The Privacy Commission has finally released their updated guidelines for landlords and tenants.

Back in August of 2018, the Property Management hit the headlines for the wrong reasons. A property manager who was appearing in front of a select committee admitted to looking through tenants bank statements and observing the tenants spending habits. This infamously became known as the ‘KFC test’ as the property manager confessed to seeing certain tenants waste money on KFC as well as other poor spending habits.

There was outrage about this and this prompted the Office of the Privacy Commission (OPC) to investigate whether this was a widespread practice.

However, earlier this year, the industry made the news again as it was reported that a Facebook group called ‘Bad Tenants New Zealand’ had a list of 200 ‘bad tenants’ with 3200 members as a part of the group. Many of the members were property managers. The OPC had seen enough and announced an investigation in the practices that took place around tenancy selection.

The OPC started a process of interviewing stakeholders across both tenant and landlord groups. I too was interviewed back in March. It was a fascinating discussion. When I was asked about our industry’s knowledge of the Privacy Principles, I gave us a score of about 2 out of 10. Without going into the actual details of our discussion, it became clear that, as an industry, we were collecting far too much information from the outset and there was a lack of knowledge all round. Senior people within our industry were under the impression that they had to keep all tenant applications for 12 months after the end of a tenancy as section 123A of the RTA states that landlords must keep notices and correspondence with tenants and prospective tenants. What they failed to understand was a prospective tenant is someone we had offered to grant a tenancy to and not any applicant.

What also became apparent was the negative impact that occurred on applicants’ credit scores every time a credit check was undertaken. A credit score declined every time a credit check took place. Many applicants who were searching for rental properties were having multiple credit checks undertaken.

Also, the OPC had received complaints from employers in regards to the type of questions that were being asked of applicants. Questions such as ‘is their job secure?’ and ‘What are they like in their job?’ were being asked. When calling an employer, you basically only should be asking for confirmation that they work there.

It was an enlightening conversation and I went away knowing that change would be coming.

New changes announced

After months of investigation, the OPC has now launched a new compliance monitoring programme to ensure that property managers are acting in accordance with the Privacy Act.

The OPC will now be carrying out regular checks of rental agencies as well as an annual audit of application forms as well as privacy policies of the property management industry. This includes third party service providers.

Alongside the monitoring of the industry, the OPC have also released updated guidelines for tenants and landlords. As an industry we need to improve and the OPC has now got powers to take the following action against non-compliant agencies.

  • Warning letters
  • Access Directions
  • Compliance notices
  • Referral to the Human Rights Review Tribunal
  • Public interest inquiry
  • Public naming of an agency
  • Fines of up to $10,000 for failing to comply with a Compliance Notice

Tenants and prospective tenants also have the ability to anonymously report privacy concerns to the OPC.

The main concern that has arisen is the amount of information that some agencies and landlords are obtaining from the outset goes way beyond what should be being sought. The guidelines provided to landlords and tenants alike put applying for a rental property into a staggered process. The stages are as follows.

Enquiry to view the property

At this point, the only information you need as a landlord or a property manager is the name and the contact details of the prospective tenant.

Applying for the rental property

Once a prospective tenant has viewed the property and they decide they want to apply, they will then fill out an application form. At this stage the landlord will be able to ask for the following information.

  • Name and contact information
  • Proof of identity
  • Whether the applicant is aged 18 years or older
  • Number of people who would live at the property
  • Names only of occupants who will not be on the tenancy agreement (e.g. flatmates, dependents), but not other personal details about non-tenants
  • Contact details for landlord and non-landlord references
  • Consent for a credit report and criminal record check (to be obtained only if you are in negotiation with a tenant about an offer of tenancy)
  • Pet ownership
  • Whether any occupants are smokers
  • Whether the tenant has a legal right to remain in New Zealand for the duration of a tenancy (only if the tenancy is for a fixed term)

Once this has been obtained, the landlord or property manager will make a shortlist of preferred candidates. This is likely to be no more than two or three applicants. At this point you will be entitled to carry out the background checks such as references, credit checks and proof of income.

What property managers and landlords should not collect

Property Managers and landlords cannot ask for the following information from a prospective tenant.

  • Personal characteristics protected under section 21 of the Human Rights Act
  • Whether the tenants have experienced or are experiencing family violence
  • Spending habits
  • Employment history
  • Social media URLs

Probably the most contentious issue I hear about on my travels is whether or not the property manager should check the Facebook profile of the tenant. The new guidelines state the following.

‘A Facebook or other social media profile may be accessible by the tenant’s friends and family, but not by the world at large. You shouldn’t ask for permission to view social media profiles that are restricted in this way. Seeking or requiring access to such personal profiles is unreasonably intrusive on individuals’ personal affairs.’

The temptation to view someone’s profile online is obvious. You want to make sure that you are not about to create the next ‘party central’ in the house that you manage and looking at a public Facebook profile could give you adequate warning as to what type of tenants may be moving into your property.

Consistency is the key

I for one do welcome the changes and the guidelines that the OPC have introduced. It gives greater clarity and we are better able to perform our role with the knowledge that we need. Yes, it will lengthen the application process but as long as it is being consistently managed and is the same for private landlords as well as property management companies, then it has my full support.