Tenant selection is where landlords make or break their investment. A good tenant pays rent on time, treats the property well, and makes your life easy. A problematic tenant can cost you months of rent, thousands in damage, and endless stress. The difference often comes down to how thoroughly you screen applicants.
This guide walks through the tenant screening process for New Zealand landlords, including what you can legally ask, how to verify information, and warning signs to watch for.
Why Screening Matters So Much
It is hard to overstate the financial impact of tenant selection. Consider two scenarios with the same property renting for $600 per week.
Scenario one involves a well-screened tenant who stays for three years, pays rent on time, and leaves the property in good condition. Scenario two involves a poorly-screened tenant who pays late repeatedly, falls into arrears after six months, causes $5,000 in damage, and forces you through a three-month Tribunal process to regain possession.
The difference between these outcomes is not just the direct costs. It is the time spent chasing rent, the stress of dealing with disputes, and the vacancy period while you repair and re-let. Over a 30-year investment horizon, a few bad tenant experiences can cost you tens of thousands of dollars.
Good screening does not guarantee perfect tenants. But it dramatically improves your odds.
The Legal Framework
Before diving into screening techniques, understand what you can and cannot do legally.
The Human Rights Act prohibits discrimination based on sex, marital status, religious belief, ethical belief, colour, race, ethnic origin, disability, age, political opinion, employment status, family status, and sexual orientation. You cannot reject a tenant because they have children, because of their ethnicity, or because they receive a benefit.
What you can assess is a prospective tenant's ability to pay rent and their history as a tenant. You can ask about income, request references from previous landlords, and check credit history with the applicant's consent.
The Privacy Act governs what information you can collect and how you can use it. You must tell applicants what information you are collecting and why. You should only collect information relevant to the tenancy decision.
The Application Form
A thorough application form is your first screening tool. At minimum, collect full legal names of all proposed tenants, current address and how long they have lived there, employment details including employer name and income, previous landlord contact details covering at least the last two addresses, personal references, and consent for credit and reference checks.
Ask why they are leaving their current property and what date they need to move in. These questions can reveal useful context about their circumstances.
Request proof of identity (typically a driver licence or passport) and proof of income (recent payslips or bank statements). Many landlords ask for three months of bank statements, which show not just income but spending patterns.
Verifying Income
The general rule of thumb is that rent should not exceed 30-35% of gross household income. If a household earns $1,500 per week, they can comfortably afford rent of $450-525 per week. Stretching beyond this increases the risk of payment difficulties.
For employed applicants, verify income with recent payslips or a letter from their employer. Call the employer directly if possible, using a phone number you source independently rather than one provided by the applicant.
Self-employed applicants present more complexity. Request their last two years of financial statements or tax returns. If their accountant can provide a letter confirming income, that adds credibility. Self-employed income can be variable, so look at averages rather than best-case figures.
Beneficiaries can be excellent tenants. Their income is stable and predictable. You can verify benefit income through a letter from Work and Income. Do not assume someone on a benefit is a higher risk - that assumption may be discriminatory.
Reference Checks
Previous landlord references are the most valuable screening tool available. A landlord who has dealt with this person for a year or more knows whether they pay on time, maintain the property, and are reasonable to deal with.
When calling references, ask specific questions. Did the tenant pay rent on time throughout the tenancy? Did they maintain the property in good condition? Did they give appropriate notice and leave the property clean? Would you rent to them again?
Listen for hesitation or vague answers. A landlord who had a good experience will usually say so clearly. Reluctance to recommend can be as telling as outright criticism.
Be aware that some applicants provide fake references - friends or family posing as previous landlords. Cross-reference the phone number with independent sources. Check if the referee's name appears on tenancy or property records for the address claimed.
Personal references from employers or colleagues are useful but less directly relevant. They can speak to character and reliability in a general sense.
Credit Checks
With the applicant's written consent, you can run a credit check through agencies like Centrix or Equifax. These reports show any defaults, court judgments, or bankruptcies in the applicant's credit history.
A perfect credit history is not essential. Many excellent tenants have had past financial difficulties due to relationship breakdowns, health issues, or job losses. What matters is the context and pattern.
Red flags include multiple recent defaults, current unpaid debts to previous landlords or utility companies, and Tenancy Tribunal orders against them. A single default from five years ago after a difficult period is less concerning than a pattern of ongoing payment problems.
Tenancy Tribunal History
The Tenancy Tribunal publishes some decisions online, though not all are searchable by name. If you have concerns about an applicant, searching the Tribunal database for their name may reveal past disputes.
Some tenancy database services compile records of Tribunal cases and can search these on your behalf. These services require the applicant's consent.
Red Flags to Watch For
Certain warning signs should prompt extra caution during screening.
Urgency to move in immediately without explanation can indicate they have been asked to leave their current property. Ask why they need to move quickly.
Reluctance to provide references or gaps in tenancy history warrant questions. Where were they living during that period? Why cannot they provide a reference?
Inconsistencies between what they tell you and what references or documentation show are concerning. If their stated income does not match their bank statements, or their employment dates do not align, dig deeper.
Negative comments from previous landlords - even mild ones - deserve attention. Most landlords are reluctant to speak negatively about past tenants. If they do, take it seriously.
Applications that seem too good to be true sometimes are. Unusually high income for the area or claims of perfect tenancy history sometimes mask fraud.
Making Your Decision
After gathering all this information, you need to make a decision. Document your reasoning in case questions arise later about discrimination.
If you decline an applicant, you are not legally required to give detailed reasons. A simple statement that you have chosen another applicant is sufficient. However, ensure your actual reasons relate to tenancy-relevant factors like income or references, not prohibited grounds.
If you cannot choose between qualified applicants, consider factors like proposed tenancy length, compatibility with property rules (pets, smoking), and move-in timing.
The Viewing Process
Tenant screening starts before you even receive applications. How prospective tenants behave at viewings provides useful information.
Do they arrive on time? Do they treat the current tenant or property with respect? Do they ask sensible questions about the property? Do they seem genuinely interested or just collecting options?
Experienced landlords often develop instincts about applicants. While you should not rely solely on gut feelings - and must never discriminate on prohibited grounds - your observations during viewings add context to the formal screening process.
Thorough tenant screening takes time and effort. But the investment pays dividends many times over through better tenants, fewer problems, and ultimately better returns on your property investment.
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