Great business. Professional, ethical and very responsive to an owners needs. Jack Miles
14 Nov 2017
What is the purpose of having prospective tenants complete a tenancy application form and what criteria do they have to meet?
The agent / property manager is acting on behalf of the owner and must demonstrate they have acted professionally in conducting due diligence in assessing the prospective tenants ability to;
1. Pay the rent for the period of the proposed tenancy term.
2. Meet the tenancy obligations for the period of the proposed term.
The tenancy application form is not a prescribed form although it must comply with the legislation which includes The property Occupations Act and Regulations, The Privacy Act, The Anti Discrimination Legislation and The Residential Tenancies and Rooming Accommodation Act.
The criteria is not a legislated requirement however, best practice recommends agent/property managers evaluate and the following;
1. Identification of the applicants – The 100 point check which is similar to the banking industry, is widely accepted.
2. Tenancy Record and Proof of previous living arrangements – The applicants current and previous rental history is a critical part of the selection process. The tenancy record should provide information concerning the applicant’s rental experience, their stability as tenants; such as how often they have move in the past, the reasons why they have moved or are seeking a move and any history of breaches of a tenancy agreement. It is best practice for property managers to search a property ownership database such as CoreLogic RP Data to verify the information.
3. Ability to pay rent – The property manager should sight a valid record of income in the form of payslips, accountants figures, Centrelink statements, taxation records or bank statements. It is best practice to verify the record of income, for example contacting the employer and confirming the basis of employment such as fulltime, part-time, casual or contractor. A common ratio used by property managers is for the rent amount to be no more than 30% of their income. This is not an exact science and in some geographical area the percentage may be higher although applicants rental and income history over a consistent period of time demonstrate the tenant can meet the rental obligation.
4. Professional and personal references – In some instances an applicant may have no verifiable rental history. In these instances the property manager would seek verifiable references from people who have known the applicant for a considerable period of time who are prepared to support the applicants ability to meet any tenancy obligations. Examples being ;a real estate agent who is selling the property for the applicant, a high profile well regarded member of the community, professional associates, club president or coach.
5. Tenancy database search, social media and search engines – Property managers are increasingly utilising the wealth of information available via these sources to confirm and verify the information provided on tenancy applications.
When Checking with referees, including current and previous lessors/property managers the property manager must use good quality questions to derive good quality information.