Getting tenant selection right from the start

As a landlord, one of your biggest risks is ending up with the wrong tenant. It can mean missed rent, costly damage, long Tribunal processes, and months of stress.

That’s why a thorough application checking process is not just helpful. It’s essential. Not all checks are created equal. A professional property management company will carry out a multi-layered screening and tenancy set-up process to reduce risk right from the start.

Here’s what a thorough tenant application check really involves, and why getting it right matters so much. It’s not just about who is approved. It’s about how the tenancy is structured from day one.

A comprehensive tenant application check looks at affordability, history, and behaviour.

It also ensures the tenancy is set up correctly from day one, with all tenants named, joint and several liability clearly in place, and documentation that protects the landlord if issues arise later. 

When this is done properly, it reduces disputes, protects insurance cover, and gives landlords far stronger protection if things go wrong later.

1. Verification of identity and ability to pay rent

First things first, who are they, and do they have the ability to pay the rent?

Every applicant who is named on the tenancy agreement should be required to:

• Provide photo ID (such as a driver licence or passport)
• Supply proof of ability to pay rent (payslips, employment letter, or WINZ statement)

This is the foundation of the application. If the basics don’t stack up, it’s a no.

2. Credit check

A credit report tells you more than just whether someone has good credit, it reveals patterns.

Do they have unpaid debts? Are there defaults? 

While a poor credit score isn’t always a deal-breaker, it does raise a flag, especially if combined with other risks.

At Harcourts, we use professional credit reporting agencies that give us the full picture, not just a surface-level score. Applicants are not required to consent to a credit check. However, a refusal is a clear risk indicator.

3. Background checks

A tenant background check looks beyond the application form to identify publicly available risk indicators that may not be disclosed by the applicant.

These checks typically include:

• Published Tenancy Tribunal decisions

If a tenant has been involved in Tribunal proceedings and the decision has been published, this can show up in a background check. This may include findings relating to rent arrears, property damage, abandonment, or breaches of the Residential Tenancies Act.

Not all Tribunal cases are published, and some parties may have name suppression, which means the absence of a result does not automatically mean there is no history.

• News and media searches

Background checks may identify news articles or media reports involving the applicant. This can include serious matters such as fraud, violence, drug related activity, or other behaviour that could present a risk in a residential tenancy context.

This is not about minor mistakes or gossip. It is about identifying patterns of behaviour that could affect neighbours, the property, or the landlord’s investment.

• Court and enforcement information where publicly available

Some background checks can surface information relating to court proceedings, enforcement actions, or insolvency records where these are lawfully accessible. This helps build a broader picture when combined with credit and reference checks.

• Alias and name variation checks

Screening providers may also check for common name variations, reducing the risk of applicants avoiding past records by using shortened names or alternative spellings.

It is important to understand what a background check does not do. It does not guarantee that someone will be a good tenant. It does not uncover every past issue. It is one layer of a wider risk assessment.

When read alongside credit history, references, verification of ability to pay rent, and professional judgement, a background check helps identify risks that might otherwise stay hidden.

It is about informed decision-making, not perfection.

It is also important to understand that background checks may uncover information about an individual that is not relevant to a residential tenancy. Under the Privacy Act 2020, property managers must only collect, use, and disclose personal information that is necessary for a lawful tenancy decision.

Information that does not relate to tenancy risk, payment ability, property care, or compliance with the Residential Tenancies Act will not be used or shared in the context of granting or declining a tenancy. While a property manager may be privy to information through screening, it is how that information is used that matters.

4. Reference checks

Calling previous landlords is one of the most telling parts of the process, and one that’s often rushed or skipped when property managers are under pressure.

We ask the right questions:

• Was rent always paid on time?
• Was the property looked after?
• Were there any complaints or issues during the tenancy?
• Would you rent to this tenant again? This is arguably the most telling question in the entire reference checking process.

Character references can help build a picture of stability and reliability, and when paired with a sound gut instinct, they add confidence to the overall decision.

5. In-person viewings and direct interaction

Even in a digital world, nothing replaces human interaction. Seeing applicants in person at the property viewing allows property managers to observe behaviour, communication style, and how individuals present themselves in a real tenancy context.

Where an in-person viewing is not possible, an online viewing or video interaction may be arranged. This still provides an opportunity to engage directly, ask questions, and assess whether the applicant is being open and upfront.

These interactions often reveal subtle but important cues, attitude, responsiveness, respect for the property, and how applicants interact with others.

It is surprising how many red flags can emerge from just a few minutes of direct interaction.

6. Joint and several liability 

An often overlooked part of tenant selection is ensuring that the tenancy agreement clearly reflects who is legally responsible for the tenancy, and that the appropriate adult occupants are named on the tenancy agreement.

When all adult occupants are tenants, joint and several liability applies. This means each tenant is legally responsible for the full obligations of the tenancy, including rent, damage, and compliance with the agreement, not just their individual share.

From a landlord’s perspective, this is a critical layer of protection. If one tenant leaves, or stops paying rent, the remaining tenants remain fully liable. 

This is why professional property managers are careful about who is named on the tenancy agreement. It ensures liability sits with the correct people from the start, rather than trying to sort it out after something goes wrong.

7. Landlord protection insurance

Landlord protection insurance is an important safety net, but it is not unconditional.

Most policies expect landlords and property managers to be able to demonstrate that reasonable tenant selection processes were followed at the start of the tenancy. This commonly includes verifying identity, assessing an applicant’s ability to pay rent, completing reference checks, and ensuring the tenancy agreement clearly identifies who is legally responsible for the tenancy.

Where tenant selection or tenancy documentation is inadequate, insurers may question whether reasonable care was taken. In some circumstances, this can result in an insurance claim being reduced or declined.

This is why professional tenant selection and correct tenancy structure matter. It is not just about choosing the right tenant at the outset, but about setting the tenancy up to withstand change.

Landlord protection insurance then provides an additional layer of protection if things go wrong despite best efforts.

Why it all matters

Bad tenants are rarely bad on paper, unless you dig deeper. Many applicants know how to talk the talk and sound great in writing, but a solid checking process reveals patterns.

Skipping or rushing any part of the process can have consequences:

• Rent arrears
• Property damage
• Tribunal disputes
• Tenants who refuse access or breach conditions
• Stress, time, and lost income.

The checking process protects your asset. It is the first line of defence.

Where an application is declined, property managers must also exercise discretion in what is communicated. There is no obligation to disclose specific background findings, particularly where this would involve sharing personal information such as Tribunal history, credit data, or other sensitive information. Decisions are made on the full assessment, but outcomes are communicated carefully, lawfully, and respectfully, in line with privacy obligations.

A thorough process helps select the right tenant at the time, but no process can predict future life changes. When circumstances shift, that does not make the original decision wrong.

That is why it is always easier to put the right tenant in at the start than to unwind a poor decision later.