The imbalance of power in New Zealand’s rental market

We conducted a nationwide mystery shop of property managers in May 2022. We wanted to see whether they were adhering to the Office of the Privacy Commissioner’s (OPC) “Privacy Act guidance for landlords and property managers” (OPC’s landlord’s guidance).

Our mystery shoppers, posing as potential renters, made 71 calls to 32 property agencies across five regions (Auckland, Wellington, Palmerston North, Nelson and Dunedin).

During these conversations, the property managers and rental agents were asked questions about what sort of information is collected from renters, how long it is stored and whether it is shared with any third parties.

Read the full report here (1.81 MB).

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My fiancé and I live in Wellington city. We’ve been renting a nice apartment for more than two-and-a-half years but it is small, relatively expensive and has no outdoor space. The mounting pressure of rising living costs is also taking its toll, and we’re ready to find a new, more affordable home to rent. We have been looking for that new home for over a year.

In October 2021, we turned up early to a house viewing in central Wellington. A large crowd gathered as we waited for the agent to show up. I could feel the collective, desperate urgency in the air, as everyone wanted to get in and inspect the house but also make a good first impression on the agent.

Once we viewed the house, we liked it and put in an early application. The agent encouraged us to include a cover letter, as it would help the owner of the property to get to know us better, so we did.

We thought our application was thorough, and we both had great references. We included a nice photo of ourselves and filled the cover letter with detailed information about who we are, how we met, what we studied at university and why we think we are great tenants. We even shared the story of how we got engaged, because it just so happened to take place a couple hundred metres up the road from the house we were applying for. We shared all this extra information about ourselves to ‘sell’ our application to the agent. But it didn’t make a difference – we never even got a reply.

This is an increasingly common story, especially for young people struggling to succeed in this volatile rental market. To even be considered for a property, many feel pressured to provide personal information, and don’t feel they can assert their rights to privacy because agents and landlords hold so much power over where they can or cannot live. This is still happening despite the laws that are in place to prevent it.

What we found

Our investigation into property managers and privacy regulations found that the agents showed a good knowledge of the revised Privacy Act (2020) and OPC’s guidance documents, with 18% explicitly referring to the new rules.

However, 10% of agents encouraged the mystery shopper to voluntarily provide extra information by way of a cover letter and a ‘rental CV’, which might include “information such as age bracket, gender, relationship status, etcetera”. This is because, as one property manager put it, “the more information you give, the better your chances [of securing a rental property]”.

Another agent said, “the more information you provide [about yourself], the smoother the process”. Another confirmed that extra information would “make your application stand out from the others”.

A further 6% of agents asked the mystery shoppers to include bank statements in their application, even though this is in breach of OPC’s landlord’s guidance and likely to be a breach of the Privacy Act (2020).

What really stood out was that some agents became noticeably less interested in the mystery shopper as soon as they started asking questions about the privacy and security of their information. This occurred, for example, when the shoppers asked about where, and for how long, their data would be stored. After they asked these questions, 14% of property managers showed a noticeable lack of interest.

As one shopper explained: “In the beginning of our conversation I felt as though he was very clear with his answers. However, the question about storing my information really did seem to trip him up and [he] sounded almost accusing as to why I cared about where my personal information was stored … The more questions I asked, the less interested he seemed, and [he] also almost got annoyed about them.”

Renter's rights

When applying for a property, a person should never be asked by an agent/landlord about:

• gender (including pregnancy and childbirth)
  
• relationship or family status
• religious or ethical beliefs
• colour, race, or ethnic or national origins (including nationality or citizenship)
• physical or mental disability or illness
• age
• political opinion
• employment status (being unemployed, on a benefit, or on ACC)
• sexual orientation or gender identity
• A person should also never be asked to provide bank statements for their spending habits to be reviewed.

Dodgy tactics and strange questions

We’ve also spoken with several prospective tenants who have shared their stories of intrusive questions from property managers or landlords.

Lucy (pseudonym) is a 22-year-old student living in Wellington city. She “was under time pressure to find somewhere to live”, so agreed to an interview with the landlord of a property. During the interview, the landlord asked questions about her cleanliness, religious beliefs and whether she drank alcohol.

Her desperation to find a home “blinded” her to how inappropriate these questions really were at the time, but she did think that “the request to interview was strange”. This interview ended up being only “the first sign of [the landlord’s] intrusive and creepy behaviours exhibited during [her] tenancy”, which she left early “due to the awful experience”.

Gray, a 25-year-old who studied law in Christchurch, also found it difficult when searching for a rental. When she and her flatmates were filling out an application, she noticed that the landlord was “asking some really weird questions”. For example, after requesting her phone number, they proceeded to ask, “how long I've had that phone number – yeah, I don't know what that had to do with anything”.

The landlord also asked her for her boss’ phone number “specifically because they wanted to prove that I actually worked where I worked”, despite already giving them references. They also asked her to provide bank statements, details about her salary, and in another instance, she was asked for a CV. For Gray, it felt like she was “giving a job reference for a place to live”, which seemed totally unnecessary. She found the whole process “quite invasive”.

As stated in OPC's Privacy Act guidance for tenants (OPC’s tenant’s guidance): “When you apply to rent a property, the landlord shouldn’t ask you to provide bank statements so they can assess your spending habits. Asking about how tenants spend their money is unfair and unreasonably intrusive, except in exceptional circumstances.”

Gray did not trust anything about the process.

“I was absolutely not having this. I did not want to end up in the [Tenancy] Tribunal. We bailed on a couple [of properties] because I was just not about to have that.”

