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Property Managers to be regulated under government proposal

By Kate Major

In February, the government released a discussion document proposing residential rental property managers comply with a code of compliance and adhere to an annual licensing scheme to help protect tenants and landlords.

What is included in the proposal?

Property managers looking after residential tenancies on behalf of landlords would be subject to entry conditions and a code of compliance.

Both tenants and landlords would have the ability to complain about property managers behaving poorly, with individual property managers able to be fined up to $40,000, and organisations up to $100,000.

What would be required to become a property manager?

Candidates entering the property management sector would have to be a “fit and proper person” over 18 and pass a 15-hour course to prove their industry knowledge, covering how to manage tenant relationships, financial aptitude, and requirements and knowledge about managing a property.

Attributes that deem one not to be a “fit and proper person” include but are not limited to: a history of violent behaviour, financial issues such as bankruptcy, dishonesty-related convictions.

What would be required of operating property managers?

Under the new proposal, once on the job, property managers would need to do 20 hours of professional development, have insurance, and have trust accounts reviewed annually and able to be audited by the regulator.

Similar to the Real Estate Agents Act, practising property managers would have to comply with a code of compliance. An independent disciplinary and complaints resolution scheme would handle any failure to comply, with tenants and landlords able to flag issues with the regulator (separate to the Tenancy Tribunal).

What is the motivation to regulate property managers?

Different groups, including property managers have been in favour of some form of regulation for years as instances of dodgy practices including the ‘KFC test’ have tarnished the industry.

The discussion document estimates as many as 7,881 property managers are operating in Aotearoa, covering roughly 42% of rental homes, while only around 80 of these are Property Managers Institute members, subject to a code of ethics and credit and criminal history checks.

Associate Minister for Housing Poto Williams said the government has heard the calls from the sector, saying the current regulatory shortcomings see renters not willing to raise issues about property managers for concerns over losing their rental property and having future issues when trying to rent houses.

She stated that property owners too were at risk of poor behaviour by property managers, noting instances of unregulated property managers misusing bonds and rental income while providing minimal or no property inspection and maintenance services.

The reaction to the proposal

Reaction amongst interested parties has been positive, but not without an about time sentiment.

Chloe Swarbrick, Green Party housing spokesperson pointed out that Parliament had been arguing about applying professional standards to property managers back in 2008, nearly 15 years ago. She said despite the move, we are “light years behind where we should be.”

Swarbrick said the 1.4 million renters in New Zealand can’t be left out in the cold any longer, suggesting the government “fold these proposed standards into a landlord and property manager register.

Ashok Jacob, Renters United spokesperson commented on the fact that the regulations will not apply to private landlords, saying having a home was a human right and providing this service with pretty much no government oversight was “kind of insane.”

Williams said, “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.”

When will the proposal become law?

Williams released the discussion document on 16 February, seeking feedback by April 19. Indicative implementation timeframes put a draft bill before parliament in April 2023 and commencement from mid-2025.

Learn more or find better property management

If you’d like to know more about the options the government are seeking consultation around, read the discussion paper here.

If you’re a landlord who’s not happy with your current property manager, see how we can help and what you need to switch to McPherson Property Management.

Image: ‘Regulation Key’ by Mike Lawrence via CC BY 2.0.

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