Thursday, December 1 2022

Consumer NZ chief executive Jon Duffy says requests for bank statements are a concern, particularly where landlords already have access to a tenant credit scheme. File photo
Photo: 123rf

A Consumer New Zealand investigation has found that some rental properties are collecting unnecessary, and in some cases potentially illegal, information from potential tenants.

Earlier this year, people posing as tenants contacted 32 estate agencies in Auckland, Wellington, Palmerston North, Nelson and Dunedin.

It found that overall the estate agents showed “good knowledge of the revised privacy law”.

But 6% of agents asked for bank statements in their application, which is a violation of the Privacy Commission owner guidelines and may also be a violation of the Privacy Act.

Ten percent also asked the caller to voluntarily provide additional information, such as age, gender and relationship status.

“In a tight rental market, like the one we have across the country right now, this really leaves renters with very little choice but to comply, or they face the very real prospect of missing out on a home.” , Consumer said New Zealand chief executive Jon Duffy.

This is the experience of a woman who spoke about the survey.

The 22-year-old, who did not want to be named, had an interview with a Wellington city landlord who asked her about her religious beliefs, drinking and cleanliness.

She told Consumer NZ that time pressure and her desperation to find a home had blinded her to how inappropriate the questions were at the time.

It turned out to be “the first sign of [the landlord’s] intrusive and frightening behaviors exhibited during my rental,” she said.

The rental was a horrible experience and she ended it early, the woman said.

Duffy said requests for bank statements were a concern, especially when landlords already had access to a tenant credit system.

“It’s quite invasive. It’s quite demeaning to be honest, asking a property manager to go through your intimate banking information and judge whether you are a fit and suitable person to be a tenant in a property.”

Renters United chairman Geordie Rogers said his organization hears about this type of behavior every week.

It had become common practice in places where tenants provided cover letters and “hire resumes,” Rogers said.

Transferring information between tenants and real estate agencies or landlords was a one-way street, he said.

“If a tenant were to request this information from a landlord, since the tenant is going to be living in that person’s home, they might want details of how the landlord maintains the property. Many landlords would be unwilling to provide this.”

There was also a power imbalance at play that prevented tenants from speaking or complaining to their landlord for fear of putting their home at risk, Rogers said.

“The owners even say ‘listen, I know you don’t have to provide this information, but if you don’t, it’s more likely that you won’t get the property, so just provide the information, c it’s just easier that way ” .”

Renters United wanted the practice to stop, he said.

Duffy said Consumer NZ’s investigation only covered the initial phase of property inquiries, but it was also possible that other breaches could occur further down the letting process.

He believed that the current complaints system was not good enough.

“At this time, a complaint under the Privacy Act could be filed, but the property manager or property management company will know who the tenant is filing that complaint,” Duffy said.

“This could result in that tenant being blacklisted or having difficulty securing rental properties in the future.”

This was repeatedly cited as a concern, and tenants were genuinely concerned about being blacklisted, Duffy said.

“We need a system that protects tenants and encourages them to come forward if their rights have been violated.”

Estate agents and landlords also needed a space where their complaints could be assessed fairly, he said.

He hopes the survey will help inform the Department of Housing and Urban Development’s current review of property management regulations.

Owners ‘caught in the middle’

Landlords say they need to collect information about potential tenants to satisfy insurers in the event of a future claim.

Property Investors’ Association vice-president Peter Lewis said insurers still require a certain amount of information from landlords about tenants, and landlords are stuck in the middle.

“It is one of the requirements of insurance policies that we investigate a potential tenant and keep records to show that we have been diligent in the screening process,” he said.

“We are caught between these kinds of recommendations and protecting the value of our own assets in the event of an insurance claim.”

Lewis has been a property investor for 31 years and owns 13 properties in Auckland.

He said many landlords were more selective because the new rules made it harder to evict tenants.

“Before you turn over such an asset to someone you’ve never met before, you want to be reasonably sure of their background, their track record, and that they’ll be a solid, reasonable tenant who can afford to pay the rent.”

A group of real estate investors support privacy rules

Auckland Property Investors’ Association chair Kirstin Sutherland said a change in the industry’s attitude to privacy was long overdue.

“When you have property managers who bend privacy rules and play on that power imbalance to diminish a tenant’s voluntary consent, that tells me there are issues

attitudes towards personal information and privacy,” Sutherland said.

“Continuing to snub the guidelines will only invite more scrutiny, backlash and tougher rules at a time when the industry is already calling for a regulatory reprieve.”

She said Consumer NZ’s call out from the industry was justified and the poor performance seen was mainly due to a lack of sound operational knowledge of the guidelines across the sector, deprioritization of privacy over other new rental rules and the industry’s unsophisticated tradition of confidentiality.

“Modern problems require solutions that are backed by modern attitudes. When it comes to privacy, this means recognizing the custodial power (and therefore obligation) of property managers and landlords over tenants’ personal information,” said Sutherland.

“Getting the paperwork and processes in order is one thing, but it’s really about flipping the switch in your head to recognize that we hold so much information about our tenants that we need to be careful. “

The association was one of the first to publicly support the OPC guidelines when they were introduced in November 2021.

The Property Managers Institute of New Zealand said it had held a number of training sessions focusing on the importance of privacy law, including in-person and online presentations from the Privacy Commissioner privacy and its representatives.

“Compliance with privacy law was central to the education program,” the statement continued.

“While the Institute incorporates a number of individual members of property managers…it does not involve itself in the day-to-day operation of property management companies and their associated internal policies and is not in a position to comment,” a he concluded.

The Department of Housing and Urban Development has been contacted for comment.

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