EPMEPM: Best Practice & Legislation

Processing Tenancy Applications: Beginning with the end in mind

Was it Stephen Covey that created the expression “begin with the end in mind?” Regardless of the great person who came up with the original expression, it should be a term written into every property manager’s job description. Given that property management has become such as task oriented and management focused career, with a large degree of accountability involved, every task should begin with the thought of the end result. Stacey Holt explains why this is particularly pertinent in the area of tenancy applications.

One (of many) tasks for property managers are the processing of tenancy applications. The processing of application is a time consuming activity that should be treated as a priority in agency practice as it is an income producing activity. Most would agree that the time your lessor/landlord is most likely to be disloyal is when a property is vacant, so the obvious is that we must do all we can to ensure that property is rented not only quickly, but also to a suitable applicant.

Agency procedure

We recommend all property management departments have a culture and procedure that an application will not be taken by the agency for processing unless it is 100% completed with ‘no blank spaces’; if an applicant cannot or does not need to complete certain sections, recommend to the applicant that they put “not applicable” or words to that effect. Applications should also not be processed unless satisfactory identification and proof of income are provided; also ensuring that all required signatures are in place.

Once the application is adequately completed, the agency procedure should begin. The procedure should be written and one in which is used for each and every applicant. An important point to mention is that should the tenancy ‘go bad’, the agency documentation such as the application form and the processing procedure may be required to prove that the agency acted with due care, skill and diligence. If the lessor (and this regrettably does occur more often than you would like to think), claims that the agency is negligent when a tenant defaults, the procedure will be called on to prove that all steps were taken to prove that adequate verification and processes took place.

Processing applications

A suggested best practice system includes checking relevant tenancy default databases, making an assessment of affordability, verifying previous living arrangements (even if they were at home with Family), personal references (that include addresses and are not family), verification of employment (if employed) or proof of regular payments such as Centrelink. Another necessary verification is the next of kin or contact in case of emergency details. This verification is particularly valuable if the tenancy ends and the tenant does not provide a forwarding address details; the tenant can be sent correspondence care of the next of kin address. It is also tremendously important always to be mindful and comply with applicable discrimination laws. All applications must be treated the same and remember that what is to be verified to the best of a property managers professional ability is two key questions:

  • Their ability to pay the rent; and
  • Their ability to care for the property.

Lessor instructions

All relevant applications should be submitted to the lessor regarding their property. A useful tip is to phone the lessor when applications are received to notify when an application is received, and to advise that it has to be processed, and they will be provided more details later that day (or the next; whichever is applicable).

Ask yourself how applications are actually presented to the lessor? For example, if I was applying you may say “a single woman who is in a defacto relationship and owns her own business; she also owns investment property and has no children”. The question is, why was it stated that I am a single woman who has no children?

Of course, lessors want to know who will be living in their property; however property managers may want to consider the actual language used when explaining to assist in stereotypical perceptions and in some cases unintended discrimination issues.

It is best practice to verify lessor instructions in writing. As most lessor/landlords today would have email, a simple email verifying their instructions, the rental amount and the term is great risk management. Also of course sufficient file notes should also be kept in the agency database or fie.
Successful applicants and those who miss out

When accepting applications, suggested agency practice is to say “congratulations Stacey, the lessor/landlord has accepted your application based on the following terms. Our agency policy now requires…”. The key to this procedure is to ensure that the tenant receives the tenancy documents and contract/agreement; and monies such as rent or bond are paid as soon as possible to secure the tenancy for the lessor client as soon as possible. Always ensure compliance with the relevant tenancy legislation in your state or territory.

For the applicants that miss out, always be aware that there is no legal obligation as to give a reason as to why (as long as the reason is not because of unlawful discrimination). Understandably the question “Why?” will be asked of property managers when an application is denied. Property managers should never use the ‘ugly’ word rejected; suggested wording include “regrettably the lessor/landlord has not accepted your application” or “regrettably the lessor/landlord has advised our agency that the application has been denied”.

The next question will undoubtedly be ‘why’ from the applicant. Suggested wording is ‘we are not obliged to give you a reason and wish you well’. Property managers may well want to provide valid reasons such as their income did not meet the criterion, another applicant was successful or the terms were not suitable to the lessor/landlord. Rule and best practice number one is never accepting an illegal instruction from a lessor/landlord in regards to discrimination; advise the lessor that your agency cannot follow an instruction that is unlawful, so please, do not discuss unlawful issues with our agency. Yes, it is their property, but they have no right to act outside the law and if agencies accept instructions, they most likely will be held vicariously liable to a claim of discrimination.

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