Are NTD Tenant Checks worth it? I’m breaking my silence

For homeowners

Here at Cubbi, we've run 732 National Tenancy Database (NTD) checks over the last few years. These were all paid for by landlords who self-manage their properties using the Cubbi platform.

Tenant checks with the NTD have been the industry standard when it comes to screening potential renters.

I am the co-founder of Cubbi and I’m breaking my silence.

I have seen some big promises made by companies who on-sell these so-called rental history checks:

  • “Know if they’ve ever broken a lease, damaged a property or been evicted”
  • “Know if they paid their rent in full and on time in the past”

Now the big fat problem is, you’ll ONLY get this type of information if the person has been blacklisted.

So with that in mind…

Out of the 732 NTD checks we've done, how many tenants do you think were flagged as blacklisted?

Take a moment to guess.

Last year (FY23) 9% of bonds were paid in FULL to the rental provider/agent in Victoria.

So, for 9% of all tenancies in Victoria, the renters did not get any of their bond back.

So, based on this, you might expect about 65 out of those 732 checks to reveal a blacklisted tenant.

Here is another fact:

In Victoria, 4.43% of renters were taken to VCAT by the rental providers (owners and agents) last year (FY23).

Going to the Tribunal is a big deal. It's either very expensive or nerve-wracking, depending on whether you're using an agent or representing yourself.

Nobody takes that step without a very good reason. Or a bad reason, depending on how you look at it.

So based on that, it would be reasonable to see 32 out of the 732 NTD checks flagging a tenant as blacklisted.

Nope. It’s lower.

The actual answer is 2 out of 732.

Only 0.27% of the NTD reports flagged a tenant as blacklisted.

So what does this mean?

It means very few bad tenants actually get blacklisted on the NTD (based on our data of 732 checks).

1 in 10 bad tenants in fact.

This information tell us that you can’t just rely on these NTD Tenant Checks to tell you if your potential renter is a bad tenant because it’s only right 1/10 times.

This information may surprise you but it does not surprise me.

I have been trying to tell people for 10 years but I finally have enough data to back it up. It’s why I have finally broken my silence.

Whats the problem?

Most agents and owners don't bother reporting tenants because it’s a big hassle blacklisting a tenant.

There is no one automatic or centralised database that holds records of bad renters. It simply does not exist. Myth Busted.

Blacklisting a tenant is a very regulated process regardless of the which database it is (NTD, TICA etc).

In some Australian states, you even need a court order to blacklist a tenant.

You also cannot blacklist a tenant until after they move out, so it’s not going to stop them from getting their next rental. Go figure.

Also, tenants can usually only be blacklisted for three years.

And, If you have a bad tenant you know…

By the time you get them out, and go through the pain of Tribunal, you’re exhausted. To minimise your loss you quickly get the property back into rent-ready condition and prioritise finding new, reliable renters.

The last thing you want is to get caught up in the lengthy process of blacklisting someone.

So are they worth it?

No, not on their own.

Let's say hypothetically you are thinking about renting your property to a perspective tenant, and lets say they are in fact a bad tenant who owes other landlords a lot of money.

But you don't know that yet.

If you rely solely on an NTD check to determine if a tenant is blacklisted, you have about a 10% chance of uncovering the potential nightmare.

So that will not help you.

But there are other aspects to the NTD report I do like:

  • Bankruptcy & court record check
  • ASIC company directorship check

This is very good information that is difficult to get elsewhere but I have to stress it’s only going to tell you about a very small portion of potential renters.

I do also like the Identity verification check because it cross-references the potential renter's ID number against government databases so it helps to verify their identity but you cannot rely on this alone because it does not match their face with the ID (unless you want to do that in person).

At Cubbi we use these NTD Tenant Checks as just one very small part of our comprehensive screening process.

It’s important to remember the goal isn’t to avoid a bad tenant, the goal is to get the best tenant - the most suitable tenant for your property who will look after the property, always pay the rent on time and be a breeze to deal with.

Learn more about our professional screening here.

Now if you’ve read all this and still want a standalone NTD Check they are $29 each. You should never rely on these alone, instead I highly recommend full comprehensive tenant screening.

Here are the reports and links I mentioned in this article:

Click to download the FY23 RTBA Annual Report

Click to download the FY23 VCAT Annual Report

Residential Tenancies Act VIC - SECT 439E

Residential Tenancies Act WA - PART VIA -- Residential Tenancy Databases

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