Although the ultimate goal of any landlord is to put a renter into a property, there are some times when it's just not the right fit. Not every applicant who wants to live in your rental is going to work. When this happens, you'll find yourself having to prepare a rental application denial letter.

It may feel daunting to have to write this type of letter. It's not easy having to reject someone in any situation. However, with the right approach and plenty of transparency, you'll get through this process just fine, moving on to find the ideal tenant.

Legal reasons to reject a rental application

While we've all met people whose personality is something we'd like to say "no" to, the Fair Housing Act restricts the reasons, as a landlord, you can reject someone's rental application. You must adhere to these regulations to prevent any legal recourse.

Under the Fair Housing Act, a rental application denial letter cannot get served on the basis of race, color, national origin, religion, sex, familial status or disability. This prevents housing discrimination and reverses housing segregation. You're also not allowed to deny a renter's application based on their criminal record unless there are dangerous criminal convictions that could put people, and your property, at risk. In other words, a DUI is not grounds to deny a potential renter, but getting convicted of arson, most likely is.

Even with the Fair Housing Act policing rental application rejections, it is legal to say "no" to a potential renter in specific instances, mostly when they fail to meet your rental requirements. Here are a few examples:

1. When a credit score isn't high enough

It's a common practice for a landlord to run a credit check on every applicant. As long as you do this, you can reject a potential tenant if their score is too low. Since a credit score is indicative of an applicant's financial history, a low number could mean they don't pay their bills, which includes rent.

It's your personal preference whether you allow them to bring in a co-signer or guarantor to help get their rental application approved despite their credit history, but you don't have to.

2. When the money doesn't work out

Expectations when it comes to finances are also a major concern for you as a landlord. Not only does an applicant need to have enough liquid funds to cover all the upfront costs — first, last, security, etc. — but they need enough income to pay the rent each month along with their other bills.

Many landlords ask that their renters make a specific amount, annually, above rental costs to ensure everything is good. The standard ask is three times as much income as rent.

3. When their rental record is less than stellar

Looking at a potential tenant's rental history may also raise some red flags that could lead to a rental application denial letter. Situations like prior evictions, records of unpaid rent or fees, bad feedback from previous landlords and proof of previous property damage are all solid arguments to reject a rental application. You need to protect your property in every way, so it's best to be hesitant when issues like these arise.

4. When their lifestyle doesn't mesh

You'll most likely have additional rules related to your property. You may have a no pet policy, or a zero smoking indoors policy. Except for emotional support animals, these are rules you're able to enforce. If a potential tenant comes to you with their dog or says they're a smoker, you can reject their application because of their inability to meet all your requirements for tenancy.

5. When there's an issue with their application

If a potential tenant lies on their application, or can't complete it, you also have grounds to deny them tenancy. These are, in fact, two very big reasons to write a rental application denial letter. Either they've falsified the information you need to approve their application, or they simply didn't give you enough. Either way, you can't make an informed decision if this applicant is even safe to have living in your property.

6. When the property is no longer available

When demand is high for a specific property, you may get more rental applications than you actually need. Evaluating them on a first-come, first-served basis, you may fill the vacancy quickly. It's polite to send a letter out to the other applicants letting them know the property is no longer available. Not necessarily a solid rejection, but another example of when it's legal to tell an applicant "no" in regards to renting your property.

How to write a polite rental application denial letter

Once you understand when it's okay to reject a rental application, the next part is crafting the actual letter. It's stressful because you're having to let someone down. But with enough finesse and information, this should be a seamless break.

Your letter should have a professional and informative tone, covering exactly why you're denying their rental application. Include as many specifics as possible, such as:

• Application date
• Property address
• Reason(s) for rejection
• Supporting documents (if necessary; i.e., a copy of their credit report)
• Your contact information (for additional questions)
• Suggestions for alternate options (optional)

Also, don't forget to thank them for applying and let them know you feel bad about having to say "no." The, “We regret to inform you," phrase works every time.

Sample rental application denial letter template

Some rental application denial letters will feel like you're filling out a form. They'll list all the possible, legal, reasons to deny a renter and let you check the boxes. This does save time, but it's often impersonal enough to rub prospective renters the wrong way.

If you can, take the time to make it a little more personal, and a little less formulaic. Download and try out this template instead.

(Date)

(Applicant's full name)

(Address of rental property)

RE: Rental application review

Dear (Applicant's name),

Thank you so much for submitting your rental application for (Property Address.) I've had time to review it and sincerely regret to inform you that it was not accepted at this time.

The decision was made based on (fill in as many specifics regarding the reason why you denied the application such as low credit score, income concerns, the property is no longer available, issues with rental history, etc.)

I understand this is not the news you were hoping to hear. Should you have any questions regarding your rental application status, please don't hesitate to reach out to me directly at (your phone or email.)

You may also want to consider (insert any advice, if applicable to help them out the next time such as offer up a co-signer, seek rentals more in their price range, etc.)

Sincerely,

(Your Name)

Finding the perfect tenant

Remember, there are many reasons why you can reject a rental application, but it's not always what's on paper that counts. If possible, get to know your applicants a little bit when they come to view the property, before filling out an application. Make some notes on your first impressions and consider using that to help sway your decision if their application comes back less-than-stellar. Your perfect tenant may not always have the perfect application.

The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.