It doesn’t take long to find a horror story about renting a property. Look in the right place and you find plenty. Better yet, get out and about and have a chat with as many tenants as you can and you can almost guarantee that you’ll hear some outrageous stories about the way they were treated by their local property manager.
They aren’t the only ones though. Landlords too have inevitably had some shocking experiences that leave a lot to be desired from the property management industry.
Cases of landlords being ‘ripped off’ or having their property returned to them in a terrible state can become the norm if you spend long enough reading up on it all. 💸
It is unsurprising then that New Zealand is home to an unregulated property management industry. One of the only countries in the western world to not have a regulated industry, New Zealand’s housing minister Phil Twyford has announced that the Residential Tenancies Act will be completely overhauled. As part of this, there is a high chance that property managers will be required to comply with new industry regulations. But what will they look like? How will it work? And what impact is it going to have on the market, the landlord and the tenants who rent property?
It is true that New Zealand is one of the last major western world countries to regulate around the world.
Australia, America and the UK all regulate their industry in some form or other. 🔒
Whilst regulation takes many different shapes, what is common is that property managers are required to ‘register’ and in many cases even become licensed.
Residential property managers are regulated in every state of Australia except South Australia who are in the process of introducing their own regulations following a law that was passed in September 2017. England, Ireland, Scotland and Wales, too have regulated their industries although in different ways. In Wales, landlords who manage their own property must be registered alongside property managers and letting agents.
In England, property managers must belong to one of three Government approved redress schemes and fines are given to those who act unregistered. Scottish property managers must also be registered to work in the industry. Property managers are subject to a Code of Practice which was introduced in January of 2018 and failure to register is considered a criminal offence. Whilst each state in the USA is slightly different, property managers are still regulated across the board, and are either required to hold a broker’s license or at least be registered in the state in which they practice.
So why bother with the regulation of the industry in New Zealand? Simply put, the industry is growing rapidly. More and more landlords are turning to property managers as the legislation and ‘box ticking’ involved in renting a property is becoming more and more complex.
As a result, property management companies deal with larger sums of consumers’ money and this should be properly monitored. 📈🔍
In South Australia, the minister leading the charge for the lobbying of changes said this was required ‘to ensure that both tenants and landlords have the confidence that they are dealing with a competent and trained professional’. Moreover, regulation of the industry would allow for disgruntled consumers to have an independent entity to register their complaints to.
Prior to regulation in Scotland, of those who had made a complaint to their property manager, up to two thirds were unhappy with how it was handled. It could be suggested that the numbers would be similar in New Zealand.
Providing a standard and regulating it will allow both consumers and property managers to comprehensively understand their rights and obligations. 🏅
Regulation in the New Zealand property management industry does seem somewhat inevitable. However, it could take many different forms. It has been suggested that a possible solution would be to introduce property managers under the Real Estate Agents Act 2008 (REA Act).
Originally included in the Act, but removed prior to the Act’s passing, property managers would be subject to the rules of professional conduct and trust account auditing requirements. Property managers were removed from the original Act despite 98% of submissions received in respect of the Act supporting their inclusion.
It would not be too far fetched to expect however that even if property managers were not included in the REA Act, they would be required to be licensed.
It may not even be out of the realms of possibility for landlords who don’t use property managers to expect to be asked to become licensed, or registered at least. 👍
Audits of property managers would no doubt become commonplace. Inevitably, the landscape of property management looks set to change. Whether this is for the better or not remains to be seen, but it could be suggested that as the industry grows more rapidly this regulation is required. We would love to hear some of your experiences with property managers and whether or not you would like to see the industry renovated.
If you would like to discuss your property and how the potential regulations could affect you, feel free to give me a call directly anytime on 04 979 6363.
Business Development Manager