The Privacy Commission recently released guidelines around what information a landlord can legally request from a tenant when they are applying for a rental property and on the surface this can look like a scary prospect. However, as in most of the changes in legislation we come across in our industry, when you dig a little deeper and have processes in place, it is in fact not quite what you first thought.
Discrimination has of course, and rightly so, never been allowed when choosing your tenants and this includes anything from what race, religion, sexual orientation or anything else which will of course not actually affect the tenancy.
The ethos of the new legislation is essentially that landlords are only permitted to collect information needed for a lawful purpose connected to finding tenants and managing tenancies.
The major change which has got landlords up in arms is that we are no longer allowed to request employment status at the first part of the application process. This of course upset landlords as it does seem reasonable and not in breach of privacy or any human rights to ascertain whether a tenant can pay the rent each week.
However, as I mentioned when you look further into the legislation and weigh up when it is reasonable to collect essential information, at a later point it can be done. What this means is that a tenant application process will become a four step process, as opposed to collecting all of the information on the initial application form it will have to be staggered.
It should look something like this:
Step one – tenant arranges to view the property. At this stage they can offer to submit an application, however this cannot be requested by the landlord. You can only collect their name and contact information.
Step two – the tenant completes an application form with their basic personal information, i.e. name & contact information, proof of identity, whether they are over 18 (but not their age), contact details for referees and consent to contact them and how many people would be living at the property, plus other details.
Step three - when you vet a shortlist before deciding who the property will be offered to. This is where we can ask questions in regards to affordability of the rent. This could include a payslip or letter from an employer or work and income and evidence of rental payments from a previous tenancy. Be careful here however as you are not allowed to ask for evidence of spending habits, bank statements etc.
Step four comes into effect once the tenant has been offered the property and you are completing the tenancy agreement. Now it is permitted to ask things like vehicle details, an address for service and other similar information.
So what is already a thorough due diligence process can continue, it is just a longer process. Of course a tenant is able to provide you with any information they would like to, we can just not ask for it!
The Privacy Commission announced that they are setting up a dedicated phone line in March 2022 where tenants can call and report any breaches of The Privacy Act and The Human Rights Act and I have a feeling they may be rather busy given what I often read in some rental property advertising.
It is quite a complex process so if you have any questions to ensure you don’t get it wrong, please feel free to give me a call. As I always say, training and knowledge are the key to successfully owning an investment property.
We knew it was coming, and we were hoping for some clarity sooner rather than later, but as we have come to expect from our Governments, they have pushed it through with limited time to get all the ducks in a row and with limited information. I guess on the … Read more
You may be aware that the Residential Tenancies Amendment Bill had its Second Reading before Parliament last week. These long-discussed changes to the RTA (Residential Tenancies Act), (reinstatement of ‘no cause’ terminations, changes in notice periods, pet bonds, etc) are well and truly coming and we should know precisely … Read more