The OPC has raised serious concerns about the privacy breaches. In its 2022 Insights Report, it wrote: “In early 2021, we saw that some property management agencies were asking for very detailed information from prospective tenants as part of their selection process, while others were using public forums to compile lists of so-called ‘bad tenants’.”

The OPC also noted: “The power imbalance between people and agencies is such that even if people are not comfortable with the way that their personal information is being collected and used, they are not in a position to do anything about it.”

Ashok Jacob is a representative for Renters United, the national advocacy group for tenants. He told Consumer about a survey it conducted among members in 2021 which found, “that property management companies and landlords had been blatantly and consistently violating privacy laws in tenancy applications. In many cases they were explicitly discriminating against people based on race, gender and family status – obviously contrary to the Human Rights Act 1993.”

“The supply of rental properties is so tight in so many areas that people are incentivised to give over more and more information in tenancy applications, regardless of whether or not the landlord specifically requires it,” he said.

Our mystery shop showed that renters who do try to assert their rights under the Privacy Act (2020) are more likely to be labelled ‘troublesome’ or ‘problematic’ and less likely to be offered a place to live.

Renters United blames the tenancy laws, which it says gives landlords “disproportionate power over their tenants’ lives in so many ways that people are pressured into providing personal information – whether or not it’s legal for the landlord to ask for it”.

We approached Quinovic, one of the largest property management companies in the country, to ask for its stance on this issue. We also asked how it is actively preventing the Privacy Act (2020) from being breached within its own business practices.

Grant Sheridan, the Chief Executive of Quinovic Property Group, said he is “acutely aware of the regulatory complexities facing our industry as a result of the new OPC regulations [and OPC’s guidance]”.

He told us that Quinovic is “committed to adhering diligently to all regulations but there are certainly some challenges in terms of inconsistencies within the guidelines.” The company would “welcome a tightening up of the OPC regulations”.

Sheridan said the industry faces difficulties in regard to collecting and retaining information, such as collecting proof of identification for a credit check. He claimed that if a scan of a prospective tenant’s identification document is made, “the new OPC regulations require that the scan or photocopy must be immediately destroyed once the credit check has been completed.”

Yet, in practice, these documents don’t need to be deleted immediately. The OPC’s landlord guidance says landlords and property managers should delete identification documents once the verification process has been completed and they no longer need that information.

Sheridan also said that if a credit check is challenged, the company providing the credit check needs evidence the landlord or property manager had the authority to request it.

“The credit check company also has a requirement to retain such proof for five years after the request. If the tenant is approved, then they may make a claim against the landlord up to six years after the end of the tenancy and, as such, the landlord or property manager is duty-bound to retain the proof that they were authorised to do the initial credit check,” Sheridan said.

However, the landlord or property manager is not required to retain this information as they are not subject to the Credit Reporting Privacy Code.

Changes to the Privacy Act and its related guidance for landlords and rental agencies hasn’t changed the rules about keeping information, such as credit check information. Under the Tenancy Act, a landlord or property agency can keep the information of their preferred candidates for 12 months. And, under IRD legislation, they must keep approved tenants’ information for seven years.

Sheridan said that prior to the Privacy Act 2020 coming into effect, a property manager or landlord could meet and approve a tenant for a property within 24 hours or even less, but now the process can take longer.

“We know this is not an ideal situation for tenants, who understandably want a speedy answer when they have applied for a new home.”

He argued that the current laws are disrupting tenants, landlords and property agents alike in the application process. However, in highlighting this issue to us, he did not respond to our direct question regarding how much information agents and landlords are still asking tenants to provide but said that “Quinovic property managers make a judgement call for each individual application regarding how much information is required from tenants”, meaning this can differ between tenancies.

“Property managers need to weigh up their regulatory obligations against the privacy rights of each tenant and that is not always clear cut because of the inconsistencies in the current guidelines,” he said.

Lastly, Sheridan said that Quinovic is reviewing all “internal processes with a view to streamlining them nationwide”.

Jackie Adams, the compliance manager at OPC, has seen substantial improvements in how private information is handled by most rental agencies.

The rental agencies are “reporting that the guidance is not impacting on their ability to evaluate and approve rental applicants and is providing them with more clarity about what they can do with peoples’ personal information,” she said.

The grey area

OPC’s tenant’s guidance states: “Landlords can only collect personal information in ways that are lawful, fair and not unreasonably intrusive. Landlords shouldn’t collect unnecessary and privacy-intrusive information from you.”

However, the guidance also states the amount of “information you give to a landlord when you apply for a property is your choice, but the amount you provide may affect a landlord’s decision to offer you a property”.

Here lies the murky grey area.

When my fiancé and I applied for that house, we did not need to tell the agent or anyone else all those details about ourselves, and especially our engagement story. The agent did not request that information either. That was a private moment that should only ever have been shared with our friends and family. We felt compelled to share it, though, just in case it would be the story that differentiated us enough from the others and won us the house.

It is this very notion that is the problem. In a market that is overwhelmingly skewed toward landlords and property managers, renters are feeling compelled, or pressured, to ‘sell themselves’ to landlords and agents by sharing private stories and information just to secure a place to live.

What can you do about it?

It’s clear from our mystery shop and research that landlords and property managers are not always complying with their obligations under OPC’s landlord’s guidance.

If you are a renter and have experienced a situation where a landlord or agent has breached your rights under the Privacy Act or the OPC guidance documents, you can lodge a complaint with the Office of the Privacy Commissioner. It may investigate and take your issue further.

You could also share your story anonymously with Renters United.

You can find out more about your legal rights, as well as make a complaint to the Privacy Commissioner, here. You can share your story with Renters United here.

Thanks to the Office of the Privacy Commissioner for their support with this article.