While the ultimate goal of any landlord is to get tenants into the property, sometimes this isn’t the right fit. Not every applicant who wants to live in your rental will work. When this happens, you may find yourself having to prepare a rental application rejection letter.
Writing this type of letter can be intimidating. It’s not easy to say no to someone under any circumstances. However, with the right approach and enough transparency, you will successfully navigate the process and continue your search for your ideal tenant.
Legal reasons for rejecting a rental application
While we’ve all encountered someone to whom we want to say “no,” the Fair Housing Act limits the reasons why, as a landlord, you can deny someone’s rental application. You must comply with these provisions to avoid any legal recourse.
Under the Fair Housing Act, a rental application denial letter may not be served on the basis of race, color, national origin, religion, sex, familial status, or disability. This can prevent housing discrimination and reverse housing segregation. You also may not deny a tenant’s application based on their criminal record, unless there is a dangerous criminal conviction that could put people and your property at risk. In other words, a DUI is not a reason to turn away a potential tenant, but an arson conviction probably is.
Even if the Fair Housing Act provides for denying a rental application, it is legal to say “no” to a potential tenant under certain circumstances, especially if they cannot meet your rental requirements. Here are some examples:
1. When your credit score isn’t high enough
It is common practice for landlords to run a credit check on every applicant. As long as you do this, you can reject potential tenants if their scores are too low. Since credit scores reflect an applicant’s financial history, a lower score could mean they don’t pay their bills, which includes rent.
Whether you allow them to bring in a co-signer or guarantor to help get their rental application approved (despite their credit history) is your personal preference, but you don’t have to.
2. When you don’t have enough money to spend
As a landlord, financial expectations are also a major concern for you. Not only do applicants need to have enough liquidity to cover all upfront costs – first fee, last fee, security fee, etc. – but they also need enough income to cover their monthly rent, as well as other bills.
Many landlords require tenants to pay a specific amount each year above the rent to ensure everything goes smoothly. The standard asking price is three times income as rent.
3. When their rental record is less than ideal
Reviewing a potential tenant’s rental history may also raise some red flags that could result in a rental application being rejected. Things like previous evictions, a record of unpaid rent or fees, bad feedback from previous landlords, and evidence of previous damage to the property are all powerful arguments for denying a rental application. You need to protect your property in every way, so it’s best to hold back when such questions arise.
4. When their lifestyles are inconsistent
You most likely have other rules related to your property. You may have a no-pets policy, or a zero-smoking indoors policy. These are rules you can enforce with the exception of emotional support animals. If a potential tenant comes to you with their dog or says they are a smoker, you can deny their application because they cannot meet all of your rental requirements.
5. When problems arise with their application
You also have grounds to deny a lease to a potential tenant if they lied on their application or are unable to complete the application. In fact, these are two important reasons to write a rental application rejection letter. They either falsified the information you needed to approve their application, or they simply did not provide you with enough information. Either way, you won’t be able to make an informed decision if this applicant can safely live in your property.
6. When the property is no longer available
When demand for a particular property is high, you may receive more rental applications than you actually need. Evaluate them on a first-come, first-served basis and you may be able to fill a spot quickly. The polite thing to do is to send a letter to other applicants letting them know the property is no longer available. This doesn’t have to be a firm no, but another example of why it’s legal to say “no” to an applicant when renting your property.
How to Write a Polite Rental Application Rejection Letter
Once you know when a rental application can be denied, the next part is writing the actual letter. It’s stressful because you have to let someone down. But with enough skill and information, this should be a seamless breakthrough.
Your letter should have a professional and informative tone and explain exactly why you are rejecting their rental application. Include as many details as possible, such as:
- Date of Application
- Property address
- Denial Reason
- Supporting documentation (i.e. copy of credit report if necessary)
- Your contact information (for other questions)
- Suggestions for alternatives (optional)
Also, don’t forget to thank them for applying and let them know you’re sad about having to say “no.” “We regret to inform you” works every time.
Rental Application Rejection Letter Template
Some rental application rejection letters can feel like you are filling out a form. They will list all possible legal reasons for rejecting a tenant and ask you to check boxes. This does save time, but is often impersonal and can annoy potential renters.
If you can, take the time to make it more personal and less formulaic. Download and try this template.
(date)
(Applicant’s full name)
(Rental property address)
RE: Lease Application Review
Dear (applicant’s name),
Thank you for submitting your rental application for (property address).
The decision is based on (fill in as many details as possible about the reason why you declined the application, e.g. low credit score, income issues, property no longer available, rental history issues, etc.)
I know this is not the news you want to hear. If you have any questions about the status of your rental application, please feel free to contact me directly at (your phone or email).
You may also want to consider (insert any suggestions if applicable that might help them resolve the issue next time, such as providing a co-signer, seeking more rentals within their price range, etc.)
Sincerely,
(your name)
Find the perfect tenant
Keep in mind that there are many reasons why a rental application may be rejected, but it’s not always what’s on the paper that matters. If possible, get to know your applicant a little bit when they come to see the house before filling out the application. Take note of your first impression and consider using it to influence your decision if their application turns out to be less than ideal. Your perfect tenant may not always have the perfect app.
