Nationwide Housing Crisis Drives Controversy Over Tenant Screening

In the wake of a global health crisis that upended economies and disrupted the lives of millions, many social systems have struggled to recover and stabilize. The housing market, and specifically the rental market, has been particularly hard hit by the long-lasting effects of Covid-19 and some of the economic measures meant to mitigate the impact of the pandemic. Conditions on both sides of the equation have led to an impasse and the potential for long-term difficulties for renters.

A look at recent events in California proves illustrative of this challenging split. After years of protection that shielded renters unable to pay for their living space and a freeze on rent hikes, landlords have turned to a rigorous set of criteria. No longer is it enough for tenants to show that they have an income capable of supporting payments on the property. Instead, many landlords have toughened tenant background screening criteria, particularly regarding credit scores.

One landlord demanded not only an income at least three times greater than rent but also demanded receipts showing proof of past rental payments. Even stricter, the landlord set a credit score threshold at 750 —an "excellent" score. Failing even one of these criteria was enough to send the landlord reaching for the next application in the pile.

Los Angeles landlords claim their hands are tied and that such criteria are their only means of protecting themselves against potential defaults. However, they may have gone too far—the issue has caught the city council’s attention, which has begun discussing barring landlords from applying credit checks in such a way. Whether that bill will ultimately pass remains to be seen, but it could put more pressure on landlords to relax their criteria or search for another loophole.

The push and pull between landlords trying to remain profitable and governments trying to address housing crises, shortages, and skyrocketing rents are unlikely to resolve soon. In fact, many other locales have begun considering additional restrictions on how thoroughly landlords screen and consider tenants.

In Arizona, for example, a recently enacted law set to go into effect in 2023 would create new, faster pathways for individuals to seal criminal records. These records would still exist, in contrast to expungement for crimes such as marijuana possession, in which the record functionally never existed. However, landlords and employers would not be able to see these sealed convictions or charges on any tenant background check. The law aims to broaden access to housing—but as in California, landlords may simply toughen their criteria in other areas to protect their investments.

Striking the right balance between supporting property owners and ensuring affordable access to housing remains a challenge. As an adversarial relationship develops in some locales between governments and landlords, what the future may hold for tenant screening is unclear. One thing is sure: the average renter will need to be ready for a challenging housing environment.

Michael Klazema

About Michael Klazema The author

Michael Klazema is the lead author and editor for Dallas-based with a focus on human resource and employment screening developments

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