REINZ chief executive Jen Baird says in an industry where a modest one-person property management business can oversee assets totalling $60 million, it’s inconceivable that such a significant sector remains unregulated.

“No other profession handling assets of this magnitude operates without oversight in New Zealand,” she said. 

Nearly one in three households rent, a number that will continue to rise, and REINZ will not give up on the bill without a fight.

“There are no minimum standards requiring residential property managers to ensure they are up to speed on landlord and tenant laws.  There is no legal requirement for property managers to hold insurance.  There are no checks and balances to ensure tenant bonds and landlords’ rent money is protected in an independent trust account,” she said. 

“Rent and bond fraud is not uncommon. Having no safeguards for client funds puts landlords and tenants at risk.”    
Housing Minister Chris Bishop has instructed the Social Services and Community Committee to stop work on the Residential Property Managers Bill as analysis shows the cost benefit is marginal.

Vulnerable tenants

Bishop says the analysis also noted that even those marginal benefits were highly uncertain, with the most certain aspect being costs. 

He says that as the country is in the middle of a housing crisis, adding more regulation to the rental property market isn’t the way to boost housing supply.

“Instead, we need officials working on policies that will make a real difference to improving housing supply, such as our sensible changes to the Residential Tenancies Act, which will encourage more landlords into the market and apply downward pressure to rents.”

Baird says amidst a housing crisis the need for landlords to have confidence in professional management of their assets is paramount. “This, along with measures to incentivise private investment, will be pivotal to increase rental supply.”

She says vulnerable tenants deserve to be protected from rogue property managers who do not always abide by the law. Concerns over bond refunds consistently rank among the top three Tenancy Tribunal disputes.  

Protection

The bill would have imposed minimum standards and protections on an unregulated industry that manages billions of dollars in assets for everyday New Zealanders. 

NZPIF president Sue Harrison says the bill would have been beneficial for the industry.

“Many members of nationwide property investor associations professionally manage properties, making it reasonable to expect financial regulation regarding the substantial rental payments flowing through managers’ bank accounts.”

The federation supported the proposed licensing and regulation regime, emphasising the importance of enforceable obligations.

While the regulations would have contributed to upskilling professional property managers, Harrison says that, as with any licensing regime, there is no guarantee trained and approved individuals will consistently demonstrate honesty and competence.

She says one of the reasons for scrapping the bill was ongoing costs, but those would have been funded by charges imposed on the regulated parties, not tenants.

“The costs would ultimately have been absorbed by owners, as property managers would need to adjust their pricing models to cover the legislation costs.”

 REINZ has been advocating strongly for residential property managers to be regulated for more than five years. 

Baird says members are held to high levels of professionalism.  To qualify as an accredited property manager members are required to meet minimum standards in professionalism, education and training every year. 

Their agency must hold rental income in a separate trust account with an independent review/audit annually, and it must hold appropriate business insurance, she says.

REINZ members manage about 40 per cent of privately managed residential housing stock, but for the other 60 per cent standards of professionalism and competence vary wildly.  “Sadly, not all property managers act ethically,” Baird says.  

Online education

Also upskilling its members, NZPIF has developed an online education programme called RentSkills, which it says has been highly successful.

REINZ and NZPIF say they will not give up the fight for minimum standards and basic protections for landlords and tenants and will continue constructive talks with the government and others.