Outrage at landlord’s ‘KFC test’ for prospective tenants

A GROWING number of landlords are putting prospective tenants through what’s been dubbed the ‘KFC test’.

NEW Zealand landlords are demanding copies of prospective tenants’ bank statements in a move that’s been denounced as “unethical”, and raised privacy and discrimination concerns.

As the pressures on the rental market increases with about a third of all Kiwis now renting, landlords and property managers are seeking further proof that potential tenants can cough up the rent.

Auckland-based property manager Rachel Kann told a social services select committee last month, which was hearing submissions on the Residential Tenancies Amendment Bill (No 2) to scrap letting fees, that she routinely asks for bank statements.

“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, McDonald’s, the dairy, KFC, McDonald’s, court fine’, trucks that they buy, goods that they can’t afford. You know, I see a lot of mismanagement of money.”

Auckland-based property manager Rachel Kann.

NZ First MP Darroch Ball, who was sitting on the select committee, provided the NZ Herald with audio from the meeting and said he was stunned by the “outrageous” admission, calling it a “gross invasion of privacy”.

Consumer NZ had also received complaints about it and said it was a “very concerning” and “unethical” practice.

“If the exact same proportion of income was spent on, ‘UberEats, Habit gym, Ponsonby restaurant, UberEats, Habit gym, craft beer bar’, is that a more reliable money manager?” asked chief executive Sue Chetwin.

Independent Property Managers Association (IPMA) president Karen Withers said it was becoming more prevalent. She said new immigrants often offered bank accounts without prompting, saying it was standard practice in other countries.

“It’s just one of many tools property managers will use to get background information and vet tenants,” Ms Withers said.

Wellington City Council had a longstanding policy of checking bank accounts to ensure its housing stock was reserved for low-income earners.

“We means test our tenants to make sure they are not earning a high income,” a council spokesman said. “Of course there are privacy issues but, the thing is, if they don’t show us their bank account details, then they don’t qualify for our houses. It’s as simple as that.”

NZ Property Investors Federation’s Andrew King wasn’t aware of the practice and said he would warn members against asking for bank details.

Normal background inquiries, including credit checks, Tenancy Tribunal searches, and references, should give a landlord or property manager a clear picture of a potential tenant’s finances, Mr King said.

Housing Minister Phil Twyford was “surprised” to hear of property managers asking for bank accounts. “This just reinforces calls being made for the regulation of property managers,” he said.

The Office of the Privacy Commissioner said it had concerns about the “growing number of cases” where landlords or property managers “seem to be collecting more personal information than they need from prospective tenants”.

“Landlords should only collect the minimum amount of personal information necessary to make a decision on the tenancy application,” a spokesman said.

Under the NZ Privacy Act, if a landlord was collecting personal information from a tenant they must have a lawful purpose to do so, not collect information in an unfair, unlawful, or unreasonably intrusive way, and only use that information for a lawful purpose connected with their function.

The Privacy Commissioner said that while it might be lawful for a landlord to collect information to assess a tenant’s ability to rent, collecting bank statements to “make a determination on their money management style” may be unfair or unreasonably intrusive.

The Office of the Information and Privacy Commissioner (OIPC) in British Columbia, Canada earlier this year found that landlords collected too much personal information from prospective tenants.

It also released guidance to help landlords determine what personal information they could collect under Canadian privacy laws.

“We think this is a reasonable approach, and if we see that these issues continue to arise here, we would consider creating similar guidance for New Zealand,” the Office of the Privacy Commissioner spokesman said.

This article originally appeared on NZ Herald and was reproduced with permission.