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Professional National Trend

An increasing number of landlords are turning to property managers for help with their additional responsibilities, writes Will Alexander.

By: Will Alexander

1 August 2021

In November 2020, professional agencies managed 42% of the bonds lodged within the bond centre. Based on that statistic, it shows us that 58% of rental properties are still managed privately by landlords in New Zealand.

Although it is not a legal requirement to lodge a bond, this statistic provides excellent insight into the industry’s current state.

REINZ has recorded the most significant increase in membership enquiries and general council than ever before in history. The membership base is proliferating, and this is from professional agencies only. Private owners cannot join REINZ.

It begs the question;

"if experienced managers are looking for greater support by joining REINZ, how on earth are private owners navigating the minefield that is property management in 2021?"

New Zealand currently has approximately 2,100 professional property managers, and this number is also growing rapidly. In 2019, agencies managed 32-35% of rental properties in the country; so in the space of 18 months, roughly 55,000 properties have shifted from private to professional management. And we believe this is a growing trend that will continue in the years ahead.

Looking to our neighbours across the ditch, the numbers are entirely reversed, and professional agencies manage approximately 90% of rental properties.

For years, many commentators have pointed out that New Zealand has trailed behind Australia in this respect due to the regulation and licensing regimes across the different states. With the exception of accountability, the markets are very similar.

Once the New Zealand Government introduces a regulatory body and licensing regime for the industry, we see no reason New Zealand won’t eventually be comparable to Australia.

Even without regulation, the industry is becoming increasingly specialised. From the growing trend of private to professional management, we can see that the increasingly litigious environment is taking a toll on the private sector.

Around New Zealand, roughly 80-85% of purchasers are owner-occupiers. Since the Government’s proposed tax scheme was released in March 2021, investors have paused for a period to take stock of these potential new laws. However, we have not seen a mass exodus of landlords as some may have expected, and by and large, the rental pool has stayed roughly the same.

If passed in October 2021, the tax reforms will be grandfathered in for rental properties purchased before March 2021; and investors know they need to lift rents to offset the new tax.

Once again, we are sensing that a recent surge in management enquiry is from owners that are needing specialist management and professional guidance to do this fairly and legally. When you look at all the factors and pressure points, the national trend of private owners engaging professional property managers is only going to continue.

If and when the industry becomes regulated, we estimate that to be by 2030, the vast majority of rental properties in New Zealand will be professionally managed.

Any professional agency worth their salt advocates for a greater level of accountability across the sector. Combined with the preferred choice to engage professional agencies in the future, we only see this as a win for tenants, landlords, and the industry.

As the General Manager for Property Management at Property Brokers, Will Alexander is passionate about this industry and innovation - focused on implementing solutions that improve operations, customer experience, and business profitability. He is a staunch believer in; people, property and working smarter.

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