3 best practices for affordable housing tenant screening
This blog was written by Ella Gross, Managing Director at HomeScreen Tenant Screening.
HomeScreen is a non-profit tenant screening service that provides property managers with modern, data-driven solutions that create stable and equitable rental housing within communities. HomeScreen’s screenings are simple, fast, and customizable to meet the needs of all residential managers, while supporting the HomeScreen mission of ending the affordable housing crisis. Learn more about HomeScreen here.
Tenant screening is a universal practice for property managers looking to find the best tenants for their affordable housing communities. We know that good screening helps property managers accurately assess which applicants will pay their rent on time and take good care of the units so that they can report positive outcomes to the owners. However, the best practices for tenant screening services have changed as the rental housing market becomes increasingly more competitive for market-value rentals, and especially for affordable housing units.
The real estate market is often used as a lens with which to view the economy at large. Rising inflation is causing rent prices to increase at the highest rate in decades, forcing more Americans to look for affordable housing and compete for the scare units.
1. Be consistent, even when application volume is at an all-time high
You likely have a lot of interest for available properties. To stay within the Fair Housing Guidelines, be sure your process is consistent for all applicants. When pre-screening, ask all interested renters the same questions and require that all qualified occupants 18 or older undergo the screening process, including spouses, adult children, and roommates.
Consider processing applications on a first-come-first-served basis to ensure fairness and avoid discrimination claims. Remember that the Fair Housing Act was set up to protect the most vulnerable renters, so be prepared to make reasonable accommodations to your approval criteria for those protected by the Fair Housing Act, like applicants with disabilities.
2. Recognize that income verification is more important than ever
During the Covid-19 outbreak, many people changed their work hours, joined the gig economy, or took the opportunity to start a new career entirely. Property managers need a tenant screening service that provides verification of an applicant’s current income through AI solutions, including bank deposit analysis, for the most accurate information.
Experts predict we may be heading toward a recession in the near future, again. While we may be living in a post-Covid world, the importance of keeping income verification accurate and timely will continue to be important as we move forward through unstable economic conditions.
Ultimately, with the current affordable housing shortage, AH managers must ensure that all applicants are within the income limits for these scarce units, or risk being out of compliance with their funders.
3. Consider tenant screening services with broader data sources
As rent, food, and gasoline have become more expensive throughout 2022, and Covid-era relief programs run dry, more Americans are at-risk of homelessness than pre-pandemic. Property managers should look for screening services that value diversity, equity, and inclusion for those who have been affected by the current market.
Screening services can tap into alternative data sources, like INSIGHT scores instead of FICO scores, to evaluate applicants in a more equitable manner. INSIGHT scores evaluate utility and telecom payments, like cell phone and cable bills, so that lower income renters without credit cards, car loans, or mortgages, can still be evaluated on their payment history.
Be proactive – More changes are coming
With the novel and sudden changes happening in the economy, and particularly the housing market, it’s more important than ever for property managers to review their screening process and stay informed of industry trends. Tenant screening services should not just react to the uncertainties of today, but be forward-thinking, providing property managers with the tools they need to be successful for tomorrow’s economy.
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