As the discussion around residential property management regulation intensifies, today the Real Estate Institute of New Zealand (REINZ) stepped forward to provide crucial insights and recommendations to the Social Services and Community Committee on behalf of the industry and its 1700 residential property management members.
REINZ delivered a compelling verbal submission for the regulation of the residential property management sector emphasising the need for balanced and effective regulations to safeguard both landlords and tenants.
REINZ Chief Executive Jen Baird says the submission is timely for several reasons.
“This submission comes amidst growing concerns over the need for better standards and accountability within the property management sector.
“This sector plays a significant role in the residential tenancies market. Nearly one in three households rent in New Zealand, with half of those properties managed by a professional property manager. By requiring property managers to adhere to specific standards, a regulator can hold them accountable for their actions, fostering professionalism and responsibility within the industry,” comments Baird.
“Over 1.4 million people lived in rental housing at the time of the 2018 Census. According to the Census, over 7,800 property managers worked in New Zealand in 2018, removing commercial property managers, there are still over 5000 residential property managers. That is a considerable number to operate with no regulation.”
In New Zealand, having a ‘rental’ is a core part of some New Zealanders' retirement savings. Property managers are responsible for huge amounts of kiwi’s wealth and retirement saving, and the revenue generated from those assets, with no regulation.”
REINZ is the leading professional body representing real estate agents and property professionals in New Zealand and has been committed to promoting best practices and advocating for the interests of both property owners and tenants.
“We [REINZ] have actively engaged with policymakers to address issues related to residential property management for over 5 years now. With the housing market facing unprecedented challenges and concerns about rental properties' standards and management practices, regulatory measures have become imperative.”
“Recognising the significance of this issue, REINZ has proactively engaged in the dialogue, advocating for policies that promote transparency, accountability, and fair treatment for all stakeholders.”
In its verbal submission, REINZ stressed the importance of striking a balance between regulatory oversight and operational flexibility for property managers. Here is why they think the legislation is necessary:
- There has been an increase in the number of private landlords who are using property managers to manage their investments. The Residential Tenancies Act is complex, and there are currently no minimum standards for staff training, which has resulted in underinvestment in this area. As the cost of home ownership becomes out of reach for many New Zealanders, more people are expected to rent, and as a result, more tenants will use the services of property managers.
- There is a lack of formal checks on what happens to client funds, and instances of bond fraud are too common. Some residential property management businesses do not separate general business expenses from client funds, which makes it difficult to protect client funds.
- Apart from the disputes tribunal, there is no other formal avenue for landlords to raise their concerns about property managers' failures to perform with reasonable skill and care. There is also a variance in the quality of services that property managers offer.
- Without some form of regulatory intervention, it is unlikely that many of these issues will be self-correcting.
The institute emphasised the role of education and professional development in enhancing industry standards and ensuring compliance with regulations.
Detractors of the Bill say that increased regulation will lead to higher fees for property management services. Reputable property managers already have a number of the requirements (insurance and a trust account) in place so additional costs will be small. These costs are unlikely to add material costs at a per-property level and REINZ does not expect there to be wholesale rent increases due to the regulation.
“People may choose to manage properties themselves, but it doesn’t seem a rational argument to suggest this will occur because of the added cost of this regulation. Those people who use a professional property manager already understand the benefits of outsourcing this complex, 24/7 role. Managing a property requires an understanding of many different pieces of legislation, requires good people skills, and you need to be available to your tenant if there are issues. This is also a competitive market, and fee level is already a competitive space for residential property managers, states Baird.
“Without the RPM Bill, the property management industry will continue to manage billions in assets and rent without regulations, leading to potential harm for property owners and tenants. This includes inadequate protection for bond and rental money, renting non-compliant spaces, increased dispute resolution costs, negative impact on tenant wellbeing, and insecure tenure affecting children's academic performance and health,” states Baird.
As discussions around residential property management regulation continue, REINZ remains committed to working collaboratively with government agencies, industry stakeholders, and community organizations to advance these recommendations and ensure that the interests of all parties involved in residential property management are safeguarded.
For more information on the Bill’s progress and REINZ position and
submissions, visit the REINZ website.
Media contact:
Laura Wilmot
Head of Communications and Engagement, REINZ
Mobile: 021 953 308
[email protected] or [email protected]
About REINZ:
The Real Estate Institute of New Zealand (REINZ) is the national professional body representing the real estate industry in New Zealand. With a focus on advocacy, education, and professional development, REINZ strives to uphold the highest standards of integrity and professionalism in real estate practices.