As a rental property owner, it’s likely that you receive a lot of tenant applications. But not all tenant applications are up to mark, and you have to reject most of them. However, if you don’t follow the correct procedure, this application denial phase can get tedious.
Everything You Need to Know About Declining Tenant Applications
When Declining a Rental Application Is Illegal
You cannot decline a tenant applicant because of their sex, color or religion. According to the Fair Housing Act, it’s illegal to reject a tenant applicant because of their race, religion, color, sex, family status, disabilities, and national origin. If you violate this law, you’ll have to face severe consequences and criminal charges. It’s also unethical to reject a tenant applicant based on these factors.
4 Reasons to Decline a Rental Application
1. Income-to-Rent Ratio is Low
As a property owner, you must set an income-to-rent ratio. However, this ratio may vary from one landowner to another. But it’s recommended to set it three times the rent of your property.
2. Poor Credit
When a person has poor credit, it indicates that they don’t have the habit of paying the loans timely. And if you select such a tenant for your property, there is a high chance you won’ get your rents on time. That’s why if you want positive cash flow every month, you should reject the tenant applicant who has poor credit. Don’t worry; it’s legal, and you have every right to do so.
3. Bad Rental History
If the tenant applicant has a bad rental history, you can reject the application. Some rental red flags are – unpaid rent, property damage, prior eviction, etc.
If you still want to accept the rental application, you should ask for references from the tenant applicant.
4. Legal or Technical Reasons
You can decline a tenant applicant due to legal or technical reasons as well. For example, if your property is a non-smoking unit and the tenant is a smoker, you can reject the application. Again, if the tenant wants to bring pets in a no-pet zone, you can reject the application. But you’ll have to keep in mind that you’re not allowed to reject a rental application based on their race, religion, sexual orientation, and gender.
What Should Be Mentioned in the Denial Rental Application Letter
You’ll have to understand that there is no fixed format for the denial rental application letter. If you want, you can even deny the tenant informally over a phone or by sending a formal email. However, it’s recommended that you don’t deny the tenant over the phone or in person. Because when you deny the tenant over the phone or in person, there is no document of you denying him on genuine grounds, and if the tenant applicant wants to file lawsuits against you, you’ll have a hard time facing it.
Before writing the denial letter, you should check your local laws and the Fair Housing Act to see if there is a guideline for writing such a letter. While writing the denial letter, try to be polite and professional. Also, write your denial reasons precise and short. After describing all the reasons, it’s a good practice to add the conditions of rental approval.
