Impending changes to tenancy law, along with the damage liability issues generated by the infamous Osaki decision, means that careful tenant selection is now of even greater importance for landlords.
However, exactly what information a landlord, or property manager, can ask for when selecting a tenant has often been mired in controversy.
Last August, it was revealed that some property managers were asking to see the bank statements of prospective tenants.
This prompted heated dialogue over exactly what information requests from landlords, when selecting a tenant, are reasonable and what requests could constitute an invasion of privacy.
Now the Office of the Privacy Commissioner (OPC) has released a new set of guidelines outlining what information should and should not be collected by landlords when selecting a tenant.
Privacy Commissioner John Edwards says that landlords are entitled to collect personal information where that is necessary for their lawful purpose of selecting a tenant.
“As a landlord, you want tenants who will care for your property and fulfil their obligations. The pre-tenancy stage is an opportunity to gather information that will help you make your decision.
“However, you need to balance this with the privacy of your prospective tenants. You may only collect information that’s necessary for you to decide whether they would be a suitable tenant.”
He says the guidelines are designed to help landlords make a reasonable decision about what personal information to collect from prospective tenants.
The guidelines group information requests into three categories - ‘always justified’, ‘sometimes justified’ and ‘almost never justified’.
According to this system, that means it is fine for a landlord to ask whether a prospective tenant has ever been evicted or for authorisation to perform a criminal check.
But it is very rarely okay for a landlord to ask about conflicts with previous neighbours and building managers or for credit card information or proof of insurance.
It is, however, sometimes justified for a landlord to ask for current income verification or for authorisation to collect a credit report.
Edwards says it may be lawful for landlords to collect information to assess whether a tenant can pay rent.
“But collecting their bank statements to determine their money management style may be unfair or unreasonably intrusive. Landlords should only collect the minimum amount of personal information necessary to make that decision.”
The guidelines might provide clarification but they also add a further level of complication into the search for good tenants.
That’s because while tenant selection has always been tough, the changing rental environment means landlords are now keen to access as much information from prospective tenants as possible.
Auckland Property Investors Association vice-president Peter Lewis says the reason for that is that the current Government is making it increasingly difficult to get rid of unsatisfactory tenants.
“This means landlords will naturally be a lot more cautious about who they select as a tenant in the first place. No-one with the slightest blemish on their record will, in time, have any chance of gaining a tenancy.”
*The Privacy Commissioner’s guidelines on the collection on personal information by landlords can be read here.
Proof rent can be paid crucial