Property News

Property managers to be regulated

Associate Housing Minister Poto Williams has released a discussion document for consultation on what a new licensing regime will look like for property managers in order “to make things fairer for renters and landlords”.

The new legislation will cover property management companies but not private landlords. New Zealand is one of the few countries in the OECD that does not regulate property managers.

About 59% of the country’s private rental properties are under management. At the beginning of 2020 this was 49% but there has been a significant swing to property management companies by private landlords since new government legislation and Reserve Bank tax rules have been introduced over the past two years.

Williams says property managers will have to comply a code of conduct, professional entry standards, established industry practice standards be accountable through an independent, transparent and effective disciplinary and complaints resolution process, under the new regime.

A regulator independent of the property management industry is to be appointed.

Under the professional entry requirements property managers must be 18 years of age, pass a fit and proper person test and undertake education/ training with a basic course of 15 hours.

Industry standards include 20 hours a year of continuing professional development, indemnity and public liability insurance and trust accounts (including independent review with periodic audits as required by the regulator).

If a property manager commits an offence under the new legislation to be introduced this year, they can be fined up to $40,000 and if a companies does the same, it can be fined up to $100,000.

Cost recovery is a major issue for the new regime. It is expected a mixed model will be used involving full cost recovery of some services, partial recovery of others and no recovery of public good regulatory stewardship costs/initial establishment costs.

A significant portion of the costs associated with the delivery of the new system will be through fees and levies rather than being funded by the Crown.

Te Tuapapa Kura Kainga is to be appointed to oversee and report on the performance of the regulatory authority.

New Zealand Property Investors chief executive Sharon Cullwick says the federation is pleased property managers will be licensed. “There have been a number of calls for the industry to be regulated and we agree with it,” she says.

“Independent landlords are dealing with only their own rental income but property managers are often dealing with income from hundreds of properties

She says the industry also has a high turnover of staff. On average property managers last about eight months. “If it is regulated and becomes more professional it will be a massive improvement for landlords and renters.”

Willlisms says the Government is committed to improving the wellbeing of all New Zealanders and housing plays a fundamental role in that.

“We have heard the calls of the sector, which has said the lack of regulations mean renters feel reluctant to complain to, or about, their property manager for fear of losing their homes or jeopardising their ability to rent houses in the future.

“Property owners are also vulnerable to poor conduct by property managers, and we know of some instances where unregulated property managers have misused rental income and bonds and provided little or no property inspection and maintenance.

“Today’s proposals are part of a suite of initiatives designed to improve the operation of the residential tenancies market and ensure New Zealanders have access to secure, healthy, and affordable housing,” Poto Williams said.

Landlords to be belted again by Government

Private landlords could be faced with further restrictions on running their properties as a business.

Associate Housing Minister Poto Williams has asked her officials to look at rent controls and rental indexing as a way to help renters struggling with the cost of accommodation.

She told TV1’s Breakfast programme nothing is off the table as far as controls on rents are concerned.

“I’ve charged officials at HUD (Ministry of Housing and Urban Development) to go away and look at what are the options we can put in, in the short term to support renters.”

She has asked officials to come back with a list next week of things that can be looked at. “Nothing is off the table.”

Williams says there are a lot of proposals, such as rent controls and indexation and there are other things she has asked officials to look at. “With some of the measures being proposed a balance needed to be struck to ensure inequities weren’t created in other place.

“Proposals around rent controls and the like overseas have shown that while it will alleviate issues in one area, it sometimes causes problems in others.

“So whatever measures are put in place there is a trade-off and a balance that’s to be struck.”

Property Investors Federation chief executive Sharon Cullwick has a 10 minute scheduled phone call with Williams on 14 January with other stakeholders and believes it will involve Williams outlining what the Government is going to do.

“I believe she already has most of the information and plans are basically in place. It will be a case of no negotiation with anybody and having to swallow yet more Government legislation belting landlords.”

She says the Government has implemented many pieces of legislation over the past couple of years to limit house price increases and in turn rents to little avail.

“The Healthy Homes Standards were introduced when there was a housing crisis and this reduced private rental stock as some landlords across the country baulked at the cost of bringing their houses up to the standards and sold properties, many to first home buyers, taking them out of the renal pool.

“The introduction of 90-day notices to terminate a tenancy under limited conditions has meant landlords are unwilling to rent to a marginal tenant and give them a chance, while Tenancy Tribunal powers to grant name suppression to tenants means landlords cannot do checks on potential renters.

“The recent CCCFA changes and LVR requirements means getting a mortgage is infinitely more difficult for landlords and borrowers.

“On top of all this they are going to face a sticky situation in April when their tax returns are filed and they realise the enormity of the Government’s phasing out of mortgage interest tax deductions. This may prompt a wave of selling.”

Cullwick says she has been advising landlords to immediately make sure their properties are rented at market rates, even if the rent has to be increased for long-established tenants. “The federation could see some form of rent controls coming.” ✚