Here's why more tenants should request reference letters from landlords

Agent's advice on getting a rental property Sales representative Tom Storey says have your credit checks and proof of employment ready to make an offer on a rental property.

The idea of landlords asking prospective tenants for a reference letter has long been considered standard practice within the rental industry, said William Strange, a professor of economic analysis and policy at the University of Toronto’s Rotman School.

Far less common, however, are instances of tenants asking landlords for a reference letter from previous renters.

“I haven't heard about it much, [and] I would suspect that it wouldn't be all that common,” Strange told CTVNews.ca in a telephone interview on Tuesday. “There is not any standard data source that tracks this kind of thing.”

While it may not happen frequently, Strange said it presents an interesting idea: why aren’t landlords automatically obligated to provide their own reference letters?

Landlords request reference letters in order to get to know more about prospective tenants who are interested in renting their unit, as well as verifying whether or not they would be able to make rent payments. Tenants, however, are also interested in learning more about what kind of landlord they would be dealing with, Strange said.

“From the tenant’s viewpoint, there's a lot of stuff they want to know about the landlord that is not trivial and isn't guaranteed by the laws that protect tenants,” Strange said.

“They might want to know, is this a landlord who's going to come fix the washing machine when it really needs to be fixed? Or is this landlord going to ask for the maximum legally allowed rent increase or is the landlord more moderate?”

One man from Sydney made this exact request earlier this year in Australia. In a TikTok video posted in January, Tom Cashman explained that in his search for an apartment to rent, he had asked a landlord to provide a reference letter from a previous tenant.

“I’ve never heard of anyone asking for this, but they ask me for, like, three references to see if I’m a good guy,” Cashman said in the video. “What about them? Are you a good guy?”

According to Cashman, his application was initially approved but in a follow-up video, he informs viewers that his rental application was withdrawn, even though Cashman said he did not ask for it to be cancelled.

Lasse Hvitved, a legal advocate with the Tenant Resource and Advisory Centre in British Columbia, said he has yet come across a similar story involving a Canadian renter who requested that a prospective landlord provide references from past tenants.

“I've heard a lot of tenants express anxiety about their new landlords and not knowing how they're going to treat them [or] whether they're a good person,” he told CTVNews.ca in a phone interview in March. “But I don't think I've ever heard of anyone specifically requesting a previous tenant reference from the landlord.”

Part of the reason for this could stem from a power imbalance between landlords and tenants, Hvitved said. In the province of B.C., for example, there are strong signals that the province’s current rental market skews in favour of landlords as opposed to tenants.

A rental market report released by the Canada Mortgage and Housing Corporation (CMHC) in February gathered data on vacancy rates across major Canadian cities. These rates pertain to the percentage of available rental units in a given market. While certain cities, such as Edmonton, continue to see high vacancy rates around seven per cent, rates in other cities, such as Vancouver, remain severely low at just 1.2 per cent. The city of Victoria, as well as certain parts of Ontario, are seeing vacancy rates as low as one per cent, according to the CMHC report.

Lower vacancy rates among these units mean tenants have less to choose from, Hvitved said. As a result, asking for reference letters from prospective landlords may serve little purpose in helping tenants secure a rental, he said.

“Most tenants aren't deciding between 14 landlords like, ‘Oh, I wonder which apartment will I choose’,” he said. “Beggars can't be choosers [and] right now, renters are beggars.”

LIKELIHOOD OF LANDLORD LEGISLATION

Hvitved said that he recognizes the value in efforts to ask landlords for references from past tenants as a form of protest. With average rent prices on the rise in Canada, this will likely prompt renters to become more politicized and undertake similar initiatives to try to correct the power imbalance between landlords and tenants, he said.

“I can see how some people would see it as a very unserious way to address a much more serious problem,” said Hvitved. “How it's a way to try to get back control or take back some of that power that's been robbed from you.”

But the current reality is that this may not actually be helpful in tackling some of the legitimate issues currently facing Canadian tenants, Hvitved said. It’s rather easy for a landlord to dismiss applications from anyone requesting references, as they likely have a number of other candidates to choose from.

“If you’re a landlord, you rent out a place and you have like 40 applicants, why would you put in any effort if you don't have to?” said Hvitved. “If anybody asks for a reference, you just don't choose them because you want the people who are going to cause you the least trouble.”

Strange said this is why some form of legislation that would make landlord references a requirement is important.

A motion has been introduced to Australia’s Legislative Assembly by MLA Michael Pettersson that would give renters the right to ask their landlords for references from past tenants. After watching Cashman’s video, Pettersson said allowing tenants to request references from landlords could benefit those living in the capital of Canberra, which he presides over, to help make sure renters maintain a similar quality of life as those who own the units.

While no such laws currently exist in Canada, Strange said he can see a case being made for requiring landlords to present tenants with reference letters from past renters of a unit, if asked.

In the context of general investments, such as dealings with a bank, efforts are taken to disclose the terms of the agreement, including benefits and associated risks, said Strange. Signing a leasing agreement with a landlord functions as a sort of investment, therefore it makes sense to put measures in place for reference letters to be presented by landlords as well, he said.

“If you’re looking for someone to invest, you shouldn’t keep them in the dark about the circumstances of the investment,” he said. “Literally speaking, entering into a tenancy agreement doesn't look like buying stock, but it really is an investment in the sense that you’re entering into a contract.

“These kinds of investments are going to work better for all parties if they understand each other.”

Landlords who are unwilling to provide information from past tenants or other relevant details on the unit should be cause for suspicion, Strange said.

“A good landlord has every reason to tell you [about] the previous tenants,” he said. "Landlords might want to have letters that attest to their fitness as landlords, and a good landlord would voluntarily want to do that.”