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Tenant screening ordinance: There is a path that can lead to better results for both landlords and tenants

South Mpls apts
MinnPost photo by Peter Callaghan
When Minneapolis City Council members recently proposed an ordinance to address problems in the tenant screening processes landlords use, the Minnesota Multihousing Association responded with an all-out campaign in opposition. This was reminiscent of past fights over tenant protections that sometimes lead to improvements in the law but often result in a stalemate. 

We don’t think it has to be that way because current practices in tenant screening don’t work very well for either landlords or tenants. What is remarkable — and troubling — about the standards landlords typically employ is how little we know about whether those standards are doing the job they are supposed to: helping landlords decide which applicants are likely to be good tenants, while treating those applicants fairly. There is simply no set of recognized best practices in this area.

Margaret Kaplan
Margaret Kaplan
Here is an example that illustrates the arbitrariness of current practices. In settling a lawsuit with a major Twin Cities property owner, our office — the Housing Justice Center — attempted to persuade the owner that applying a minimum income standard of income equal to three times the rent to existing tenants made little sense. Many long-time tenants in that building had been paying rent on time even though their income was less than three times the rent. The property owner’s response was to substitute a minimum credit score of 625 instead of a minimum income requirement. There is ample evidence, however, that credit scores are a very poor predictor of the likelihood someone will pay the rent. Credit scores almost never reflect rent payments and are much more likely to be lower because of medical bills, consumer debt, or exploitative loan products that are designed to fail. As many tenants will tell you when it comes to paying bills, “the rent eats first.” In this case, the owner exchanged one arbitrary test for one that was even worse. In our research, we have documented similar problems with other standards landlords use, including criminal history and rental history. 

To be sure, landlords have a legitimate interest in ensuring they are admitting tenants who will pay their rent and comply with the lease. But the stories of unfair and discriminatory denials from both tenants and those who help them find housing are too frequent to ignore. Several years ago HUD issued guidance on how landlords should do criminal history screening. HUD’s message was that if landlords indiscriminately bar applicants for any sort of criminal history, no matter how old or how unrelated to fitness as a tenant, they may well be in violation of the Fair Housing Act. The same reasoning can apply to overly broad grounds for denial relating to credit scores, minimum income requirements, or rental histories.

How do we come up with a set of fair practices that treat tenants fairly and help landlords accurately determine the risk associated with an applicant for vacant rental housing? By looking at evidence of what is working and what isn’t. 

Recently a group of nonprofit affordable housing providers in the Twin Cities decided to look at the evidence with respect to criminal history and “success in housing.” Working with researchers at the Wilder Foundation, CommonBond, Aeon, Project for Pride in Living and Beacon pooled their tenant data to compare the criminal histories of their tenants at the time they were admitted into their housing with whether they subsequently had positive or negative outcomes as tenants. What the evidence showed was that many crimes had no value in predicting the success of a tenant-applicant and that after a period of years (two years for misdemeanors, five years for felonies), even relevant past criminal history had no impact on success as a tenant. 

Tim Thompson
Tim Thompson
The conclusions from the Success in Housing study are not just relevant for the nonprofit affordable housing provider community but for the rental housing industry as a whole. However, when presented with the evidence from the nonprofit study, many private landlords rejected the conclusions as irrelevant for their own business practices, arguing that nonprofit providers can absorb more tenants with troubled histories because they typically offer supportive services that private landlords cannot. In reality, most of the 10,500 tenant-households studied by the nonprofit housers had access to minimal supportive services. The study also adjusted for the existence of even minimal services in order to ensure that the research would have the most value to housing providers of all types. Still, many private landlords will need additional evidence and reassurance before they are willing to reduce arbitrary barriers in their own admissions process. 

The Housing Justice Center is working with a number of partner organizations with the goal of developing a set of evidence-based best practices in tenant screening. This includes a number of community-based organizations gathering information on how this system looks from the point of view of tenants. While we have gathered extensive data, more is needed. Several larger private property owners have expressed interest in making their own tenant data available for a study similar to the nonprofit study, which would be directly relevant to the private rental market. Twin Cities landlords have two choices in how they respond to the growing public interest in reducing arbitrary and discriminatory tenant screening barriers: They can simply oppose all proposals, or they can participate in a constructive process to develop standards that work for both landlords and tenants. We hope they will choose the latter.

Margaret Kaplan is president of the Housing Justice Center, a nonprofit public interest advocacy and legal organization whose primary mission is to preserve and expand affordable housing for low-income individuals and families. Tim Thompson is its senior staff attorney.


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Comments (4)

  1. Submitted by Christopher Williams on 07/16/2019 - 09:02 am.

    Would be nice if Minnpost could require opinion pieces to cite sources. I have no opinion really one way or another on the issue but it’s hard to do research and come up with a point of view if nothing claimed is being cited with studies I can read for myself.

  2. Submitted by James Hamilton on 07/16/2019 - 01:57 pm.

    While I’ve not read the entire report, I did note that average household income was so low ($16,000) as to virtually guarantee that a good many of the tenants involved received substantial rent subsidies, if not complete subsidies. That would seem to reduce greatly a landlord’s exposure to unpaid rents and, thus, the need to evict tenants, a figure reflected in the report’s findings that only 2% of the negative rental outcomes involved non-payment of rent.

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