A legal expert says prospective tenants who are concerned about being asked to show their bank statements could offer to show redacted copies, or tell landlords to do a credit check.
Victoria University of Wellington senior law lecturer Dr Mark Bennett said: "I can't see why they shouldn't be happy to see a redacted copy of a bank statement."
If landlords complained about the costs of a credit check, tenants could offer to pay for it themselves.
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It comes after reports of tenants being turned away by landlords for spending too much money on things like KFC, and one being told that a landlord disapproved of them taking pole dancing classes.
Dr Bennett said the issue of landlords asking for bank statements raises "questions about compliance with the Privacy Act."
He said a prospective tenant's claim she was judged by a landlord for taking pole dancing classes was difficult, because it was "not in itself or obviously one of the prohibited grounds of discrimination".
These grounds include sex, marital status, disability, and employment status.
Dr Bennett said landlords could argue that bank statement checks were for credit worthiness, but "we just don't know what they're going to do with it."
If tenants' information was used by landlords in a way that was not disclosed to them when the information is gathered, that could be a potential breach of the Privacy Act.
Privacy Commissioner John Edwards waded into the issue on his personal Twitter account.
"I'm going out on a limb here - if you're a landlord collecting and using information about prospective tenants' fast food consumption you might have a hard time defending a Privacy Act complaint!" he said.
Dr Bennett said the issue highlights the uncertainty around what landlords are and are not allowed to ask of their prospective tenants.
He expected the Government might look at the issue during its major review of the Residential Tenancies Act, which is expected to result in new legislation by the end of the year.
Under the Privacy Act, if a landlord is collecting personal information from a tenant they must:
- have a lawful purpose to do so
- not collect the information in an unfair, unlawful, or unreasonably intrusive way
- only use that information for a lawful purpose connected with their function
The Office of the Privacy Commissioner said it had concerns about landlords increasingly asking for more personal information than they needed.
"Landlords should only collect the minimum amount of personal information necessary to make a decision on the tenancy application," it said in a statement.
"It might be lawful for a landlord to collect information to able to assess whether a tenant can pay rent. However, collecting their bank statements to make a determination on their money management style may be unfair or unreasonably intrusive.
"Landlords could get sufficient information about an individual's ability to meet their rent obligations from things like credit checks and references from previous landlords."
People who felt a landlord had unfairly collected or used their information could lodge a complaint to the Office.
If the issues continue to come up, the Office would consider creating new guidance for landlords about what personal information they can collect under New Zealand privacy laws.