Renting rights and wrongs

Atenancy agreement is simply a contract or business arrangement between a tenant and a landlord. One has something the other needs and pays market rates for it. This is economics at its most basic. But sometimes it can look more like a feudal arrangement in which one party wields the power and the other must grovel, beg and jump through hoops.

News about the so-called ‘‘KFC test’’ applied by some landlords shows how out of balance the relationships have become. It also reveals that a tendency to shame beneficiaries and the working poor for bad decision-making and unhealthy choices is alive and well in New Zealand.

NZ First MP Darroch Ball released select committee audio in which a property manager talked about a practice of looking through a prospective tenant’s bank statements and assessing their spending patterns. ‘‘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,’’ the property manager said. ‘‘They’re paying somebody’s mortgage and I see a lot of people who are low socio-economic and their bank statements will read, ‘KFC, McDonalds, the dairy, KFC, McDonalds, court fine’, . . . goods they can’t afford.’’

The casual reinforcement of prejudices about ‘‘people who are low socio-economic’’ is alarming.

Housing Minister Phil Twyford is right to point out that demanding to see a payslip or bank statement is ‘‘sailing very close to the line’’ of discrimination. Landlords and property managers are entitled to do a credit check and ask for references, but as landlords cannot discriminate on employment status, it is surely problematic if they turn down potential tenants on the basis of subjective views about money management.

The practice is not illegal but the Office of the Privacy Commissioner says it is seeing rising numbers of cases where landlords and property managers ask for more information than they need. Where it gets murkier is that the practice is not limited to private landlords and property management companies. Ball has said Wellington City Council also asks to see bank statements from those who apply for council-owned rental properties, although the council says it is to check that housing stock is kept for low-income tenants.

The Real Estate Institute has pointed out that even the Government has supported the idea that Twyford condemns, as ‘‘the Ministry of Social Development website . . . says to prospective tenants ‘If you’re in paid work, ask your employer to give you a letter stating you’re employed in a permanent or long-term job. Or, you could show your landlord your bank statement with regular income’.’’

The institute’s position is that landlords are entitled to do due diligence but that should not extend to assessing spending choices. However, when the institute says that due diligence includes ‘‘ascertaining whether a tenant has stable employment’’, it should probably brush up on the Human Rights Act, which, as Twyford noted, stresses it is illegal to ‘‘discriminate on the basis of employment status, eg being unemployed or a beneficiary, or receiving ACC payments’’.

But the power imbalance will remain as long as we have a hyper-competitive rental market in some cities, chronic housing unaffordability, unregulated property managers and tenants prepared to overlook their own rights out of desperation.

‘‘The casual reinforcement of prejudices about ‘people who are low socio-economic’ is alarming.’’