As 2021 comes to a close, the conversation around housing across North...Read more
The short answer to the question is yes. Property Owners and Landlords...Read more
Imagine: you’ve taken pictures of your rental suite, posted your advertisement on Craigslist, and showed the unit to multiple tenants. Finally, one tenant tells you they want to move forward and lease your rental! Before signing the lease you want to make sure this tenant will be able to pay the rent on time, and has paid their rent on time in the past - how can you be sure of this?
One of the strongest indicators of future payment security is to look at past payment history. Unfortunately past payment history in the rental world is either inaccessible or unreliable.
In a perfect world you would be able to view someone’s credit file and confirm that they were able to pay their rent on time in rental properties they have previously lived in. Unfortunately, rental payment information is not shared with the credit bureaus so a landlord has to look for other sources to figure out if the tenant has a good rental payment track record.
Calling references is one of the most common practices in tenant screening; however, it has its limits, and calling references is very time-consuming...
When you have a good tenant who is interested in your property, you want to move as quickly as possible or risk losing the tenant to another rental. A recent Naborly customer poll showed that only 1 in every 5 reference calls result in a connection on the first try. The remaining went to voicemail and required follow-ups slowing down the entire process.
Another consideration is that references can be unreliable….
Tenants are motivated to ensure that their previous landlord gives them a positive review. Rather than taking the chance of their previous landlord mentioning late payments or noise complaints, many tenants provide the contact information of a friend or family member instead. Since the tenant is providing the landlord's contact information, it is very difficult to verify the identity of the person you are calling or trust the information they provide as truthful.
Private eviction databases may exist; however, they are only accessible through credit resellers/tenant screening companies or property management software. These products give landlords the opportunity to report payment history or evictions manually after they have produced a credit/tenant screening report. They add this information to their database and if the same tenant is screened again through their system this history will be noted one the new report.
With the pandemic and massive job loss, there is also a bit of an eviction crisis right now, as reported by The Eviction Lab.
The US federal government implemented three additional eviction moratoria: the CARES Act, which expired in summer 2020, and the CDC's "Temporary Halt in Residential Evictions To Prevent the Further Spread of COVID-19," which was in place from September 4, 2020 to July 31, 2021 and re-implemented in a more limited form from August 3, 2021 to October 3, 2021. More information about eligibility requirements for the CDC moratorium is available here.
Rental assistance, including upwards of $46 billion in federally-funded aid, became available in all 50 states and the District of Columbia by the middle of 2021. Most states were accepting rental assistance applications at the end of the Scorecard study period. The rental assistance measure on the Scorecard is counted as present if rental assistance was available to renters throughout the state during a statewide eviction moratorium.
The real solution is to create one standardized and secured database in which all rental payment history is submitted, which is accessible only with the consent of the tenant. This would allow tenants to prove their ability to pay rent with a verified track record, which leads landlords to be confident in their approval decisions. This system only works if there is abundant access to affordable housing and the wage gap to housing costs is significantly reduced. Many policy-makers and researchers (some from the Eviction Lab at Princeton) believe that the moratorium on eviction and rental assistance would not have been necessary, had the shortage of affordable housing and/or wage gap been addressed years ago.
Until verified rental history data is democratized, landlords and property owners should be focused on the verifiable information about a tenant. The Naborly Report helps landlords understand if a prospective tenant is a good fit for their rental property and can afford the agreed-upon rent with their verified monthly cash flow without ever picking up a phone.
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