Landlords should not be at ease in light of recent reports characterising the Auckland rental market as being under significant demand pressure. Your applicant base expanding does not make it easier for
you to find your next tenant. In fact, it should mean quite the opposite. Now is as good a time as any for all landlords and letting agents
to review your vetting process and to reassure yourself that it will lead you to the most meritious tenant at each and every turn.
There are, of course, several elements to vetting a tenant-applicant and we have covered some of there here,
here and here.
APIA will continue to facilitate the appropriate content to support landlords through this process, but for today, I want to talk a bit about
carrying out a credit check and handling private information lawfully.
What prompted this article? Late last week, an APIA member requested some technical support to carry out a credit check. He engages a letting
agency that (quelle horreur!) does not carry out a credit check before recommending a tenant-applicant to its landlord-client
and understandably wanted to run a check himself before accepting the agency’s recommendation. A particular question on the credit check form
prompted a review of the entire tenancy application itself upon which it was discovered that the form had not sought any permission for landlords to
carry out a credit check on any applicants. The support process terminated then, and no credit report was generated in that instance.
Some learnings from these events warrant pointing out for all landlords:
The Privacy Act allows you to collect personal information of your tenants for a lawful purpose relevant to the tenancy. Generally, the
purpose relates to the granting or withholding of tenancy. It can be broken down to two parts: the first one being collecting enough information
to verify a tenant-applicant’s identity and the second being information that helps you make a reasonable assessment as to what type of tenant this
applicant would likely be like. Typically, an acceptable collection would cover:
- name and contact details;
- current residence and renting history;
- ID information;
- referees and their contact details; and
- credit, court fine history, criminal record, policy vetting (only acceptable if you have obtained specific consent from the tenant-applicant
allowing you to collect this information)
You must let the tenant-applicant know why the information is being collected, what it will be used for, and who it will be shared with. A clear
statement at the beginning of the tenancy application form covering these items off should suffice.
The Privacy Commissioner recommends landlords to include a basic privacy statement in your tenancy application form for good measure. Don’t have a statement
handy? Use the Privacy Commissioner’s award-winning
to generate an appropriate statement for your rental portfolio.
Some landlords like to run a search through the Tenancy Tribunal database for previous
adjudications. As with all publicly available databases, there should be no reasonable expectation of privacy for any named parties in reported
adjudications. You are free to access the public portal of the database and execute a search. That said, be careful with your reliance.
The database cites full name but not date of birth which makes name-matching problematic. In fact, some tenancy credit checking agencies
have dropped the Tribunal feed for that exact reason.
Make doubly sure to collect the information you need before signing the tenancy agreement as otherwise a subsequent collection during the
course of the tenancy could fall outside of the lawful purpose test. For example, you cannot require your existing tenant to consent
to a criminal record check (unless it is the a term of the lease) once you have already rented to the tenant but you may be able to when the lease
is up for renewal.
Take care when it comes to flatmates. Flatmates are often not on the tenancy agreement and therefore your dealings with them are not covered by the
Residential Tenancies Act. If a flatmate is not on the tenancy agreement, you can only collect their personal information if it is a term of
the tenancy agreement. If the tenancy agreement requires you to consent to a room being sublet to a flatmate, then make clear that your consent
will only be conditional on being informed of the flatmate’s identify and any personal information you may require to help you give that consent.
The lawful purpose connected to your collection relates to the granting or withholding of a tenancy. This means any information collected from your
tenant-applicant cannot be used for any purpose outside to the stated purpose. You have an obligation
to store this information securely (more on that later) and fully disclose this to your tenant when they require you to do so. Note at all times,
your tenant has the right to make a complaint against you under the Privacy Act to the Privacy Commissioner if they have reasonable cause to believe
that you have failed in your duties of proper collection, use, and storage of their personal information.
You must securely store any personal information relating to your tenants and past tenant-applicant. The subject of the collection (tenant/tenant-applicant)
has the right to access their information and to correct when necessary. Outside of that, you will need the subject’s authorisation before disclosing
any of that information to anyone else.
Note that this includes their identity which precludes you from naming your tenants even under the most innocent of circumstances. A lot of us live
busy lives and outsource repair and maintenance to a third party. Get into the habit of getting your tenant’s consent before you pass on their
identity and contact details to tradespeople and your agents. Just because your tenant has asked for a repair to be carried out doesn’t mean
there is implicit consent for you to pass on their details.
For those of you who store information electronically, take the time to investigate and be satisfied that the hardware or server being used is robust enough
to guarantee secure storage.
4. It is down to you
Vetting tenant-applicants is such a crucial part of being a landlord that it would be insufficient to abdicate all responsibilities to your property manager
or letting agent. At the end of the day, it is your property and you should be comfortable with who you put in it. The
buck stops with you. If you engage a letting agency or a property management firm, then work in with them and double check their standard application
forms to make sure that the vetting process is carried out as rigorously as possible.