7 Must-Haves In Your Rental Application Denial Letter

Learn about rental application denial letters and how to reject applicants in a professional and transparent manner.

By
Nichole Stohler
|
Last Updated
September 26, 2023
7 Must-Haves In Your Rental Application Denial Letter

Rejection is tough. For landlords reviewing rental applications, doling out rejections to applicants is par for the course. For the sake of your professional reputation, on top of simply wanting to be a kind person, knowing how to clearly explain your reason for rejection while also preserving the relationship with the applicant is imperative.

This article will share techniques for crafting a rental application denial letter with care. Communication is an art -- especially when conveying unfavorable news.

You'll discover the importance of clear and respectful communication, uncover the legal aspects, and gain valuable tips for maintaining a positive relationship with prospective tenants.

Ready to learn how to handle denied rental applications? Let's dive in.

About the rental application denial letter

A rental application denial letter, also known as an adverse action letter, is a formal document that a landlord or property manager sends to applicants that explains why they were not chosen as a future renter.

The purpose of this letter is to provide the applicant with specific reasons for the denial and fulfill legal requirements. For example, if you deny an applicant because of their credit report, the Fair Credit Reporting Act (FCRA) legally mandates that the rejection letter include the reasons for the denial. You must also provide information about the consumer reporting agency used to obtain the credit report.

Legal reasons to reject a rental application

Here are some of the valid reasons for rejecting the rental application:

Insufficient income: If the applicant's income does not meet the minimum requirements set by the landlord or property management company, this could lead to a denial.

Poor credit history: A history of outstanding debts, a low credit score, late payments, or a negative credit report can raise concerns about the applicant's financial history and ability to fulfill their monthly rent, leading to a denial.

Negative rental history: Previous evictions, lease violations, or a poor rental record can be grounds for denying an application.

Inadequate references: If the applicant's references, such as previous landlords or employers, provide negative feedback, the application may be denied.

Criminal history: A property manager may deny an application if the applicant has dangerous criminal convictions that pose a potential risk to the property or other tenants.

Incomplete or inaccurate application: Incomplete applications containing missing documentation or false information may be denied and lead to a rental application rejection letter.

Preparing to write the denial letter

Once you've chosen the most suitable applicant for your property, you'll need to inform the other applicants of their denial. To prepare for writing a rental application rejection letter:

  1. Start by gathering all the application materials and screening reports.
  2. Include documents such as income verification, credit history, and references.
  3. Document the valid reasons for the denial, supported by the applicant's information.
  4. Refer to the lease agreement, local regulations, and Fair Housing Act for compliance and fairness in decision-making.

The 7 tenant rejection letter must-haves

You've gathered your materials. Next step? Writing the letter. Here is a step-by-step guide on what to include in the rejection letter.

  1. Begin with a polite greeting: Start the rejection letter by addressing the applicant by name and thanking them for their interest in the rental property.
  2. Clearly state the decision: In the opening paragraph, your letter should state the denial of their rental application -- be direct but professional about the decision.
  3. Provide a brief explanation: The second paragraph should briefly explain the reason for the denial. This can include insufficient income, poor credit history, a low credit score, or failure to meet other specific criteria.
  4. Reference the specific criteria: Mention the criteria used to evaluate the application. For example, you can mention the minimum credit score required, the income-to-rent ratio, or any other factors influencing the decision. Provide details on the consumer reporting agency used for the credit report.
  5. Offer suggestions or alternatives if possible: You can offer polite suggestions for improvement or alternative options to the applicant. For example, you may suggest credit repair resources, recommend a co-signer, or inform them about other available properties that suit their needs better.
  6. End on a positive note: Conclude the letter by wishing the applicant well in their search for housing and expressing appreciation for their interest in the rental property.
  7. Provide contact information: Include your contact information if the applicant has questions or needs further clarification.

Sample rejection letter

Feeling a bit more confident about the process, but still need more inspiration to get started on writing that letter? Worry not! This tenant rejection letter template will help you nail it:

[Your name, Address]

[Date]

[Applicant's name, Address]

Subject: Rental Application Denial

Dear [Applicant's name],

Thank you for your interest in renting [property address]. We appreciate the time and effort you put into submitting your rental application. We have reviewed your application and regret to inform you that we are denying it.

While we understand this may be disappointing news, we would like to explain the factors that influenced our decision. After evaluating your application against our established criteria, we have determined that it does not meet the requirements necessary for approval.

