From pre-tenancy application forms to credit checks and personal interviews, master the art of tenant screening to find the right tenants for your rental property.
Whether you’re a seasoned landlord or new to the game, this guide will help you make informed decisions that benefit both you and your tenants.
What is tenant screening?
Tenant screening is the process by which landlords or property managers evaluate potential tenants before renting out their property to them.
The screening process typically involves reviewing a tenant’s rental application, checking their credit history, verifying their income and employment, conducting a criminal background check, and checking their references from previous landlords or employers.
The purpose of tenant screening is to identify potential problems before they occur, such as late rent payments, property damage, or behavior that could disturb other tenants. By conducting a thorough screening process, landlords can ensure that they are renting to tenants who are responsible, trustworthy, and financially stable, which can help them avoid costly legal and financial problems down the road.
Here are some of the top reasons why landlords should conduct tenant screening prior to selecting a tenant.
- Locating reliable tenants: Tenant screening helps landlords find tenants who are reliable and trustworthy. This can help prevent issues such as late rent payments, property damage, and tenant disputes.
- Protecting your investment property: By conducting a thorough background check and tenant screening process, landlords can identify potential red flags such as a history of property damage or eviction. This can help prevent future problems and protect their property.
- Legal compliance: Tenant screening can help ensure that landlords are in compliance with fair housing laws and other regulations. This can help prevent discrimination and other legal issues.
- Financial stability: Tenant screening can help landlords identify tenants who are financially stable and able to afford the rent. This can help prevent issues such as missed rent payments and evictions.
Overall, tenant screening is an important tool that helps landlords make informed decisions about who they rent their property to. It can help prevent problems.
As a landlord, what are the legal considerations I should consider when conducting tenant screening?
When gathering personal information about tenants as a landlord, it is crucial to understand your responsibilities under the Privacy Act 2020. You should have a valid reason for collecting the relevant information and avoid asking for unnecessary details, such as their spending habits or religious affiliation. However, you may need to perform a credit check to assess the tenant’s creditworthiness.
Moreover, you are obligated to inform the tenant of the purpose of collecting their information, how it will be used, and who it will be shared with. You must not use their information for anything other than the intended purpose or share it without their consent. It is also essential to securely store their information to prevent unauthorized access.
Tenants have the right to access and correct their information if necessary. To learn more about the information you can and cannot collect about tenants, refer to the Privacy Commissioner’s website here.
When gathering personal information about tenants as a landlord, it is crucial to understand your responsibilities under the Privacy Act 2020. You should have a valid reason for collecting the relevant information and avoid asking for unnecessary details, such as their spending habits or religious affiliation. However, you may need to perform a credit check to assess the tenant’s creditworthiness.
Moreover, you are obligated to inform the tenant of the purpose of collecting their information, how it will be used, and who it will be shared with. You must not use their information for anything other than the intended purpose or share it without their consent. It is also essential to securely store their information to prevent unauthorized access.
Tenants have the right to access and correct their information if necessary. To learn more about the information you can and cannot collect about tenants or potential tenants, refer to the Privacy Commissioner’s website here.
Landlords can’t discriminate against tenants.
Discrimination that breaches the Human Rights Act is unlawful under tenancy law. Landlords can’t decide who to rent to, or make decisions about whether or not to extend the tenancy if the reasons breach the Human Rights Act.
Violating the Human Rights Act may result in legal action from the Tenancy Tribunal or the Human Rights Commission. For instance, it is unlawful for a landlord to reject a prospective tenant based on their religious affiliation, or to alter the terms of the tenancy agreement upon discovering that the tenant is jobless.
Pre-tenancy application form
A pre-tenancy application form is a document used by landlords or property managers to collect information from potential tenants who are interested in renting a property.
The application form provides crucial information about prospective tenants, such as their name, contact details, current residence, rental history, ID details, and references that you can contact for further information. Additionally, the form includes permission for you to conduct a credit check, which should only be performed on your preferred tenant/s.
Download a copy of the Tenancy Services pre-tenancy application form here.
