Checking to make sure you have a great tenancy application!

There is a range of tools and resources available to landlords to help you find quality tenants. Property managers should not just assess applicants on paper value – you’d be surprised at the amount of applicants who stretch the truth on their rental application, while others outright lie! So switched on property managers use everything at their disposal – checking provided rental references is just the beginning. Databases such as TICA or the National Tenancy Database – can be a helpful to check and determine if prospective tenants have any “black marks” against their names. Social media is also important – you’d be amazed at what people post to the world wide web!

This article provides an overview of tenancy databases and how they can help you ensure you have quality tenants.

When can people be listed on a tenancy database?

Renters can only be listed on a tenancy database for specific breaches to their tenancy agreement. These breaches include intentionally damaging property, jeopardising a neighbour’s safety, not paying rent, failing to comply with a court order, using the rented property for illegal purposes, or subletting the property without approval from the property manager or landlord.

One thing to note however, is usually, a VCAT order is required before a tenant can be listed. It’s something that is a little disappointing in 2021 given VCAT is more than 12 months behind in hearing matters because of Covid. The other concern is you need property managers to list their tenants – quality property managers always list defaulting tenants.

Assessing an applications is the first step

Property managers should initially run through the application to see if the information they have provided initially, will suit the property they have applied for. Mainly this is a check to see if their income can cover the monthly rental amount and their references from previous landlords and property managers show that they’re a quality tenant. Quite often, applications are declined at this point if they don’t meet affordability standards or, if their past rental reference shows poor inspections or poor payment history.

At this point, if you have a few great applications, it can feel overwhelming knowing which tenant to approve. Social media can be a great way to ‘meet’ your prospective renters as this can give you an idea about their personality. From there if you still can’t decide – Accessing a tenancy database is a good way to complete a final layer of due diligence on the applications you receive.

Tenancy database results

Agents (or rental providers) can pay to have a membership to access a database where you can search and review prospective tenants. Note, these databases often also charge a search fee – generally it’s around the $20 per person search mark, plus the annual subscription fee that can be anywhere between $220 to $600 per year! You may uncover that some potential tenants have had problems with their previous rental properties in this process or, if they’ve ever been bankrupt. These problems may include late rental payments or not receiving a full bond refund due to property damage.

You may not have access to all information

It’s important to note that with recent changes to rental legislation in some Australian states, you may not have access to some information. For example, in Victoria, a renter’s previous property manager isn’t legally required to disclose whether the tenant received their bond back in full at the end of a tenancy. As an agent, they also can’t require information about the tenant’s past bond claims / refunds (seems silly, but that’s the legislation we’re working with). However, if a tenant has no issues, they can disclose the details – not receiving their bond back in full isn’t always a bad sign. A tenant and their property manager may agree for part of the bond to cover the final rental payment in the rental agreement, or some additional cleaning for example. Tenant’s who disclose this show that they’re good to work with.

It’s up to each owner how detailed they want to be when selecting a tenant. As a property management only agency, we dig as far as we can before making any recommendations. Tenancy databases (until VCAT catches up) aren’t the be all and end all of tenancy checking given a lot of the information isn’t current, and it relies on the past property manager / rental provider uploading defaulting tenants. However, checking if a prospective tenant is listed on a tenancy database can be a helpful due diligence step in reviewing rental applications. Ensuring you have a quality property will attract high-quality prospective tenants in the first place.

Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.