How to Choose the Right Tenant
As a landlord, the last thing you want is an unreliable tenant.
If you’re going to rent out your home, naturally you’ll want to find a tenant who will respect and look after your home, pay rent on time and hopefully stay long term.
It’s tempting to make your choice based on an applicant’s circumstances and whether they seem like a stable choice but be aware, under the Equal Opportunity Act, you must not discriminate against any applicants based on their gender, age, race, religion, marital status, sexuality, whether or not they have children, pregnancy, mental illness or disability, etc. (Oh, and unfortunately this isn’t an exhaustive list by the way. Be sure to check the legislation in your state for the full shebang).
To cover all your bases, we recommend you ask for the following items from all your applicants. This list will help get you started on the right foot.
- Government Issued Photo ID (driver’s license, passport,etc.)
- Employment / income verification (current payslip)
- Proof of current address (recent house bill, phone bill, rates notice, etc.)
- Professional Reference (employer, co-worker)
- Character Reference (friend, housemate, any non-relative etc.)
You can be however strict or easy-going as you like with the items you require from your applicants. Some of your applicants’ situations may differ. For example, if your property is ideal for students to rent, they may not have a current house bill, so be sure to keep that in mind.
So, once you have a few applicants that tick all the right boxes on paper, how do you properly (and morally) ensure you’re selecting the best person to rent out your property? Well, pour yourself a glass of wine and take some time this evening to reflect on your potential tenants’ applications using the following questions.
1 – Can They Afford It?
Ask prospective tenants about their job, income and how long they’ve been with their employer. Generally, they should earn enough to pay two and a half months’ rent. You should also factor in whether they will have a flatmate or partner to contribute to the rent. We suggest asking for a current payslip or bank statement, or you can ring their employer for verification.
If your applicants are less affluent, such as a group of students, you can request that they provide a Lease Guarantor on the rental agreement. A Lease Guarantor is someone (either a friend, relative or legal entity) who co-signs the lease agreement with your tenant and agrees to be responsible for rental payments or any other financial obligations if your tenant defaults.
2 – Do They Have a Solid Rental History?
Past performance can give you a good indication of your potential tenant’s future behaviour. On top of requesting employment and character references from your applicants, we suggest also requesting a rental reference check with one or two of their previous property managers, landlords or agents.
Helpful questions you should ask their references include:
- Did the applicants pay their rent on time?
- How long did they stay in the property?
- Why did they leave the property?
- Were there any issues when they left? / Did they get their full rental bond back?
- Were there any lease violations?
- Did the neighbours complain about them?
3 – Have They Ever Been Blacklisted?
There are several state-based and national databases that list tenants who have not paid rent, been evicted or damaged property. A lot like credit checks when applying for a loan or credit card, these agencies can provide tenancy history checks when applicants apply for rental properties. One national database is TICA (www.tica.com.au)
4 – Do They Have Pets?
Many landlords don’t mind if tenants have pets, but they can add to the wear and tear of a property. It’s one thing if they have a guinea pig outside, but quite another if they have 10 indoor Great Danes. If you are worried about maintaining property condition, you can either decide to advertise your property with a no-pets clause or allow your tenant(s) to have pets but with extra conditions built into the contract. Many lease agreements include a tenant’s obligation to have carpets cleaned and the house fumigated on termination of the lease if they have pets. Some even include an additional rental bond to be paid if pets will be living on the property.
For our friends in VIC, please keep in mind the Residential Tenancies Act reforms that will come into play by effective 1 July 2020. These changes include the fact that your tenant has the right to keep pets, provided they get your written consent. That said, you as the landlord, only have the right to refuse consent to a pet if you get approval from VCAT to do so. However, your tenant will be responsible for cleaning your property for pet-related damage if it is beyond fair wear and tear. For further information on the Residential Tenancies Act reforms of 2020, visit https://www.vic.gov.au/rentfair-rental-reforms-victorians.
5 – Why Are They Moving?
Take the time to chat with your applicants about their motives for moving and you’ll uncover valuable information, such as whether or not they’ll be a long term or short term tenant. For example, if they are applying to rent your place while they finish their final six months of University, they may not stick around, which could leave you having to start all over again sooner rather than later. If they have occupied five different properties in two years, they might not be the type of person to commit to you in the long term.
6 – What Are Your Instincts and Observations?
You can almost always spot the people who are well organised, neat and tidy from their appearance, visual cues or behaviour. For example, those who rock up at your Open for Inspections with their lease application filled out and ready to go demonstrate the kind of character traits that are likely to translate well to renting your property. You can also make judgement calls on applicants you’d prefer not to rent your property. For example, if you don’t want smokers occupying your property, you should make note of applicants who reek of cigarette smell. While instincts and visual cues should not be your primary criteria, there is something to be said about a gut feeling. If you’re struggling between two awesome tenants, both of which tick all the right boxes, go with your gut on who you think would be best for your property.
It’s not always an easy task to select the right tenant. But if you put in time and effort into discovering valuable information about your applicants, you’ll be able to make well-informed decisions that will pay off, keeping your landlord-tenant relationships healthy, happy and long-lasting.
Download your FREE buyMyplace sample Tenancy Application Form that you’re welcome to use throughout your property journey.