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Property managers to be regulated

The government finally makes moves to regulate property managers.

Wednesday, February 16th 2022, 5:27PM 5 Comments

by Sally Lindsay

Associate Housing Minister Poto Williams has released a discussion document for consultation on what a new licensing regime will look like for property managers in order “to make things fairer for renters and landlords”.

The new legislation will cover property management companies but not private landlords. New Zealand is one of the few countries in the OECD that does not regulate property managers.

About 59% of the country’s private rental properties are under management. At the beginning of 2020 this was 49% but there has been a significant swing to property management companies by private landlords since new government legislation and Reserve Bank tax rules have been introduced over the past two years.

Williams says property managers will have to comply a code of conduct, professional entry standards, established industry practice standards be
accountable through an independent, transparent and effective disciplinary and complaints resolution process, under the new regime.

A regulator independent of the property management industry is to be appointed.

Under the professional entry requirements property managers must be 18 years of age, pass a fit and proper person test and undertake education/training  with a basic course of 15 hours.

Industry standards include 20 hours a year of continuing professional development, indemnity and public liability insurance and trust accounts (including independent review with periodic audits as required by the regulator).

If a property manager commits an offence under the new legislation to be introduced this year, they can be fined up to $40,000 and if a companies does
the same, it can be fined up to $100,000.

Cost recovery is a major issue for the new regime. It is expected a mixed model will be used involving full cost recovery of some services, partial recovery of others and no recovery of public good regulatory stewardship costs/initial establishment costs.

A significant portion of the costs associated with the delivery of the new system will be through fees and levies rather than being funded by the Crown.
Te Tūāpapa Kura Kāinga is to be appointed to oversee and report on the performance of the regulatory authority.

New Zealand Property Investors chief executive Sharon Cullwick says the federation is pleased property managers will be licensed. “There have been a
number of calls for the industry to be regulated and we agree with it,” she says.

“Independent landlords are dealing with only their own rental income but property managers are often dealing with income from hundreds of properties
She says the industry also has a high turnover of staff. On average property managers last about eight months. “If it is regulated and becomes more
professional it will be a massive improvement for landlords and renters.”

Willliams says the Government is committed to improving the wellbeing of all New Zealanders and housing plays a fundamental role in that.

“We have heard the calls of the sector, which has said the lack of regulations mean renters feel reluctant to complain to, or about, their property manager for fear of losing their homes or jeopardising their ability to rent houses in the future.

“Property owners are also vulnerable to poor conduct by property managers, and we know of some instances where unregulated property managers have misused rental income and bonds and provided little or no property inspection and maintenance.
“Today’s proposals are part of a suite of initiatives designed to improve the operation of the residential tenancies market and ensure New Zealanders have
access to secure, healthy, and affordable housing,” Poto Williams said.

 

Tags: property management

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Comments from our readers

On 16 February 2022 at 5:03 am Grant Smith said:
Sure, more regulation. That's your answer to everything. That and more tax. Let's see how that goes for you next election.
On 16 February 2022 at 7:48 pm Peter Lewis said:
We have regulation and licencing for legal practitioners, teachers, medical staff and accountants.
Yet hardly a week goes by without 'shock horror' stories about those people being caught with their hands in the till or down someone else's trousers.
On 17 February 2022 at 2:21 am Garry Mason said:
The real estate industry wanted Property Managers to be regulated 10 years ago when the Real Estate Agents Act 2012 was enacted.

It was Clayton Cosgrove and then the Labour Government that chose to leave them out of the legislation.

This has proven to be a huge error with many "rogue" operators ruining the reputation of those that operated out of licensed real estate offices. Finally, the Labour party have seen sense, so hopefully the new controls will tidy up this industry.
On 18 February 2022 at 10:03 pm Geoff Hall said:
More Regulations, More tax, the Govt. answer to everything is to impose more Regulations , push taxes up. NO NEW TAXES was the election slogan !!
In some cases there is a need for a regulation controlling Property Managers.
I have always used a reputable Real Estate Company as a property manager, and the results have been excellent. well worth the money spent. Landlords and Tenant are kept on the same page at all times. Any change in regulations is handled in a professional way.
The results of the proposed Regulations will push up rents again, then we will get hit with RENT CONTROL. Using average rents in the area , which is already in place. It will be up to the Property Manager and the Landlord to prove to the Authorities that a rent increase is in order. This is going to be almost impossible, just wait and see.
Now you wonder why Private Investors like myself is getting our rentals up to a selling proposition, then leaving the Rental Market. While the property is rented, spending as much as practical on improvements to maximise sale price.
On 19 February 2022 at 3:02 am Dougal MacGibbon said:
It is apparent to me that with every increase in regulation or property requirements, the number of motels needed for emergency accommodation increases indicating a slow but steady departure of private landlords from the sector.

When will they wake up that the rental sector wasn't broken and was functioning very well in almost all cases and that all that was required was to actually police the laws that they had a hound the illegal and very poor landlords out of the industry.

Now with every interview the media does, it is yet another sorry tale or gouging, nasty mean landlords yet again treating wonderful deprived people in a terrible fashion.

I'm struggling to keep up with the non-stop changes that are happening every month or two. This, at least is something that should have happened years ago and maybe would have meant some of the legislation enacted over the last 5-8 years wouldn't have been required.

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AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
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BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 4.29 5.09 5.35
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 5.14 ▼5.79 6.15
TSB Special 4.79 4.34 ▼4.99 5.35
Unity 5.65 4.80 5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 19 May 2022 10:42am

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