Specifically, the reasons for the denial are as follows:

[Clearly state reason 1 for denial]

[Clearly state reason 2 for denial]

[Clearly state reason 3 for denial]

We assure you that we did not make this decision lightly and are committed to treating all applicants fairly and impartially. Our criteria ensures the successful tenancy of the residents within our community.

While we cannot reconsider your application for this property, we recommend exploring alternatives that may better align with your current circumstances. Additionally, we encourage you to address any areas of concern mentioned in our evaluation.

Once again, we appreciate your interest in our property and wish you success in finding suitable housing. Thank you for your understanding.

If you have any further questions or require clarification regarding the denial, please do not hesitate to contact us at [your contact information]. We're here to assist you and provide any additional information that may be helpful.

Handling reconsideration requests

The prospective tenant may ask for reconsideration of their application. If this occurs, here are guidelines for handling the request:

Document the request

Keep a record of the reconsideration request, including the date you received it and the communication method used. Documenting the request provides transparency and consistency.

Review the application

Revisit the applicant's original rental application and the reasons for denial. Reassess the information provided, paying attention to any new or additional details the applicant may have included in their reconsideration request.

Gather additional information

If the applicant has provided new information or documentation that may impact your decision, evaluate it objectively. Assess whether the new information addresses the concerns that led to the initial tenant rejection letter.

Communicate clearly

Reply to the reconsideration request promptly and professionally. Acknowledge receipt of the request and provide a timeline for the decision. Communicate your process and any additional requirements, such as requesting further documentation or references.

Fair evaluation

Evaluate the reconsideration request fairly and consistently, as with any other rental application. Base your decision on objective criteria and consider the applicant's ability to address the reasons for the initial denial.

Notify the applicant

Once you make a decision, inform the applicant of the result. Be transparent about the reasoning behind the decision, providing clear explanations if the reconsideration request is approved or denied. Communicate the decision in writing to maintain a record of the correspondence.

Tips for preventing application denials

Landlords can take several steps to prevent applications that are unlikely to be approved, saving both their time and the applicants'. Here are some strategies to consider:

Communicate rental criteria: State your rental criteria in your property listings, advertisements, or application forms.

Set application fees: Charging a non-refundable application fee can deter applicants who may not meet your criteria or do not have serious intentions. Make sure to check local laws and regulations regarding application fees.

Request pre-screening information: Ask potential applicants to provide some basic information before submitting a formal application. For example, request the tenant's name, contact information, and occupants of the rental unit, including pets, employment, and monthly income. This lets you quickly understand the tenant's ability to pay rent and any conflicts with your occupancy policies.

Conduct initial phone screening: Use a brief phone call to ask some preliminary questions and get a sense of the applicant's qualifications and compatibility.

Provide comprehensive application instructions: Outline the required documentation and information applicants must provide.

Advertise targeted screening criteria: If you have specific requirements, such as no pets or smoking, advertise them prominently.

Use tenant screening: A tenant screening process covers background checks, credit reports, and rental history verifications.

Stay consistent and fair: Apply your criteria to all applicants to ensure fairness and avoid potential discrimination claims. Treat each applicant equally and objectively evaluate their qualifications based on the established criteria.

Rental application rejection letter

Letting people down can be tough to do. Placing care and understanding at the forefront when communicating rental application denials helps to soften the blow. Document valid reasons for refusal and politely structure your letters. Evaluate appeals fairly and minimize rejections through prescreening and clearly stating your eligibility criteria. Mastering this approach preserves integrity and relationships between landlords and applicants. With these best practices in hand, you can go forth with confidence.

Rental application denial letter FAQs

What is the Fair Housing Act?

Fair Housing Law is a federal law that guarantees equal opportunities for every prospective tenant to rent or buy a home without discrimination.

Landlords cannot discriminate against applicants based on color, race, religion, gender identity, national origin, familial status, or disability. This extends to the questions asked on rental applications, as well.

What is the Fair Credit Reporting Act (FCRA)?

The Fair Credit Reporting Act (FCRA) regulates consumer credit information collection, use, and dissemination. It aims to protect the privacy, accuracy, and fairness of consumer credit reporting.

The Federal Trade Commission enforces the FCRA and provides individuals with rights and protections concerning their credit information.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of NicsGuide.com, a blog dedicated to real estate investing.

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