'KFC' test for tenants: Property managers asking for bank statements

Wednesday, 8 August 2018

Property manager Rachel Kann says she looks at spending habits to determine what tenants can pay.

Property managers seem to have the backing of the Government in asking to be shown copies of potential tenants' bank statements, the Real Estate Institute says.

New Zealand First MP Darroch Ball released audio of a select committee oral submission in which a property manager said it was common practice to ask to see the details, to determine whether tenants could pay rent.

Rachel Kann told the committee it was common to see lots of payments to KFC and for things tenants couldn't afford.

'I don't just want to put a tenant into a property and no sooner have they been put in they can't afford the rent,' she said.

'They're paying somebody's mortgage and I see a lot of people who are low socio-economic and their bank statements literally will read, 'KFC, McDonalds, the dairy, KFC, McDonalds, court fine', trucks that they buy, goods that they can't afford. You know, I see a lot of mismanagement of money.'

Ball said there was a power imbalance between landlords and tenants. When people were desperate to get into a property, they would hand feel obliged to hand over whatever information was requested.

Property managers are looking at bank statements, and KFC purchases are noted.

He said it was outrageous that managers would judge people's spending habits. 'Most property managers and landlords would have a look for the genuine reason of assessing affordability but it's quite clear that there are a few, and it's a growing trend, that go and assess spending habits and that's not necessary.'

Consumer NZ said it had received complaints about the practice.

'They have to comply with the Privacy Act, which says requests for personal information must be fair and reasonable,' said head of research Jessica Wilson.

'But there's no regulation of property managers and no specific standards they have to meet. Too often, they're requesting information they don't need.'

Bindi Norwell, Real Estate Institute chief executive said the Government appeared to support the idea.

'The Ministry of Social Development website actually says to prospective tenants 'If you're in paid work, ask your employer to give you a letter stating that you're employed in a permanent or long-term job. Or, you could show your landlord your bank statement with regular income'.

'It's important that property managers carry out due diligence on behalf of their clients - landlords, but the focus needs to be around ascertaining whether a tenant has stable employment and can pay the rent, not whether they spend their disposable income on KFC or Uber Eats.

Bindi Norwell, the new chief executive of REINZ, says more clarity is needed around property management.

Bank statements are being used to check that tenants can pay their rent.

'While there are many amazing property managers out there, unfortunately their high standards are being undermined by a lack of regulations and also by a small group who don't have the same ethics.'

Norwell said there needed to be consistent standard to ensure industry and consumers had enough protections in place, that there were protections around holding money in a trust account, that property managers had the appropriate insurance in place to operate in the industry, had a dispute resolution process in place and ensured that regulatory compliance was being adhered to alongside operating under an industry-wide recognised qualification.

One tenant, Darren Henderson, said he had submitted to credit checks.

'Renters are always made out to be lower-class. I have been renting for many years, we have shifted around with my work, we are what I would call professional renters.

'What has to be put across here is that this is a business agreement. If the tenant is asked to show statements, should the owner or Property manager not then also have to show they have the means to pay the mortgage, that they have the correct insurances and that they have the funds to repair any problems that arise within the property?'

Another, who did not want to be named, said she was asked for bank statements before being offered a home.

'This was despite telling the property manager we are a middle-aged couple who have just sold our home of 35 years -we will be moving out of Auckland, I was told it was so they could see that we were able to pay a mortgage, I told the manager that we were mortgage-free and had been for the last five years so that wouldn't be helpful…I wasn't impressed but when you need to find somewhere to live there isn't a choice.'

* Have you been asked for bank statements by a landlord or property manager? Email susan.edmunds@stuff.co.nz

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