Regulating Property Management
Bringing accountability into the Property Management industry could be extremely effective, writes Guy Mordaunt.
1 December 2021
While he was still Minister of Housing in late 2020, Minister Kris Faafoi confirmed that the Government wanted to regulate the property management industry and introduce a licensing regime. Contrary to what many would believe, this is what the industry wants.
In 2019, REINZ launched the A Call for Change campaign to lobby the government to review the industry and address the long-standing frustration that property management (against the advice of industry leaders) was left out of the Real Estate Agents Act (REAA) 2008.
With the benefit of hindsight, bringing accountability into the industry could potentially be more effective than anything done so far in New Zealand.
So what could this look like for the industry and stakeholders? As we see it, there are two components to address. One area is a regulatory body, and who does that? And secondly, a licensing regime to educate and maintain standards across the industry. So what could this look like for the industry and stakeholders? An authority similar to the REA (the sales industry’s overriding authority for everyone holding a sales licence and manager licence) is attractive to professional property managers and businesses in the sector. The REA reviews complaints, mediates, disciplines operators where necessary and maintains standards.
Who could regulate property management? As part of the reforms and subsequent amendment to the Residential Tenancies Act, MBIE were given more power over the industry. They now have the mandate to audit both private and professional agencies. And trust me, they are checking! Property Brokers has been randomly audited roughly 10-15 times over the last year, and the audits are extensive. From our vantage point, they are doing a good job, and we welcome their feedback and a greater level of governance. Reading between the lines, it would make sense for MBIE to be the governing body; however, as with sales, the REA could be another viable option.
The introduction of a licensing regime would bring standards and consistency to the industry. Ongoing training would significantly improve the overall understanding and awareness of a property manager’s obligations by providing an industry-standard training infrastructure. The Government should look to existing courses such as the Skills Level 4 course or equivalent via REINZ or REAL iQ as a guide. As with sales, there should be a minimum learning requirement for licensed property managers that could be equivalent to the ten hours of sales agents’ verifiable and non-verifiable training expectations.
The REINZ Campaign identified minimum standards for the government to cover as part of this review:
1. A minimum level of education to operate, such as the NZ Certificate in Residential Property Management.
2. Ongoing education obligations, including current law changes.
3. Police or background checks before operating.
4. Trust account for tenant and landlord funds.
5. Appropriate insurance.
6. Mandatory Code of Conduct or set of standards.
7. Lines or sanctions if Code of Conduct or standards aren’t adhered to.
A huge point of frustration for professional agencies has been that since industry deregulation in 2008, many operators have acted unlawfully and haven’t adhered to the Residential Tenancies Act, damaging the reputation of everyone within the sector.
From the outside looking in, it would be fair to remark that everything introduced has failed to address the overall standards of living in New Zealand and the service provided to landlords. There are countless examples of fraudulent behaviour from property management agencies and tens of millions of dollars unaccounted for.
The introduction of a licensing regime, a governing body to regulate the property management industry, and engagement with industry bodies such as REINZ would see the entire standard change. For the better.
Tenants would be treated with much more respect, service provided to owners would significantly increase, and the entire standard would change. Operators that continue to operate with impunity would have their licence revoked and banned from the industry. And good riddance to them.
As the Managing Director of Property Brokers, Guy Mordaunt 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