Original Article: 【なぜこの人が落とされる？】家賃債務保証業者の審査基準について
The other day, while browsing the Internet, I came across an article in which Takafumi Horie, a.k.a. “Holliemon,” was reported to have said with a wry smile that he had been rejected from the screening process for a monthly apartment in Mori Building.
Mr. Horie is a man of character, even if his mannerisms and behavior may divide people.
He was arrested in 2006 for violating the Securities and Exchange Law and was sentenced to two years and six months in prison in 2011.
In 2014, after his release from prison, he was evicted from the Roppongi Hills Residences owned by Mori Building in Tokyo’s Minato Ward, and he commented the reason he could not pass the screening was because “the president of the company hates me.”
Rather than a corporate representative disliking the company, I believe the screening was based on a history of problems with properties owned or managed by the company in the past, but the reason for Mori Building’s rejection has not been disclosed, so in any case, this is just speculation.
Have any of you ever wondered about the results of screening by a guarantor company. Have you ever wondered “Why was this person rejected?”
We, real estate agents, who mediate rentals, may also refuse to accept a tenant based on our own judgment if the tenant is likely to cause trouble after moving in, such as if the tenant has “an intimidating attitude or lacks moral character.”
For this reason, rental application forms often include a warning that no explanation of the screening process or reasons will be given in case the application is turned down.
In the case of the aforementioned Mr. Horie, even though he has no income problems, there is no problem in rejecting him because he does not meet Mori Building’s internal screening criteria due to his behavior or past grudges.
When tenants are rejected by the screening process, they are often asked to explain why they were rejected, or to explain why their plans went awry. (We understand your anger, but it is reasonable to refuse to introduce any further properties to those who respond in this way after hearing the screening results.
However, if it is proven that the reason for refusing to move in is in violation of respect for fundamental human rights stipulated in Article 11 of the Constitution, such as nationality, race, social status, or family origin, you may be obliged to pay compensation in court.
Although the degree varies, the screening process is conducted by the management company, the guarantor company, and the rental owner, respectively. There is no way for us, the mediator, to know which of these three was the cause of the problem.
By the way, do you know what kind of points the rent guarantor focuses on in the screening process?
We will explain such screening criteria.
Basic Screening Criteria
As those of you who are involved in real estate sales and loan brokerage will understand, the rental guarantee screening process involves an examination of the applicant’s character, place of employment, and income.
In addition, the screening will take into account the applicant’s history of rent arrears, place of employment, length of employment, and income.
It is pointed out that if a person has been released from prison, his or her crime has already been atoned for, and it is morally problematic to refuse to allow them to move in on such basis.
While this is true from the standpoint of respect for human rights, the rights also lie with the owner or management company.
It is understandable that they would want to eliminate the possibility or risk of negative impact on the surrounding area for the safety of other tenants.
However, the rent guarantee companies do not publicly disclose their screening criteria.
Since there is a case in which an original judgment standard is set up except the above-mentioned, the cause will also remain unknown.
It is said that 97 companies exist in the whole country as of July 24, 2023 according to the list of registered rent debt guarantee companies the Ministry of Land, Infrastructure, Transport, and Tourism discloses.
However, since registration is voluntary, the Ministry of Land, Infrastructure, Transport and Tourism does not know the exact number of cases, including the number of guarantee services which are not registered.
n many cases, the management company to which the rental property is entrusted decides the rent obligation guarantor in effect, though these rent obligation guarantors are used by the rental owner to prepare for the risk of late payments.
The rental owner does not directly bear the guarantee fee.
Although individual examination standards are not made public, the fact is that there are variations among guarantors, such as avoiding sole proprietors (entrepreneurs) even if they correctly report their income and have a reasonable income.
Is information about delinquencies and problems shared?
We cannot confirm that all of the rent guarantors, since the Ministry of Land, Infrastructure, Transport and Tourism is unable to ascertain the actual number, share information with each other for mutual protection.
The National Association of Leasehold Guarantee Companies (LICC) seems to share information among its member companies, but as of May 2023, only 15 companies are regular members.
Although the possibility cannot be denied that information may be shared voluntarily by other companies as well, the actual status of this information sharing has not been ascertained.
If the rent debt guarantor is a consumer credit company such as Orico, it is highly likely that information is obtained from personal credit information agencies such as CIC, JICC, and KSC.
In cases where a borrower is rejected in the screening process even though he/she has reasonable income, the personal credit information may confirm his/her wasteful spending habits and delinquency information, and the borrower may be judged to be at “risk of rent delinquency.”
As a backdoor method, you can choose a rent guarantee company which does not have access to credit bureaus or a company that is unlikely to share information with other companies to pass the screening process, but as you know, the number of properties you can choose from is extremely limited.
Other Review Items
In order to arrange a rental agreement, you must meet the requirements of the property’s owner, one of which is the use of a guarantor company. Even if you like the property, if you do not pass the screening process, all the time you spent viewing the property may be wasted.
As those of you who specialize in rentals know, you need to examine the screening trends of the rental properties you are mediating, and introduce properties which are more likely to pass the screening.
However, this depends on experience. ……
If married couples live together, there is no problem, but unmarried couples are discouraged from moving in together.
The reason is simple: there is a concern that the risk of delinquent rent increases in the event of a breakup.
If a couple has already decided to move in together and they do not declare it in advance, they may be accused of violating the terms of the lease, so the declaration must be made correctly.
In order to make it easier to pass the screening process in such a case, we recommend a property that can accommodate two tenants, and at the same time, a property that can be occupied by a couple with a rent burden ratio sufficient to pay independently in the event of an emergency.
Although this does not apply to all rent guarantee companies, if either party is found to have a history of rent delinquency or poor conduct, there is a greater likelihood they will fail the screening process.
In addition, we must be cautious in handling applicants who report a history of arrest or incarceration in the past.
From a moral standpoint, if a person is incarcerated and serves a specified period of time in prison, he or she should have atoned for his or her crime and should not be disadvantaged because of this past record after release.
However, the reality is that it is not that simple. Because of the negative information which can be gathered as part of a background check, it can be difficult to get through the screening process if you were involved in a crime that can be easily found on the Internet.
If you are denied, you cannot publicly state that your past criminal record was the reason, but you are not obligated to disclose the reason for the denial in the first place.
Even if you are lucky enough to move in, if this fact is discovered later, you may be forced to leave the apartment on the grounds that the relationship of trust has been destroyed by your false declaration.
However, if a tenant has been sanctioned through criminal proceedings and has been allowed to return to society, there is no way that an eviction request will be accepted if no specific nuisance behavior has occurred.
Therefore, many rental owners often wish to exclude those with a criminal record from the property prior to moving in, as they are at risk of re-offending (although the reasons for this cannot be made public).
This is the reason why it is difficult to evict them once they are allowed to move in.
Although we explained the screening by the guarantor company, in reality, even when a management company refuses a move in based on their own judgment, in order to avoid being accused of the reason for the refusal, the company often claims that the tenant was “rejected by the guarantor company’s screening.”
Since the specific screening criteria are not disclosed and the reason is not clear, it is necessary to avoid properties which use the rejected management company or guarantor comapny when mediating new properties.
This will narrow your options, but that is inevitable.
When mediating rental housing, it is important to understand the basics of the screening criteria, be aware of the importance of the screening result, and try to introduce properties which will pass the screening process.
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