Conducting Credit Checks
In New Zealand, landlords can conduct credit history checks on potential tenants with their consent. Credit checks can provide valuable information about a tenant’s creditworthiness and financial history, such as any outstanding debts, payment defaults, or bankruptcies.
However, landlords and property managers must follow specific rules and guidelines when conducting credit checks on potential tenants. For example, they must obtain written consent from the tenant before conducting a credit check, and the tenant has the right to access the credit report and correct any inaccuracies.
Additionally, landlords and property managers must ensure that the collection and use of personal information comply with the Privacy Act 2020. They should only collect the necessary information and store it securely to prevent unauthorized access.
A credit report alone should not be the sole basis for rejecting a potential tenant. Landlords must consider other factors, such as rental history, current employment or employment history, and references when making their decision.
How to assess the information provided
Assessing a pre-tenancy application form is an important step in the tenant screening process.
Here are some steps you can take to assess a pre-tenancy application form:
- Verify the Information Provided: Check the information provided in the application form to ensure that the information is accurate.
- Check for Red Flags: Look for any red flags such as inconsistent information. This can help you identify potential issues that may affect the tenancy.
- Contact References: Contact the references provided by the tenant to verify their history and get an idea of their previous behavior as a tenant.
- Assess the Tenant’s Compatibility: Consider the tenant’s lifestyle, pets, and number of occupants to determine whether they are a good fit for the property and other tenants in the building.
Overall, assessing a pre-tenancy application form requires a thorough review of the information provided by the tenant. It is important to take the time to carefully evaluate the application to ensure that the tenant is a good fit for the property and to minimize the risk of future issues.
Interviewing potential tenants during the tenant screening process
In New Zealand, landlords and property managers can conduct interviews with potential tenants as part of the screening process. The purpose of the interview is to gather additional information about the tenant. This includes their rental history, employment, and lifestyle, to determine if they are a suitable candidate for the property.
During the interview, landlords must follow the rules and guidelines set out in the Human Rights Act 1993, which prohibits discrimination based on a person’s race, ethnicity, religion, gender, or sexual orientation. The questions asked during the interview should be related to the tenancy and should not be discriminatory or invasive.
Some points you may want to discuss with the interviewee include:
- If the property will suit them and their needs?
- An overview of the last two places they rented and why they moved
- If they have previously been involved in any tenancy disputes
- Their current circumstances and ability to pay rent
- How many people will live in the house
- Do they have pets? If so, what kind of pets? Read more about renting with pets here.
- What sort of tenancy do you both prefer (fixed-term or periodic)
- Ask if they are familiar with their responsibilities as a tenant. For example paying rent on time, telling you about maintenance or repairs, and keeping the place reasonably clean and tidy.
This is an ideal time to discuss any specific terms that you want to add to the tenancy agreement. For example – a no-pet policy, discussing the responsibility of mowing the lawns, etc.
Checking tenant references
When completing the tenancy application form, tenants will need to provide the contact details of two referees. These individuals could be a friend, co-workers, employers, or anyone else who knows the applicant well. It can be useful if one of the referees’ is their current or past landlord/property manager.
It’s good practice to inform the prospective tenant that you will be contacting their references. This way, the applicant can give them a heads-up.
If you are unable to get in touch with one or both of the provided references, you can request the details of a different referee.
What should I ask the referees?
The goal of speaking with referees is to gain insight into the applicants’ behaviour. If the referee is a past landlord/ property manager, you may want to consider asking if the tenant:
- Historically let them know when maintenance or repairs needed doing.
- Returned calls promptly
- Kept the property reasonably clean and tidy
- Was ever overdue with rent payments, and what was the outcome of this?
If you suspect that a referee is not being truthful, you may want a second opinion. Checking references is an important step in the tenant screening process. It can provide valuable information to help make an informed decision about renting to a potential tenant.
After completing the tenant screening process, it’s time to make a final decision on selecting a tenant. Review all of the information carefully and trust your instincts.
Selecting a tenant is an important decision that can have long-term consequences for your rental property. Choosing the right tenant can lead to a more profitable, less stressful, and more enjoyable rental experience for the landlord.
For more expert advice, download a FREE copy of our landlord guide here or click here to read our tips for keeping quality tenants long-term.
