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Leave Discipline And Complaints To The REA

David Faulkner suggests the Real Estate Agents Disciplinary Tribunal, with almost 14 years under its belt, can easily adapt to property management.

By: David Faulkner

1 April 2022

In the February edition of this magazine I wrote an article stating this would be the year we would finally see steps towards regulation. A few weeks later, Associate Housing Minister Poto Williams finally announced discussion documents on what a regulated residential property management industry may look like.

One of the big discussion points was whether property owners who manage their own properties should be covered. Personally, I am on the fence with that one. I like the idea of a landlord register, and some basic mandatory training for self-managing landlords would be good. However, if we make it too onerous, more landlords will vacate the market, leading to further supply shortages.

However, for the point of this article, I want to explore who should deal with disciplinary issues and complaints. There are two clear choices as stated in the discussion document released by the Ministry of Housing and Urban Development. It is a choice between the Real Estate Agents Disciplinary Tribunal (REA) and the Tenancy Tribunal.

Much Better Place

For me, I think the logical option should be REA. Let me explain.

The REA was set up in 2008 so consumers could independently lodge a complaint with the REA and not the Real Estate Institute of New Zealand (REINZ), which is where you went to complain prior to this. The theory was that REINZ would look after its members and not deal with complaints transparently. Making REA independent meant that consumers would have greater confidence, there were stricter rules around professional development, and the industry provided better information to their consumers. Although this was controversial at the time, there is no doubt the real estate industry is in a much better place because of this.

‘We need shorter Tenancy Tribunal hearing times rather than longer ones’

Property management probably should have been included back in 2008, but it was left out. This was mainly because the REA would be overrun with minor disputes such as minor damages at the end of a tenancy. Now, nearly 14 years since the introduction of the REA, we have a robust disciplinary system that works and can be easily adapted to property management.

The other reason the REA should deal with property management disputes is that there will sometimes be disputes that may involve a real estate agency and a property management company. For example, an incorrect notice may have been served on a tenant to end a tenancy, and this may lead to a sale falling through.

Who do the vendors and purchasers complain to? Having it heard all in the same disputes tribunal means the REA can correctly apportion blame.

Background Knowledge

Suppose the complainant had to lodge a complaint with the REA and the Tenancy Tribunal. In that case there is a possibility the two separate disputes tribunals may come to two different conclusions.

The other reason my belief is that the REA should handle these disputes is that they already have a good understanding of how a business is run. The Tenancy Tribunal does not have this background knowledge. The Tenancy Tribunal needs to be left purely for disputes between landlords and tenants and body corporate disputes over which it also has jurisdiction.

I also have concerns with the consistency of the Tenancy Tribunal. As I have stated in the past I do not believe the Tenancy Tribunal is biased, but it is most undoubtedly inconsistent at times. Giving them jurisdiction over the property management industry would also lead to lengthier delays to obtain a hearing between a landlord and a tenant. This is not a good outcome. We need shorter Tenancy Tribunal hearing times rather than longer ones. Giving them jurisdiction over the property management industry would not be a good outcome.

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