How to choose the right tenant for your investment property

Attracting the wrong type of tenant can make or break the property ownership experience and may leave an investor out of pocket. That's why it's important to take the time to properly screen potential occupants. 

Why does tenant screening matter?

Properly screening potential tenants is one of the key ways property investors can help minimise their risk of property damage and loss of rental income.

When assessing a tenancy application, there are two important questions to ask yourself:

1. Is this tenant capable of paying the rent (without significant financial stress)?

2. Is this tenant capable of taking care of the property?

Consider engaging a property manager

Contracting a property manager may take the stress out of managing your investment property, including screening tenants on your behalf.

They may also have access to the National Tenancy Database which provides access to historical tenancy information including tenant checks, individual public record checks, identity verification, and visa verification. Self-managed landlords are not able to access this.

They should also be across the laws an regulations you need to abide by, potentially saving you headaches.

First things first: How to attract good tenants

The process of attracting the perfect tenant typically begins before you've even purchased your rental property.

Invest in suitable properties in in-demand areas

When selecting an investment property, think about the type of tenant you want to attract – that might be a family, sole tenant, or a couple.

This may come down to demographics and demand.

Areas with quality schools and lots of green space may attract families and a savvy investor might focus on family homes within its bounds. Or a bustling inner-city suburb may attract young professionals, perhaps making an apartment a better investment choice.

On the other hand, poorly maintained properties or those in undesirable areas often aren't attractive to tenants and, thus, you may have a smaller pool of applicants to choose from.

Make sure your advertising is clear and considered

But having the perfect property for a particular tenant doesn't necessarily mean they'll apply for it – particularly if your advertising isn't clear or your price isn't well thought through.

Ask yourself two questions when writing or considering a rental listing for your investment property:

• Is the listing accurate?

• Is the listing fair?

Accuracy is simple. Make sure images correctly depict the property's state and all details stack up.

Fairness is a harder to judge. Ensure the asking price is in line with similar properties in the area – too low or too high a price may result in too few or subpar applications. Also consider whether you're unfairly prohibiting certain factors – a family home is likely suitable for pets, for instance, and denying them could turn good tenants away (denying pets in suitable rentals is also prohibited in some states and territories).

What to look for in tenant applications

Once your rental listing is live and applications begin trickling in, now's the time to assess those interested in renting your property. Here are some of the key things to look for:

• History of rental payments
  Perhaps the most pertinent aspect of a potential tenant's application is their rental history (your property manager or their references might be able to assist you with this). Tenants with a good history of making payments on time might represent less risk.

• Employment and income
  You might also want to look at their employment, how long they've been at their current job, and their salary. These points can ascertain how stable their income is and how easily they'll be able to afford the rent. Keep in mind that the well-trodden '30% rule', arguing rent shouldn't be more than 30% of a person's come, doesn't necessarily stand up – particularly for higher income households.

• Rental history
  Perhaps less important than rental payment history is their broader rental history. This should detail an applicant's past tenancies and reasons for leaving, which can demonstrate relevant lifestyle patterns. It can also include information on whether a tenant's previous bonds were refunded, completely or partially. If they weren't, that's likely a red flag.

• References
  Finally, an applicant's references can be a gold mine of information. Generally, they'll include former landlords or property managers, former or current employers, and personal references.

Don't forget appropriate landlord insurance

Even with rigorous screening, things can go wrong. That's why every landlord should consider landlord insurance. Even the best tenant can accidentally damage property or run into financial hardship, impacting their ability to pay their rent.

A good landlord insurance policy should provide cover for malicious and accidental damage and loss of rental income. Particularly if an owner would have a hard time meeting mortgage repayments and other costs if they were to loose their rental income.

Legal and ethical considerations when screening tenants

Perhaps the most important thing to remember when screening a tenant is that it has to be done within the boundaries of Australian law.

