What’s Next For Heavily Scrutinized Multifamily Tenant Screening Tools?

One wrong move and regulators are ready to pounce

America is facing a housing affordability crisis that has escalated alarmingly in recent years. As frustrations mount, the real estate industry is under increased scrutiny. Legal challenges have already emerged against tools that landlords use to set rental prices, and other software, like tenant screening platforms, is also under close watch by regulators, ambitious attorneys general, and opportunistic plaintiffs.

While tenant screening software is designed to streamline the application process and mitigate risks for landlords, it has drawn criticism from tenant advocacy groups. Recent lawsuits highlight instances where these automated systems may have unfairly flagged or denied applicants based on inaccurate data or discriminatory practices. A notable case involved a major Florida landlord accused of denying housing to Black renters based on flawed reports from a popular screening program. This growing backlash raises urgent questions about the technology's role in perpetuating systemic inequities in the rental market.

As the multifamily sector continues to feel the pressure, new legislation is being proposed to regulate these practices more closely. With 60 percent of renters in the $35,000 to $49,000 income bracket now classified as cost-burdened, lawmakers are taking action to address evictions and rent control. The push for transparency and fairness in tenant screening is becoming increasingly vital, especially as more landlords rely on these technologies without fully understanding their implications or verifying the underlying data.

As the landscape of tenant screening evolves, alternative approaches are emerging that aim to better assess potential renters while addressing issues of fairness and discrimination. Suggestions include using consistent rental payment histories or considering the diverse income sources of gig economy workers. With regulatory bodies and advocacy groups pushing for changes, the multifamily industry is at a crossroads—one that could redefine how tenant screening is conducted and ultimately improve access to housing in an increasingly strained market. Click through to dive deeper into what’s next for tenant screening tools.

Not a subscriber yet? You can get access to all of our exclusive content for just $1 for the first month. Sign up now.

Propmodo Focus

ENERGY MANAGEMENT ➜

MULTIFAMILY ➜

SPACE MANAGEMENT ➜

PROPERTY RESEARCH ➜

Propmodo Technology: Investment Management

More Propmodo