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[OPINION] New four step application process for prospective tenants

The Privacy Commissioner has implemented prescriptive new guidelines for landlords in the way they get information from prospective tenants. It appears clear that they have been developed with a very narrow view of what the minimum information prospective tenants need to supply to landlords.

Tuesday, April 12th 2022, 2:55PM 6 Comments

These new rules take no consideration for the quiet peace and enjoyment of current tenants or the time and delay it will take for property managers to select a new tenant. It also does not take into account any consideration for Health and Safety in the current Covid-19 environment.

If landlords do not follow the prescriptive step by step process they are threatened with fines. From March 2022, the Privacy Commission will regularly check on how landlords are operating, starting with the biggest private sector rental companies.

They will also carry out mystery shopper activities to check they are asking for the right information, at the right time, in a responsible way.

The Office of the Privacy Commissioner will be publicly encouraging prospective tenants to let them know they can refuse to share information, and can make a complaint to the Office of the Privacy Commissioner if the refusal is not accepted. Adding to this they have developed a reporting tool for tenants to confidentially email them about their rental experiences.

The new four step application process for prospective tenants.

Step 1
Landlords can only ask for name and contact details until the prospective tenant has seen the property.
It does not matter if the person will not be suitable for the property. Eg:

  • Has pets when the owner does not allow them
  • There are 7 occupants wishing to live there when it is only suitable for 4.
  • The combined income is $700 when the rent alone is $600.
  • Landlords cannot ask for any of this information. It will mean that you are obliged to take ‘whosoever wishes’ through the property. Then you can ask them to make an application (with limited information).

Step 2
After the prospective tenant has seen the property then you can ask for a first level application. You then will get enough information to shortlist applicants. You will then make the shortlisted applicants (just a few) “Preferred Applicants”. You will then be able to ask the tenant for more information.

Step 3
When a tenant is a Preferred Applicant, you can then carry out credit or criminal history checks and evidence of the ability to pay rent.

Step 4
When you are preparing the Tenancy Agreement you can then ask for the final information:

  • Vehicle details
  • Guarantors
  • Alternative address for service

These new rules will be like other recent guidelines and legislation impacting rental properties will have unintended consequences.

  1. Having to show every prospective tenant through the property before any information can be supplied is a major waste of time for those interested in renting and for the landlord. Already creative ways are being investigated to get around this as there can only going to be one successful candidate.
  2. It will slow down and lengthen the time it takes to process prospective tenants which will have a serious impact on tenants breaking fixed term tenancies. The impact being that the cost to tenants will significantly increase with the longer time involved in securing a suitable tenant.
  3. It will increase the inconvenience and security of current tenants who have to have ‘whosoever’ come through the property as well as the personal safety of landlords when no information other than a name and number supplied.
  4. Pose a potential health (Covid-19) and security risk to current tenants.
  5. Tenants choosing to follow the guidelines will find themselves as second choice candidates as the landlord will focus on prospective tenants who voluntarily provide information and will be the automatic first choice for landlords as they only need one good tenant.

David has been a specialist residential property manager since 2004. He started Pukeko Rental Managers in 2010. His focus has always been about “being the
best” rather than being the biggest and providing the very best property management service to property owners and tenants. David’s passion for seeing the industry-standard raised has seen him become the Chairman of the Residential Property Managers Association of New Zealand (RPMA).

Tags: tenancy reform

« [Opinion]Two years of COVID – what have we learnt in the property world?[OPINION] Budget 2022 should back build-to-rent communities »

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Comments from our readers

On 7 April 2022 at 11:13 pm Jackie Campbell said:
This government continues to hurt the very people they are trying to help because they are so short sighted. Another example is taking away the 90 days notice to vacate - a great tool to give someone that has bad credit or bad rental history a second chance. Without the 90 day notice and rules around eviction landlords can not take any risks therefore the people that have got themselves back on track are filling up the motels and emergency housing.
On 8 April 2022 at 8:59 pm Peter Lewis said:
Designed and developed by those who view the world from the comfort of a four-windowed office in a Wellington tower block on the security of a taxpayer-funded salary.

If I go to a Bank and ask to borrow $600,000 the Bank is entitled to check right through my financial, employment and personal history in the minutest detail before they make their decision.
However, if I am considering giving a prospective tenant control over and sole occupancy rights to a $600,000 property I am restricted about what questions I am permitted to ask.

To me, that poses the big question:
Why are Banks apparently permitted greater powers than ordinary NZ rental housing providers?
On 9 April 2022 at 5:42 am Brigitte Cottam said:
As a landlord, we have historically only ever held viewings for approximately 5 shortlisted parties from around 50 initial inquiries by simply having a brief phone chat which covers
"who would be moving in with you?"
"do you have any pets" and
"why are you looking to move from where you are currently?"

At STEP ONE. What they have to say and how they say it usually tells us all we need to know and saves wasting the time of applicants unlikely to get the property.

In doing so, we've never overly inconvenienced a departing tenant, or compromised their security and privacy by showing 50 random parties through their home.

How can anyone seriously see this process as a good idea?
On 9 April 2022 at 9:00 pm Glenn Morris said:
The comment re guarantors is interesting. Tenancy Services do not have a form for guarantor. I wonder if the privacy commissioner has a guarantor form. The whole point of having a guarantor is providing a second person a landlord can
"enforce" collect the debt from. There is no point in having a guarantor who is a person who does not pay their debts so it is necessary to carry out a credit check on them as well. I have noticed the Tenancy Adjudicators usually ask for details about guarantors in order to ensure the guarantor knows what they have signed up for.
On 16 April 2022 at 11:10 pm John Edwards said:
The December before Covid arrived we sold the last of our residential rentals all in northland. Solely owing to property management failures to report issues and ensure tenants carried out damage repairs to a reasonable standard. 8 properties no longer available for renters.

The omissions on property reports cost us dearly when at tribunals [5] with only 1 tenant actually paying 90% of what was awarded [ the rest lost their bonds and that was it.] We cancelled the remaining amount as a goodwill gesture. Our fault for not attending inspections ? or not having final say on short listed applicants, maybe. Additional information when handing the keys to a stranger is vital, the current regulations are misguided, one sided and seemingly written by ?? who have no understanding that fairness is a balance.
On 20 April 2022 at 4:44 am Richard Best said:
Hi David. Thanks for writing this. I've written an article called "Privacy Act guidance for landlords and property managers – very helpful but a bit too prescriptive?" that you mind find of interest:

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AIA - Back My Build 6.19 - - -
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ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
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BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
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CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
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Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
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Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
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Resimac - LVR < 80% 8.84 8.09 7.59 7.29
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Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
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Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

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