New four step application process for prospective tenants

Monday, 30 May 2022

The Privacy Commissioner has implemented prescriptive new guidelines for landlords in the way they get information from prospective tenants. It appears clear that they have been developed with a very narrow view of what the minimum information prospective tenants need to supply to landlords.

These new rules take no consideration for the quiet peace and enjoyment of current tenants or the time and delay it will take for property managers to select a new tenant. It also does not take into account any consideration for Health and Safety in the current Covid-19 environment.

If landlords do not follow the prescriptive step by step process they are threatened with fines. From March 2022, the Privacy Commission will regularly check on how landlords are operating, starting with the biggest private sector rental companies.

They will also carry out mystery shopper activities to check they are asking for the right information, at the right time, in a responsible way.

The Office of the Privacy Commissioner will be publicly encouraging prospective tenants to let them know they can refuse to share information, and can make a complaint to the Office of the Privacy Commissioner if the refusal is not accepted. Adding to this they have developed a reporting tool for tenants to confidentially email them about their rental experiences.

The new four step application process for prospective tenants.

Step 1
Landlords can only ask for name and contact details until the prospective tenant has seen the property.
It does not matter if the person will not be suitable for the property. Eg:

• Has pets when the owner does not allow them
• There are 7 occupants wishing to live there when it is only suitable for 4.
• The combined income is $700 when the rent alone is $600.
• Landlords cannot ask for any of this information. It will mean that you are obliged to take ‘whosoever wishes’ through the property. Then you can ask them to make an application (with limited information).

Step 2
After the prospective tenant has seen the property then you can ask for a first level application. You then will get enough information to shortlist applicants. You will then make the shortlisted applicants (just a few) “Preferred Applicants”. You will then be able to ask the tenant for more information.

Step 3
When a tenant is a Preferred Applicant, you can then carry out credit or criminal history checks and evidence of the ability to pay rent.

Step 4
When you are preparing the Tenancy Agreement you can then ask for the final information:

• Vehicle details
• Guarantors
• Alternative address for service

These new rules will be like other recent guidelines and legislation impacting rental properties will have unintended consequences.

1. Having to show every prospective tenant through the property before any information can be supplied is a major waste of time for those interested in renting and for the landlord. Already creative ways are being investigated to get around this as there can only going to be one successful candidate.
2. It will slow down and lengthen the time it takes to process prospective tenants which will have a serious impact on tenants breaking fixed term tenancies. The impact being that the cost to tenants will significantly increase with the longer time involved in securing a suitable tenant.
3. It will increase the inconvenience and security of current tenants who have to have ‘whosoever’ come through the property as well as the personal safety of landlords when no information other than a name and number supplied.
4. Pose a potential health (Covid-19) and security risk to current tenants.
5. Tenants choosing to follow the guidelines will find themselves as second choice candidates as the landlord will focus on prospective tenants who voluntarily provide information and will be the automatic first choice for landlords as they only need one good tenant.

David has been a specialist residential property manager since 2004. He started Pukeko Rental Managers in 2010. His focus has always been about “being the
best” rather than being the biggest and providing the very best property management service to property owners and tenants. David’s passion for seeing the industry-standard raised has seen him become the Chairman of the Residential Property Managers Association of New Zealand (RPMA).

Article Source: https://www.landlords.co.nz/article/976520142/opinion-new-four-step-application-process-for-prospective-tenants?utm_source=LL&utm_medium=email&utm_campaign=Landlords+Daily+News+for+8+Apr+2022