How to Assess Tenant Applications

How to Choose the Best Applicant (Fairly & Confidently)

Assessing tenant applications is one of the most important decisions you'll make as a landlord. You need to screen fairly, comply with the law, and make confident decisions that protect your property and cash flow.

Here's the simple, compliant decision-making framework:

• Step 1: Collect information from applicants (and know your legal limits)
• Step 2: Check affordability — does the applicant meet the 30% rule?
• Step 3: Assess suitability — do they fit the property's needs?
• Step 4: Verify income — are the documents legitimate and consistent?
• Step 5: Check rental history & references — would their previous landlord rent to them again?
• Step 6: Consider voluntary higher offers (if any)
• Step 7: Document your decision

Step 1 - What You Can and Cannot Ask

Across Australia and New Zealand, tenant screening is built on three key principles:

• You must treat all applicants fairly and consistently
• You can only request information that is reasonably required
• You must assess affordability and suitability using objective criteria

Information You Can Legally Request (AU & NZ)

You are allowed to request information that is reasonably necessary to assess:

How You Can Use the Information

Just because you can ask for information doesn't mean you can use it to reject an applicant. Here's what's legally protected:

You must store applications securely, use information only for screening, not share it with third parties, and delete or archive it when no longer needed. NZ has stricter privacy rules, but the principles are the same.

Step 2 - How to Assess Affordability (AU & NZ)

Affordability is one of the most important — and misunderstood — parts of screening. A tenant is generally considered able to afford the rent if rent is 30% or less of their gross household income.

Example: Rent = $600/week, Household income = $2,000/week. $600 ÷ $2,000 = 30% ✓ Affordable

When the 30% Rule Can Be Flexible

You can consider flexibility when the applicant has other financial strengths to compensate: high savings that provide a buffer for unexpected expenses, low living expenses or debts that reduce the burden on their income, a strong rental history showing they've successfully paid similar or even higher rent before, a guarantor willing to co-sign the lease, or very stable, long-term employment in a secure industry. When any of these factors are present, an applicant sitting at 32–35% of income might still be a solid choice.

When the 30% Rule Should Be Strict

Be cautious and strict about the 30% rule when the applicant has unstable income (casual jobs with irregular hours, seasonal work, or probationary employment), high debts that reduce their discretionary income, dependents on a low income, a history of arrears or late payments, or cannot provide legitimate income evidence. In these situations, affordability becomes even more critical, and flexibility could expose you to serious default risk.

Step 3 - Assess Suitability

Beyond affordability, you need to assess whether they're suitable for your specific property.

Pets

You can consider:

• Type, breed, size, age, and behaviour
• References from previous landlords about the pet
• Suitability for the property

You cannot discriminate against assistance animals, guide dogs, or therapy animals (with documentation).

Can you decline someone with a pet? Yes, but it's best to have reasonable grounds:

• The property is not suitable for pets (no fencing, no open space, unsuitable accommodation)
• The pet is a breed or size not allowed by local laws or body corporate rules
• The pet poses an unacceptable risk to the premises or others (history of damage or poor behaviour)
• The pet is likely to cause damage exceeding the rental bond amount

Some states and territories are more lax. For specific rules based on where your property is located refer to the Pet Requests page.

Number of Occupants

You can consider:

• Overcrowding risks
• Wear and tear on the property
• Suitability for the property
• Local occupancy limits

You cannot discriminate based on family status, children, or pregnancy.

Lease Length

Consider whether the applicant's needs match your expectations. If you want long-term tenants, an applicant planning to move in 6 months may not be suitable for your needs.

Step 4 - Verify Income

Are the documents legitimate and consistent? Look for:

• Recent payslips (usually last 2-4 weeks)
• Employment letters confirming position and salary
• Consistent income over time (no major gaps or unexplained changes)
• Bank statements showing regular deposits matching employment claims

Red Flags with Income

• Documents that don't match (payslip shows $50k but employment letter says $40k)
• Unexplained income gaps or inconsistencies
• Self-employed applicants with highly variable income
• Refusal or inability to provide legitimate income evidence

Step 5 - Check Rental History & References

Previous behaviour is often the best predictor of future behaviour. When checking rental history and references, look for patterns that demonstrate reliability and financial responsibility.

Rental History

Look for:

Step 6 - Consider Voluntary Higher Offers (If Any)

You can accept higher offers, but only if they meet strict conditions:

• You did not solicit it
• It was freely offered by the applicant
• It is documented
• It is not the sole reason for selection

Step 7 - Document Your Decision

A simple note protects you. It shows you made a fair, objective decision based on legitimate criteria. For example:

Keep this documentation with your application records. It protects you if an applicant challenges your decision.