Too expensive and wrong – new property manager regulations needed

RPMA chairman David Pearse says the previous model introduced by Labour is all wrong as it is too bureaucratic and doesn’t improve the quality of service to tenants or property owners. “Bishop has told us several weeks ago the cost benefit ratio doesn’t work.”

The bill covers about 42% of the residential tenancy market and involves compulsory registration and licensing for individual property managers and their organisations, training and entry requirements, practice standards, and a complaints and disciplinary process to be administered by the Real Estate Authority (REA).

The RMPA’s main gripe is Labour’s bill is too similar to the Australian regime, which operates under the country’s real estate regulator. He believes real estate companies were delighted the Real Estate Authority is to be New Zealand’s regulator under Labour’s regime because they can regain control over property managers and could make it difficult and unaffordable for independent specialist property management companies.

“We want a new bill to move away from that and our submissions are common sense.  Our argument is that we are a service industry and we don't fit with the real estate regulatory system that is focused on sales.

The other issue, Pearse says is in Australia surveys have shown the average property manager only lasts nine months in the industry.

“There is a huge issue in regards to property management as a career.” A lot of this, he says, has to do with business development managers encouraging a sales focus in agencies to get more rental properties on their books and expecting property managers to deal with up to 300 properties each. “This leaves just five hours a year for a property manager to focus on each rental, without chasing up overdue rent, dealing with unruly tenants and other problems. It's got nothing to do with providing a better quality service. New Zealand is experiencing similar problems.”

When people complain about the service they get from property managers, they forget they are just employees doing what they are expected to do by their employers, Pearse says. “This trend has come to New Zealand from Australian property management trainers.

“Property managers keep on getting thrown under the bus and it comes down to the responsibilities of the employers.”

It is arguing for a stand-alone association, such as those used by valuers, accountants and lawyers, so it doesn’t matter who the employer is.

Submissions from the RPMA and other specialist residential property managers have called for a standalone qualification or association. Whether a property manager works for a real estate company, an independent specialist company, or themselves, it doesn't matter – they all have to follow the same process.

It has worked effectively for those professions for decades, Pearse says. They have their own training and qualifications standards, continuing professional development programmes and complaints and disciplinary processes. “The goal of regulation is to provide better service for rental owners and tenants” he says. 

The RPMA has also been vocal in recommending private landlords be included in the bill. Of the submissions received on the previous Government’s original proposal, 182 submitters thought private landlords should be included in the legislation.

The exact number of landlords in New Zealand is unknown and is difficult to calculate, Pearse says. “Nobody really knows the state of the market. Designing a regulatory system specifically for property management companies and employees will make it hard to incorporate mum and dad private landlords into it in the future, he says.

When the bill was first proposed the RPMA suggested the previous Labour Government follow the Rent Smart Wales system.

All immediate rental landlords in Wales have to register providing personal details, the addresses of rental properties they own, and the details of those responsible for the letting and/or management activities at the rental property. A landlord registration lasts for five years and details are open for scrutiny through a free public register.

The RPMA lobbied the Government for a similar system but it fell on deaf ears. “Evidence shows that in countries where all landlords are regulated there is high compliance with the law,” says Pearse. “It makes a far more stable environment and lifts the standards of rentals and landlords.”

Private landlords say they don’t need to be regulated as they are handling tenants’ rent directly and are hardly going to rip themselves off and if tenants have complaints they can have them heard through the Tenancy Tribunal, which can penalise landlords.