Is First Come, First Served the Best Way to Rent?

by | Aug 29, 2016 | Tenant Screening

Seattle recently amended its already comprehensive rental rules to add a provision requiring landlords to accept the first qualified rental applicant.

The law is intended to assist vulnerable populations, in particular those tenants who receive “alternative” income like vouchers, child support or veteran benefits. However, these new rules raise many questions.

For instance, are the rental applicants most susceptible to discrimination likely to be the first to apply for a vacancy?

tenant screeningDoes a first-come-first-served policy allow landlords enough bandwidth to pick good tenants without creating more work?

Is a first-in-time policy the quickest way to fill vacancies?

While this may be a first of its kind rule, even Seattle’s lawmakers appear to acknowledge that it may not be effective. The law is set to be reviewed after 18 months to determine if it hits the target. (The law goes into effect in January, 2017.)

Many remain skeptical, including housing officials in nearby Portland, which is experiencing many of the same affordable housing problems. According to a news report, Portland lawmakers will take a “wait and see” approach before acting in concert with Seattle.

A policymaker with the Portland Housing Bureau points out that many of the applicants who face discrimination, including poor minorities, the elderly and tenants with disabilities may not have easy access to online apartment listings, can’t leave work early to tour a property, or may not have fluid transportation. It is possible that the first-in-time rule actually may have the opposite affect — guaranteeing space for applicants with the most resources at their disposal.

In order to implement the law, Seattle landlords will be required to set their minimum tenant screening requirements and include that criteria in rental ads. The first person to complete a rental application and meet those minimum standards must receive an offer for tenancy. While the law expressly states that it won’t “prohibit any person from making a choice among prospective tenants”, effectively it does take a higher-qualified applicant out of play.

There is an advantage to this policy, however. Because landlords must advertise the threshold requirements for incoming applicants, the commitment to take the first qualified applicant forces a landlord to hone priorities and focus on what is important in the tenant screening process: finding a qualified renter, regardless of irrelevant demographic factors. Discrimination works against landlords because many steady, good-paying renters get turned away in favor of a seemingly “ideal” prospect who turns out to be the tenant-from-hell.

Yet, there is one distinct disadvantage to a strict first-in-time policy. While it seems this would be the fastest way to fill a vacancy, that is not always the case, particularly in a hot rental market. In fact, guaranteeing someone’s spot in line can take away an applicant’s incentive to move through the leasing process quickly, and may embolden the applicant to ask for concessions.

Seattle’s rules are a great example of this issue. Under that law, if a landlord needs additional information to complete the tenant background check or the leasing process, the applicant must be given at least three days to complete the task. Assuming the applicant checks out and is offered the vacancy, they have another two days to make up their minds.

This delay can occur even without such rigid timelines. Once applicants know they are first up and that the landlord is motivated, applicants may drag their feet, delaying the process while they negotiate with other landlords for incentives. The second — or third or fourth — applicant in line may have been more motivated to pay a deposit and move in. Having a little competition for a vacant rental property creates a call to action. Soon, some landlords simply won’t have that option.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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