How to Deny a Renter's Application + Sample Letter

Rental application denial is a part of a landlord or property manager’s job. However, with good reason, many landlords and property managers aren’t as keen on sending out rental application denial letters, as they are to fill their rental vacancies.

Rental application denial isn’t a straightforward matter. There are multiple laws, considerations, and guidelines that govern rental applicants during the application process.

While most landlords are not discriminatory and don’t engage in discriminatory rental practices, these laws are meant to protect renters from those who do.

That’s why sending out rental application denial letters is so important. These letters provide a record of your application denials and the legal reasons behind them.

This guide will help landlords navigate the rental application denial process and provide a free rental application denial letter template.

Let’s dive in!

When to Deny a Rental Application

Rental application denial should occur when a rental applicant does not meet the standards or qualifications you’ve put in place for prospective tenants. However, the standards you set must be in accordance with the non-discrimination laws set by the Fair Housing Act (FHA) and your local laws.

Low Credit Score

It’s completely possible for an applicant to rent an apartment with a low credit score. However, as a landlord, you are not required to rent your unit to applicants with low credit scores.

Low credit scores come from different circumstances, though are most often caused by a negative financial history, including debt, high credit card usage, and missed payments.

As a landlord, this may indicate that the applicant may have trouble paying rent when it’s due, especially if they have many outstanding debts that they are responsible for paying simultaneously.

Unit Availability

Unit availability covers two aspects of renting out a rental unit:.

• A rental unit may already be claimed by the time an applicant sends in an application.
• An applicant plans on moving too many individuals into the unit.

When it comes to application denial, both reasons are valid. Obviously, you can’t rent out a unit that has already been rented out. However, the second reason is a little trickier.

Many states and local governments have laws that dictate how many individuals can live in a single unit or occupy a bedroom. If you rent a unit to an applicant who plans to move in with so many people that it exceeds the legal limit, you could be held liable in the event of an emergency.

Too many people living together can be a health risk and safety hazard, especially in the event of a fire.

Income-to-Rent Ratio

Most commonly, landlords look for applicants who earn at least 3x the cost of rent before taxes. Typically, when a candidate earns 3x the monthly price of rent, they will have enough money left over to cover their other expenses.

If an applicant does not meet this metric, landlords typically assume that they will not be able to afford both the cost of rent and all their other expenses. For this reason, landlords may not be keen on renting to applicants who don’t earn enough to comfortably rent the apartment unit.

Issues with Rental History

As a landlord, you don’t know everything about a prospect’s history. However, it’s your job to find out!

Learning more about an applicant’s history and past behaviors can help you determine their behavior during their tenancy. During your search, you may note that an applicant has a horrible history of late rent payments or a frequent violator of the covenant of quiet enjoyment that leads you to deny their application.

Here are some common issues with rental history that may lead to a rental application denial.

• Evictions: It is legal to deny a rental application on the basis of prior eviction. However, some states, such as New York, require that denials based on prior evictions that are legitimate and have been substantiated through a complete court action.
• Damage: If an applicant has had to pay for damages or has a proven history damaging properties, you can legally deny their rental application. It might even save you thousands in damages.
• Poor Landlord References: If a landlord or multiple landlords have given their previous tenants poor references, that should tell you something. There’s no guarantee that they will treat your property better or have stopped the behaviors that led to the negative reference.
• Broken Leases: If an applicant has a history of breaking lease agreements, you may be wary of renting to them. For one, broken leases can lead to a lot of money left on the table for landlords. Moreover, landlords generally look for applicants who will provide a steady stream of income, rather than up and leave in the middle of the night.
• Unpaid Rent: If an applicant has outstanding unpaid rent, this can indicate an unstable financial situation or a tendency to rack up outstanding debts.

Missing Application Requirements

The rental application is the foundation of the tenant screening process. Missing information on a tenant’s rental application not only causes significant delays in the tenant screening process, but can also provide a landlord with a legal reason to deny an applicant.

Common missing application requirements include:

• Proof of Income (paystubs, tax records, etc.)
• References
• Rental History
• Cosigner Information (if needed)
• Permission to Perform Credit Check

Denying a rental application based on missing application requirements isn’t always a landlord’s strategy, as the decision generally depends on the market and the landlord.

In a competitive market with tons of applicants and few vacant units, landlords may not be inclined to follow up on an application with missing information as they likely have other candidates for a given unit.

However, if you have had trouble filling a unit and an application is missing key information, you may be more inclined to follow up.

The bottom line? With missing information, it’s impossible to verify an applicant’s information. You can follow up with the prospect, but there’s no guarantee they will provide the information.

Legal Implications When Denying a Rental Application

When you illegally deny a rental application, you may face legal consequences. Rental units in the U.S. must follow the non-discrimination guidelines set forth in the FHA. The FHA states that it is illegal to deny housing to individuals based on sex, race, religion, color, nationality, disability status, or familial status.

This is fairly straightforward, but some landlords have been tripped up by the FHA’s “disparate impact” condition.

Disparate impact refers to those actions that aren’t necessarily meant as discrimination, but have the same effects of discrimination. For example, setting rental applicant standards, such as not renting to people with tattoos or who are over 6ft tall, would be considered discriminatory under disparate impact.

The disparate impact condition is currently undergoing a proposed reinstatement of the 2013 condition’s terms, a reversal of the controversial 2020 update.

In addition to the FHA, there are many other pieces of legislation that provide renter protections against discrimination, including the Americans with Disabilities Act and Title VI of the Civil Rights Act.

There are no federal renter protections against discrimination based on sexual orientation or gender identity. However, many states and local governments have renter protection laws that address this major gap.

It also pays to review your local laws for renter protection legislation, simply to ensure that you are operating in compliance with them.

How to Deny a Rental Application

Writing a rental application letter is not only good practice to help keep applicants informed, but it’s also a great way to cover yourself legally, as you provide the reason for the application’s denial.

That said, it can be challenging to know where to start when writing a rental application denial letter. Luckily, we’ve got you covered.

The keys to an effective rental application denial letter are:

• Brevity/Conciseness
• Polite and Respectful Language
• Explicit Explanation of the Legal Reasoning Behind the Denial

Use this rental application denial letter to keep things simple.

Renter’s Application Denial Sample Letter

Date [MM/DD/YYYY]

Applicant Full Name [First and Last]

Full Rental Property Address

Greetings [Applicant Name],

Thank you for your application for the rental unit located at [Property Address and Unit Name]. Unfortunately, your rental application for [Property Address and Unit Name] has been denied for the following reasons: [List Reasons for Denial].

If you have any questions or concerns regarding your application denial, please feel free to contact our office at: [Contact Information eg. Email, Phone, or Mailing Address].

Best Regards,

Your Name [Property Manager or Landlord]