1. Choose a tenant with a good credit history
The importance of a credit report cannot be overstated. Credit reports give you information to support your judgment of a potential tenant. The report will show any payment defaults, credit applications, debts, court judgements, bankruptcies, insolvencies and serious credit infringement information.
It’s best to run credit checks on all potential tenants before signing tenancy agreements and exchanging keys. Any concerning red flags on credit reports should be acknowledged and discussed with applicants. But in the end, it will be up to you to decide what you are comfortable with.
If the applicant has just moved from overseas, they may have little or no recorded data against their name. The local NZ credit check may not be very useful to you in this case. You might be better of finding a credit reporting company from the country they've lived in last, who can check their credit rating.
2. Always check Tenancy Tribunal records
The Tenancy Tribunal hears around 20,000 cases each year. The decisions made by the Tribunal are called Tenancy Tribunal Orders, and they're publically available. Search the Tenancy Tribunal Orders database to find out if a tenant has been involved in disputes in the past.
3. Verify Income
Don't let your emotions drive your selection process. Verifying applicants' references is essential. To check their employment and the accuracy of the information provided on the rental application (such as role, employment terms etc.), you will want to contact the employer directly.
4. Check the tenant's rental history
It is highly recommended to ask your applicants to provide previous landlord references as they provide one of the best insights on a tenant’s potential behaviour.
Watch out for ex-landlord giving you an overly glowing reference to their tenants to get rid of them from their property to yours
5. Look for stability
On their application form and the credit report, look at the tenant's prior addresses and employment history. Do they move or switch jobs often? If they move often, this pattern is likely to continue, and you will soon have a vacancy on your hands again. If they have not shown consistent employment, they may not be able to afford the apartment in three months, and you will be left starting your tenant search from scratch or dealing with an eviction.
If the applicant is a first-time renter or student they may not have a rental history. In this case, you can require a guarantor for the lease.
6. Check social media
Love it or hate it almost everyone uses social media these days. With so much information readily available, you can learn a lot about applicants looking at their profiles, and this may help you to develop an idea of their character. LinkedIn can be a great tool to provide you with a snapshot of education and professional history of the applicant.
Always remember that information posted on social media may not be accurate.
7. Trust your gut feeling
You can do all the screening in the world, but sometimes your instincts are the best judge of character. You may feel that there is something off about a tenant who otherwise looks good on paper. Trust your screening, but do not ignore your instincts.
Don’t skip reference and credit checks because a tenant charms you or offers extra rent upfront. It takes 10 minutes to let someone into your property. It takes weeks to get them out.
8. Keep on the good side of the law
Remember you can't discriminate. Both the Residential Tenancies Act and the Human Rights Act cover this. This a long list of things you can't discriminate on the basis of, but some big ones to remember:
- marital status
- nationality and citizenship
- employment status – e.g. being unemployed or a beneficiary, or receiving ACC payments
- having/not having children
- sexual orientation.
You’ll never truly know until the tenants move in whether you’ve got great ones. But it's important to exercise due diligence during the selection process to minimise headaches in the future.
Does chasing down all the necessary information, calling references and finding the right credit company to perform tenant checks sounds too painful and time-consuming? Here at myRent.co.nz, we can perform thorough background checks for just $25. We’ll spend the time collecting landlord and employment references, conducting ID checks, credit checks, Tenancy database and Tribunal Orders searches.