Investigation reveals some rental property agencies collect unnecessary, potentially illegal information from applicants

Renters United says the behaviour found in Consumer NZ's report is something they hear about every week.
Renters United says the behaviour found in Consumer NZ's report is something they hear about every week. Photo credit: Getty Images

By Niva Chittock for RNZ

A Consumer New Zealand investigation has found some rental property agencies are collecting unnecessary, and in some cases potentially illegal information, from prospective tenants.

Earlier this year, people posing as renters contacted 32 property agencies in Auckland, Wellington, Palmerston North, Nelson and Dunedin.

It found overall, property agents showed "a good knowledge of the revised Privacy Act."

But 6 percent of the agents asked for bank statements in their application, which is a breach of the Privacy Commission's landlord guidance and may also be in breach of the Privacy Act.

Ten percent also asked the caller to voluntarily supply extra information, such as age, gender and relationship status.

"In a tight rental market, such as the one we've got across the country at the moment, that really leaves tenants with very little choice but to comply, otherwise they face the very real prospect of missing out on a house," Consumer NZ chief executive Jon Duffy said.

That was the experience of one woman who spoke to the investigation.

The 22-year-old who did not want to be named, had a sit-down interview with a landlord in Wellington city who asked about her religious beliefs, alcohol consumption, and cleanliness.

She told Consumer NZ time pressure and her desperation to find a home blinded her to how inappropriate the questions were at the time.

It turned out to be "the first sign of [the landlord's] intrusive and creepy behaviours exhibited during my tenancy," she said.

The tenancy was an awful experience and she ended it early, the woman said.

Duffy said the requests for bank statements were concerning, especially when landlords already had access to a tenant credit system.

"That's pretty invasive. It's pretty demeaning to be honest, to have a property manager trawl through your intimate banking information and make a judgement call about whether you're a fit and proper person to be tenanted in a property."

Renters United president Geordie Rogers said his organisation heard about this sort of behaviour every week.

It had become common practice in places for tenants to supply cover letters and "rental CVs", Rogers said.

The information transfer between tenants and property agencies or landlords was a one-way street, he said.

"If a renter was to ask that information of a landlord, given that the renter is going to be living in that person's house, they might want some background details on how well the landlord maintains the property. Many landlords would not be willing to provide that."

There was also a power imbalance at play which was preventing tenants from speaking up or complaining to their landlord for fear of jeopardising their home, Rogers said.

"Landlords even are saying 'look, I know you don't have to provide this information but if you don't, it's more likely that you won't get the property, so just provide the information, it's just easier that way'."

Renters United wanted the practice to be stopped, he said.

Duffy said the Consumer NZ investigation only looked into the initial property inquiries stage but there was the possibility more breaches may be occurring further along in the rental process too.

He believed the current complaints system was not good enough.

"At the moment, a Privacy Act complaint could be made, but the property manager or the property management firm is going to know who the tenant is that makes that complaint," Duffy said.

"That could result in that tenant being potentially blacklisted or having trouble getting rental properties in the future."

It was repeatedly cited as a concern, and there was a real fear from tenants they could be blacklisted, Duffy said.

"We need a system that protects tenants and encourages them to come forward if their rights have been breached."

Property agencies and landlords also needed a space where their complaints could be fairly assessed, he said.

He hoped the investigation will help inform the Ministry of Housing and Urban Development's current review of property management regulations.

Landlords 'caught in the middle'

Landlords say they need to collect information about prospective tenants to satisfy insurers for when a future claim is made.

Property Investors' Association vice president Peter Lewis said insurers still required a certain amount of information from landlords about tenants, and landlords were stuck in the middle.

"It's one of the requirements of insurance policies that we investigate a potential tenant and keep records to show that we have taken due care in the selection process," he said.

"We are being caught in the middle between these sort of recommendations and protecting the value of our own asset if there was an insurance claim."

Lewis has been a property investor for 31 years and owns 13 properties in Auckland.

He said many landlords are being more selective since new rules made it harder to evict tenants.

"Before you hand over such an asset to somebody that you've never met before you want to be reasonably sure of their background, any past history that they have, and that they are going to be a sound and reasonable tenant who can afford to pay the rent."

Property investor group backs privacy rules

Auckland Property Investors' Association president Kirstin Sutherland said a change in the industry's attitude towards privacy was long overdue.

"When you have property managers circumventing privacy rules and playing on that power imbalance to diminish a tenant's voluntary consent, that tells me there are problematic

attitudes towards personal information and privacy," Sutherland said.

"To continue thumbing your nose at the guidance will only invite more scrutiny, backlash and harsher rules at a time when the industry is already crying out for regulatory reprieve."

She said Consumer NZ's call out of the industry is warranted and that the poor performances observed were primarily due to a lack of good operational knowledge of the guidance across the sector, deprioritisation of privacy against other new tenancy rules and the sector's unsophisticated tradition towards privacy.

"Modern problems require solutions that are underwritten by modern attitudes. When it comes to privacy, that means acknowledging the custodial power (and therefore obligation) property managers and landlords have over tenant's personal information," Sutherland said.

"Tidying up the paperwork and processes is one thing, but it is really about flicking the switch in your head to recognise that we hold so much of our tenant's information that we ought to take care."

The association was one of the first to publicly support the OPC guidance when it was introduced in November 2021.

The Property Managers Institute of New Zealand said it had provided a number of educational sessions focussed on the importance of the Privacy Act including in-person and online presentations from the Privacy Commissioner and representatives.

"Adherence to the Privacy Act was a focus of the education programme," the statement continued.

"While the Institute incorporates a number of individual Property Manager members... it does not involve itself in the day-to-day operation of property management companies and their associated internal policies and is not in a position to comment," it concluded.

Ministry for Housing and Urban Development has been contacted for comment.