SA Government To Outlaw Charging People For Rental Application Background Checks

The South Australian Government will move to outlaw charging people for their own background checks during rental applications, LiSTNR can exclusively reveal.

Real estate agents across the country have been using rental application websites that pressure hopeful tenants to pay for the checks.

Representatives of the online platforms stress that paying for a background check on their websites and applications is optional – but tenants’ advocates argue record-low vacancy rates mean many renters feel they have no real choice but to pay.

SA Consumer and Business Affairs Minister Andrea Michaels says pressuring renters to make the payment is offensive during a housing crisis, and other state and territory governments should also consider banning it.

Tenant’s Union of New South Wales CEO Leo Patterson-Ross said renters across the country are being “tricked” into paying, despite no guarantee it would help them secure a rental property.

“It is trying to leverage that worry that a lot of people have at the moment that they’re being knocked back from place after place and they often get no feedback or very little feedback about why that is,” he said. 

“And so that uncertainty makes it a thing that people can be tricked into paying for.”

Fewer than one in every hundred rental properties in Australia is available for lease, with the country’s rental vacancy rate reportedly hitting the lowest level on record in January. 

An ABC investigation last year found at least 160 real estate agencies across the country were using the 2Apply platform to process rental applications.

Online rental application platform 2Apply has been using a ‘star rating’ system to assess rental applicants – and the rating is affected by whether an applicant pays $20 to $30 for their own background check.

A renter can choose not to pay, but the website urges them to “stand out from the pack!”, boost their star rating and “show you’re a great tenant” by paying for it.

Other rental application platforms including realestate.com.au and Snug.com also ask rental applicants to pay for background checks.

Real estate website bows to public pressure

Inspect Real Estate, the company behing 2Apply, has told LiSTNR it will be removing the background check and star rating systems from its platform.

“We have listened to the concerns raised by regulators and the community and have taken significant steps to overhaul the 2Apply process flow and ensure it meets the regulator’s requirements,” a spokesperson for Inspect Real Estate said in statement.

“We have arranged to work with the regulator and will demonstrate our new process flow to them before finalising and releasing it.”

– Inspect Real Estate

LiSTNR understands the platform will also be reducing the amount of information it asks renters to disclose for their application.

Tenants’ advocates have warned that some of the questions on the 2Apply platform – including the make, model and registration of a renter’s vehicle; and the name, age and gender of tenants’ children – can enable discrimination.

Minister urges governments across Australia to outlaw the practice

SA Minister for Consumer Affairs Andrea Michaels said South Australia was “leading the nation” but banning the background check charge.

“At a time when many prospective tenants are struggling to find a place to live, the idea of charging people for background checks – with the strong implication that people who pay the fee will be treated more favourably – is outrageous,”

– Andrea Michaels

“These reforms will put an end to this practice in South Australia and give authorities the power to act if operators continue to seek payment for these background checks.”

She said other state and territory governments should also make the practice illegal.

“It would be much better for us all if there’s consistent rules and regulations around the country on this,” she said. 

“Ideally, we would love for the rest of the country to come on board because, you know, realestate.com for example, is a big beast.  

“And to be able to change it across the country is going to make it a lot easier for us to actually stop that kind of behaviour here.”

– Andrea Michaels

Background check payments ‘entirely optional’

The company that operates realestate.com.au – REA Group – says the background checks are optional and that they can benefit the rental applicant.

“Tenant Check is an entirely optional service and not a requirement for a realestate.com.au rental application,” an REA Group spokespserson said.

“It is a value-added service that verifies the applicant’s identity and proactively compiles court records, bankruptcy and tenancy database checks.”

A Snug.com spokesperson said the platform would strongly oppose the Government’s proposed legislation, arguing it would reduce “choice and convenience for renters”.

“This legislation if passed will disadvantage a range of renters such as those relocating from interstate or overseas, self employed renters, as well as those with limited or no rental history,” they said.

“Furthermore, it will create significant delays for renters that wish to obtain the same information across multiple sources.

“Snug believes industry guidelines would be sufficient to protect renters from purchase coercion, ensure information is provided about a free basic tenancy database report as well as encouraging application platforms to enable renters to reuse a purchased report.”

The Snug platform suggests renters may improve their chances at securing a rental property by paying for a background check, but also notes that renters can access a background check for free elsewhere.