Landlords need to reconsider how they vet prospective tenants. The recently released Privacy Act (Act) provides the guidelines on what information can be sought by landlords and their representatives as part of the tenancy due diligence process. Property managers acting on behalf of Landlords need to comply with the new guidelines to avoid a breach of the Act; therefore, they too need to know the guidelines inside and out.
Free reign to request private information is no longer tolerated. In the Act, one area that is no longer automatically justified is the request of prospective tenants bank statements. Doing so, was a fast way to understand the applicants’ ability to pay the weekly rent however it has been seen as too intrusive and now it’s only an acceptable request in the absence of other satisfactory references.
From a landlord’s viewpoint, it’s a risky business taking on a tenant without really understanding their personal and financial circumstances. The questions that need satisfactory answers are:
1. Can they afford the weekly rent?
2. Are they respectful of property?
For landlords, and their representatives aka property managers the new guidelines require them to get onboard with the Act and know what they can and can not do when vetting a tenant’s suitability for a rental property. While there is a lot at stake for rental property owners, i.e. they need to do as much as they can to avoid bad tenants who may not pay the rent and damage their asset, the law is the law.
The Three Types Of Information Collected
To simply the Act, it puts information collection into three distinct groups. There is the must-have ‘always justified’, the sometimes justified’ and finally the ‘rarely justified’. Landlords would argue everything they do in determining the suitability of a tenant for their rental property is justified to avoid a negative outcome.
See the list below of some of the information that falls into the three types of information requested:
- Name and proof of identity
- Contact information
- Name and contact information for the current landlord
- One or two previous landlords as references
- Expected length of tenancy applied for
- Whether the applicant has ever been evicted
- Pet ownership
- Whether the applicant must give notice at their current accommodation
- Authorisation to perform a criminal record check
- Number of occupants who will live in the unit
In this category, it is sometimes okay to seek these types of information in the absence of satisfactory references or information that fully vets the applicant:
- Personal references
- Current income verification (eg. Payslips, bank statements)
- Authorisation to collect a credit report
- Whether the prospective tenant is a smoker (if it’s a non-smoking property)
- Reasons for leaving previous tenancy
Almost Never Justified
- Broad consent to collect personal information from “other sources”
- Driver licence number
- Credit card information
- Nationality, ethnicity, origin or citizenship
- Physical or mental disability or illness
- Personal beliefs or opinions
- Marital and family status
- Gender and sexual orientation
- Rent paid at previous tenancy
- Sports and hobbies
- Current expenses
- Conflicts with previous neighbour tenants or building managers
- Proof of insurance
- Languages spoken
- Details about current accommodation
- Banking history
- Employment history
- Employment status
Only the foolhardy would ignore the Privacy Act when dealing with the private information of other people. New Zealand legislation protects its citizens, residences and permit holders so non-compliance of the Act should be seen as too risky. In any case, the vetting process may take longer now but it can be just as comprehensive without unnecessary intrusion.
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