Landlords have responded to Privacy Commissioner John Edwards hitting out at some of them for holding tenant blacklists and requiring more information than is legal.
Edwards announced he will focus on the collection, retention and disclosure of information by landlords and property management agencies after his office received many complaints.
Sharon Cullwick, executive officer New Zealand Property Investors Federation, said bad tenant or blacklists were not a fair or transparent way to find out tenant details because they were one-sided and could unfairly keep someone out of the market because of inaccuracies.
"Some information is vital, such as name, proof of identification, number of occupants, and pets," she said.
More than 3000 landlords and property managers are signed up to Facebook page Bad Tenants, New Zealand (landlords only), blacklisting tenants despite the claims of bad behaviour being unverified and some posts potentially breaching privacy rights. The group was created in 2017 and is private; although anyone can join, only members can see who's in the group and what they post.
The page has around 20 posts a week, it says.
Cullwick said a landlord might require a credit check but must get the tenant's permission first.
But there was no need to find out intricate details about how a tenant spends their money, marital status, religion, nationality or anything else that would not help to ascertain if they were suitable, she said.
Auckland-based property manager Rachel Kann told a 2018 social services select committee she routinely asked 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 at the time.
"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," Kann said in 2018.
But Cullwick said landlords needed to pick tenants far more carefully from next Thursday when the law changes and no-cause terminations are banned, meaning landlords must give specific reasons for eviction or tenancy terminations.
"While this change is aimed at improving the security of tenure for all tenants, it actually only protects the tenure of the two per cent of tenants who prove to be particularly difficult," Cullwick said.
"The unintended consequence is that it will also affect the marginal tenants to whom landlords may have given an opportunity but will hesitate to do so from now on. Some of our members have said they will leave a property empty rather than take a risk on a dubious tenant. This will increase the vacancy rate which in turn reduces the availability of rental properties at a time when we require more," Cullwick said.
The federation was keen to see fairness for landlords and tenants and would engage with the Privacy Commissioner, she said.
Auckland landlord Andrew King and Cullwick's predecessor said he hasn't been able to join the Facebook page, but it doesn't appear legal.
"The Privacy Commissioner's announcement is reasonable and it is good that he will be seeking a meeting with the federation," King said.
"But it is no wonder that some people are setting up things like the Facebook page to protect themselves once the new laws come into effect next week," he said.
"Because landlords are being restricted on when they can end a tenancy, making sure you get the right tenant is going to become even more important than it has been in the past. Landlords are going to ask a lot more questions and check out prospective tenants a lot more. It is also likely that marginal tenants will find it very difficult to secure accommodation. Landlords are going to be a lot more risk-averse," he said.
Federation members were saying that they will keep their properties empty until they find a tenant with less risk of causing problems for them and the neighbours of their rental properties, King said.
"This is likely to see longer vacancy periods which will make the supply of rental properties even worse than it already is. The Government has good intentions on wanting to improve tenants' security of tenure, but unfortunately, some of the new laws only protect a small number of bad tenants and make it harder for marginal tenants to get rental accommodation," King said.
The Real Estate Institute said welcomed Edwards' probe and said the blacklist was disappointing. Chief executive Bindi Norwell said the list of bad tenants was potentially a breach of the Privacy Act.