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Spotlight On Tenant Selection

Spotlight On Tenant Selection

The information potential tenants are being asked to provide is under review by the Privacy Commissioner. Joanna Mathers investigates.

By: Joanna Mathers

1 June 2021

It all began with the “KFC test”: the practice of property managers asking prospective tenants for bank statements, so they could see whether they were whittling away their rent money on fast food. Then there was the “blacklist”, a Facebook group called “Bad Tenants” in which landlords posted identities, photos and passport details of troublesome tenants as a warning to its 3,400 members.

It’s situations such as these that underpinned February’s announcement that the Privacy Commissioner was about to launch a review of the ways in which personal information was collected, retained and disclosed by those in the rental accommodation sector.

According to a press release at the time, Commissioner John Edwards had concerns about some of the practices that were being seen in the sector.

Landlords are able to collect information to assess whether a tenant can pay rent, however, collecting their bank statements to gauge how they spend their money is unfair and unreasonably intrusive. Landlords should only collect the minimum amount of personal information necessary to make that decision,” he states in the press release.
“I will be engaging with the sector in coming weeks to ensure that landlords and property managers understand their Privacy Act obligations and are acting in accordance with them.”

He called for tenants to report any privacy breaches to the commission. When asked to provide information around how widespread they considered problematic practices in the collection, retainment and distribution of personal information was in the property sector, spokesperson Feilidh Dwyer stated that it was difficult to provide exact figures.

He stated that it had become apparent that: “The overcollection of personal information by landlords and property managers is relatively common and of concern to many renters.”

The office of the Privacy Commissioner launched the round of engagement with representatives from tenants, landlord, and property management groups in March, in order to ascertain current practices and the business models of the sector.

Included in this round of engagements were representatives from Property Managers Institute of New Zealand (PROMINZ) and New Zealand Property Investors Federation.

David Pearse is president of PROMINZ, and the owner and founder of Pukeko Rental Managers. He says that in the past the Privacy Commissioner’s office had published minimum requirements around privacy in the rental sector, but this was done without engagement from the property management industry.

“It’s great to be given the chance to be heard in this capacity, rather than being dictated to,” he says.

(A recommendation document released in 2019 by the Office of the Privacy Commissioner that gave guidance around what landlords and property managers could ask was undertaken without consultation from the sector.)

Pearse says that the increased scrutiny over practices such as asking for bank statements had led to them being, by and large, removed from the rental application process.

“This is still a common procedure in Australia,” he says. “So, some of the larger real estate firms, that are Australian-owned, may still be asking to see these. But on the whole, it’s not common in New Zealand anymore.”

The “blacklist” of tenants is also no longer active.

While these more dramatic examples of possible privacy breaches are no longer an issue, Pearse explains that the Privacy Commissioner has voiced concern over the amount of information collected at pre-tenancy stage.

There has been an industry-wide shift in practices over the past few years, as property management rules tighten, and property investors look for the best possible candidates as tenants.

Part of this shift has been a move away from what Pearse calls “cattle class” rental viewings, where 50 or 60 people wait for property managers to let them view homes at designated times. Pre-tenancy applications are now the industry standard: these are filled in online, and managers choose the most suitable potential tenants to meet for a viewing.

These forms are likely to include information including:

• name/s
• date of birth
• work details
• weekly income
• references
• previous addresses
• number of vehicles owned.

During the consultation process, the Privacy Commissioner questioned why so much information was needed. But Pearse thinks that the commissioner is unaware of the shift in practices when it comes to finding tenants.

“I believe that the problem with the Privacy Commission review is that they have a very narrow-minded view of how tenants are found,” says Pearse

He argues that the information requested is all reasonable in order to give an accurate picture of a potential tenant.

We need to have the right information in order to find the appropriate person for any given rental. This is a matter of professionalism and necessary given the changes to the RTA which make it extremely hard to remove a problematic tenant.

Pearse says that the Privacy Commissioner also had queries around why it was necessary to know how many vehicles were owned by a potential tenant.

We need to know that the vehicles on the property are actually owned by the tenants. We also want to make sure that only warranted and registered vehicles are on the property: it’s very easy for old cars to pile up on a property and for things to get out of control.”

Sharon Cullwick, executive officer of New Zealand Property Investors Federation agrees that there needs to be a rigorous checking process at the pre-tenancy stage. She stands by everything that appears on the NZPIF tenancy application form: which includes current living arrangements, vehicle details, income, credit references, and information around whether or not the applicant owns property.

Possibly contentious questions around vehicle details and ownership of property are important for getting the full picture of someone’s financial situation, she believes.

“If someone has a car with registration that is about to expire it may impact on their ability to pay their rent,” she says
“And the information around property ownership allows us to have more information about their financial security.”

The Office of the Privacy Commissioner will be announcing their recommendations around these issues in the coming months