Ultimately, landlords can choose the most suitable applicant, but their decision must be based on lawful criteria such as financial capacity and references, not personal attributes.

Failing to meet these standards can lead to discrimination claims, fines, or legal disputes.

Anti-discrimination laws

Under federal and state legislation, you cannot reject or disadvantage a tenant based on protected attributes. These typically include:

• Race, ethnicity, or national origin
• Gender, sexual orientation, or gender identity
• Age
• Marital or relationship status
• Pregnancy or potential pregnancy
• Whether or not they have family or carer responsibilities
• Disability
• Religion or political beliefs

Landlords do have the right to choose the most suitable tenant for their investment property, as long as no unfair direct or indirect discrimination occurs.

Can landlords deny a pet in a rental property?

Laws around allowing pets in rentals vary across states and territories.

Across the most of the country, a landlord can't simply deny a tenant's request to keep a pet in their rental unless the law or body corporate bylaws don't allow animals (pets in general or particular animals) to be kept in a property or as pets (such as the case of declared dangerous dog breeds).

Though, they may be able to deny a request to keep a pet for a specific reason, like if the property is unsuitable for a pet (it might not have secure fencing or adequate outdoor space, for instance).

Here's a summary of key rules in some jurisdictions as of 2025:

State / Territory	Can landlords refuse pets?	Key details
NSW	Only for permitted reasons	Pets can be denied if the property is unsuitable or if the pet could cause significant damage, for example.
Victoria	Only with VCAT approval
Queensland	Only for permitted reasons	Pets can be denied if the property is unsuitable or if the pet could cause significant damage, for example.
SA	Only for permitted reasons	Pets can be denied if the property is unsuitable on humane grounds, for example.
WA	Only for permitted reasons and with Commissioner approval	Pets can be denied if the property is unsuitable or if the pet could cause significant damage, for example.
Tasmania	Legislation barring landlords from disallowing pets without a Tribunal order is in motion at the time of writing	Under proposed changes, property owners will only be able to deny pets if it would damage a property, cause a nuisance, or pose safety risks.
ACT	Only with ACAT approval
NT	Only with NTCAT approval

While a landlord may not be able to deny a tenant's right to have a pet, they can generally impose restrictions on that pet. For instance, they might ask a dog be kept outside or that the property be fumigated and carpets cleaned at the end of a tenancy.

Additionally, the practice of enforcing a 'pet bond' has been outlawed in much of the country, while some parts impose limits on how much a property owner can ask for a pet bond.

For what reasons can a property owner deny a tenant?

In Australia, you can choose the most suitable applicant, but only on lawful, non-discriminatory grounds. Decisions must be based on legitimate tenancy criteria like ability to pay, rental history, and references.

Lawful, non-discriminatory reasons to decline an application

The following reasons for denying a prospective tenant's application are generally permissible in most states and territories. If you're unsure, it's best to seek advice from your property manager or legal representative.

• Affordability concerns
  If an applicant won't be able to meet rent and ordinary living costs, you can deny their application.

• Unsatisfactory rental history
  You can also generally refuse an applicant based on historically repeated arrears, property damage, unresolved breaches, or poor references.

• False, misleading, or unverifiable information
  If an applicant's identity, income, employment, or rental history is falsified or can't be verified, you can generally deny application.

• If the property is clearly unsuitable
  If an applicant's proposed number of occupants would breach health and safety, strata by-laws, or local rules, or if the dwelling is plainly unsuitable for their stated use (like if it doesn't have fencing and they have a large dog), you can probably refuse their application.

Smoking: can you refuse to rent to a smoker?

Smoking status is not a protected attribute, and most leases can lawfully include a no-smoking clause. Tenants can also be held liable for smoke damage and remediation.

Body corporates can also adopt by-laws restricting smoking on a strata property.

If an applicant refuses to accept a reasonable no-smoking term, like agreeing not to smoke indoors, you can generally deny their application on that basis.

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