trading relationship.
• Accountant's reference or filed accounts. For a limited company or LLP, filed accounts at Companies House show turnover, profit, and net assets. An accountant's reference can add context that the bare accounts do not show, particularly for a business whose latest accounts are already several months old.
• Previous landlord reference. Confirms whether rent was paid on time, whether the tenant complied with lease obligations, and how the previous tenancy ended.
• Guarantor references. Where a personal guarantor or parent company guarantee is required, the guarantor is referenced in the same way as a tenant would be — personal or corporate financial standing, and sometimes a solicitor's certificate confirming the guarantor received independent advice before signing.
• Company searches. A Companies House search and a credit report showing any county court judgments sit alongside, rather than replace, the references above.

How referencing interacts with security of tenure under the 1954 Act

Most business tenancies in England and Wales automatically carry security of tenure under Part II of the Landlord and Tenant Act 1954 (sections 24 to 28). In broad terms, this gives a business tenant the right to apply for a new tenancy when the contractual term ends, unless the landlord can rely on one of the statutory grounds to oppose renewal.

Landlords and tenants can agree to exclude, or "contract out of," this protection. Since the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 inserted section 38A into the 1954 Act, contracting out for a fixed-term tenancy requires a specific procedure:

1. The landlord serves a warning notice on the prospective tenant, setting out the effect of excluding security of tenure, before the tenant is contractually committed to the lease.
2. The tenant makes a declaration. If the warning notice was served at least 14 days before the tenant enters into the lease (or becomes contractually bound to do so), the tenant, or an authorised officer if it is a company, can make a simple written declaration confirming they received the notice and accept its consequences. If the notice was served fewer than 14 days beforehand, the tenant must instead make a statutory declaration before an independent solicitor.
3. The lease records the process. The lease or agreement for lease must refer to the warning notice and the declaration, so the exclusion is documented on the face of the transaction.

This procedure is separate from referencing, but it should be addressed at the same stage. Whether a tenancy will have full security of tenure or will be contracted out affects how long you are realistically tied to this tenant, which in turn affects how much weight you place on covenant strength when reviewing references. A thin covenant on a short, contracted-out lease is a materially different risk from the same covenant on a lease carrying full 1954 Act protection.

Guarantees on assignment: the Authorised Guarantee Agreement

Commercial leases are often assigned during their term as businesses change hands or relocate. For leases granted on or after 1 January 1996 (so-called "new tenancies"), the outgoing tenant is generally released from the tenant covenants once they assign the lease on. That release can leave a landlord exposed if the incoming assignee then fails.

Section 16 of the Landlord and Tenant (Covenants) Act 1995 addresses this gap. Where the lease permits it, the landlord can require the outgoing tenant, as a condition of consenting to the assignment, to enter into an Authorised Guarantee Agreement (AGA). Under an AGA, the outgoing tenant guarantees performance of the tenant covenants by the person they are assigning to. Two points matter for referencing:

• The guarantee is not open-ended. It covers only the assignee's own period as tenant. If that assignee later assigns the lease on again, the original tenant's AGA does not extend to cover the next assignee down the chain.
• The strength of an AGA depends on the guarantor, not the new tenant. If you are relying on an AGA rather than fresh references on the incoming assignee, the financial standing of the outgoing tenant giving the guarantee is what actually protects your rent — so it deserves its own scrutiny, in the same way a personal guarantor would on a new letting.

See our guide on assignment of a business lease for how the wider assignment process works.

Data protection duties when handling references

Reference requests almost always involve personal data — director names, personal guarantor details, sometimes an individual's credit history — as well as company financial information. UK GDPR and the Data Protection Act 2018 apply to that processing. In practice, this means:

• Identify a lawful basis for collecting and using referencing data before you start (commonly legitimate interests, given the pre-contractual vetting purpose, though this should be assessed against the specific data involved).
• Be transparent. Tell the applicant, and where relevant the guarantor, what information you are collecting, who you will approach, and what you will do with the responses.
• Get consent to approach referees. As a practical matter, banks, accountants, and previous landlords will generally not respond to a reference request without the applicant's written authority — this also supports your data protection compliance.
• Collect only what you need for the vetting decision, and avoid keeping reference data for longer than necessary once the letting decision is made.
• Keep it secure. Reference responses often contain sensitive financial information and should be stored and shared accordingly.

The Information Commissioner's Office publishes detailed guidance for organisations on meeting these obligations.

How to run the reference request process

1. Agree heads of terms and identify the proposed tenant entity. Before chasing references, confirm exactly who is taking the lease. Is it a limited company, an LLP, a sole trader, or a partnership? The answer shapes which references you need and whether a guarantor should sit behind the covenant. Get the full legal name, company number, and registered office. This is also the point to decide, and start documenting, whether the lease will carry security of tenure or be contracted out under section 38A.
2. Request written consent and the reference pack. Ask the prospective tenant to provide written consent to approach referees, along with a completed reference form covering trading history, directors' details, bank account information, and previous landlord contacts. Without consent, banks and former landlords will not respond, and you risk data protection issues.
3. Approach referees and run independent checks. Write to the tenant's bank, previous landlord, accountant, and trade referees using the consent provided. Alongside this, pull a company credit report, check filed accounts at Companies House, and search for any county court judgments. Cross-reference what the tenant told you against what the documents say.
4. Assess the covenant strength and decide on security. Review everything together. If the tenant's financials look thin (a new company, weak trading history, modest net assets), consider asking for a rent deposit, a personal guarantee from the directors, or a parent company guarantee. The standard industry benchmark is that clear profits should comfortably exceed the annual rent.
5. Document the decision and proceed to lease. Keep a written record of which references you relied on and why you accepted the tenant. If you imposed conditions (guarantor, rent deposit deed, a right to require an AGA on any future assignment), make sure these are reflected in the lease documentation before completion, alongside the section 38A warning notice and declaration if the tenancy is being contracted out.

This guide provides general information about tenant reference requests for commercial leases in England and Wales. It is not legal advice and is not a substitute for advice tailored to your specific circumstances. The law described was accurate as at August 2026 and is subject to change — always check GOV.UK and legislation.gov.uk for the most current position.