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Further step to regulation of property managers
Wednesday, 23 August 2023
A new regime for property managers is now before Parliament.
The Residential Property Managers Bill aims to protect both tenants and property owners by creating a comprehensive regulatory regime for residential property managers and residential property management organisations.
The proposed regulatory system includes licensing, training and education requirements, along with industry practice standards, and a complaints and disciplinary framework.
Nearly one in three households rent in New Zealand and the residential property management sector is responsible for managing around half of the residential tenancy market.
While many property managers abide by appropriate professional standards, the sector is not legally required to meet minimum conduct, competency and industry practice standards.
The Bill will apply to individual residential property managers – including real estate agents providing property management services – and residential property management organisations.
Private landlords and public landlords, including Kāinga Ora and community housing providers, will not be subject to the regime, as they are already regulated under the Residential Tenancies Act.
REINZ, the industry body representing about 90% of real estate professionals, says property managers across the country collect millions of dollars from renters each week and manage hundreds of millions of dollars’ worth of landlords’ assets.
“This is an important sector that impacts directly on people's lives, whether through access to homes to live in, or in supporting investment goals,” Jen Baird, REINZ chief executive says.
“We know renters want greater security and we believe that with about 50 per cent of the private rental market managed by residential property managers, enforcing a set of standards for the profession will give much needed assurance to tenants and landlords their licensed property manager has the requisite skills, training and expertise,” she says.
Requiring property management companies to hold appropriate insurance will provide important protection for both landlords and tenants. In addition, property management organisations will be required to operate a trust account which the Real Estate Authority (REA) can require to be independently audited. This is to ensure all funds received on behalf of a client or tenant are always secure.
Baird says property management continues to grow in complexity. “Over the past four years we’ve seen a raft of changes to legislation, including the Residential Tenancies Amendment Act, Healthy Homes legislation, changes to the Privacy Act and Health and Safety at Work Act, and more.
“Add to that environmental and social challenges such as Cyclone Gabrielle and we have a profession that New Zealanders have come to rely on.”
She says it is a complex business so it is important there are entry standards and an independent disciplinary and complaints resolution process. “These are important to ensuring minimum standards and safeguards are in place within a profession that has an impact on something as important as the homes people live in.”
REINZ filed submissions with the Ministry of Housing and Urban Development (HUD), incorporating extensive feedback from our members.
Baird says she is pleased the feedback has been incorporated, and in particular that residential property management organisations will also need to be licensed.
The proposed new regulatory regime will include:
- compulsory registration and licensing for individual property managers and property management organisations;
- training and entry requirements;
- industry practice standards; and
- a complaints and disciplinary process.
Licensing and registration:
- licensed residential property managers to appear on a public register;
- three-tiered licensing structure for residential property managers (provisional, standard and supervisory);
- minimum qualification and training requirements for each licence class; and
- RMPOs are also licensed will appear on a public register.
Further entry requirements:
- minimum age of 18;
- not be barred under the specific prohibitions contained in the legislation;
- meet a fit and proper person test (regulator will publish guidance about how they assess whether someone is ‘fit and proper’); and
- industry experience requirements (for standard and supervisory licence classes but not for provisional).
Professional and industry practice requirements:
- continuing professional development (CPD);
- code of professional conduct and client care;
- RPMOs to operate trust accounts that are subject to an annual audit; and
- RPMOs to meet prescribed insurance requirements.
Regulatory authority:
- the Real Estate Authority (REA).
Complaints and discipline:
- independent complaints and disciplinary framework to address complaints relating to the professional conduct of a property manager or property management organisation, which involves a breach of the legislation or its associated regulations or rules;
- ‘no wrong door’ for complaints and disciplinary matters;
- complaints assessment committees (powers aligned to real estate); and
- independent disciplinary tribunal (powers aligned to real estate).
Offences and penalties:
To address issues relating to -
- providing false or misleading information;
- practicing, trading, or employing while unregistered or unlicensed;
- failing to produce financial records;
- failing to hold money in audited trust accounts or rendering false accounts;
- failing to disclose a conflict of interest that results in financial benefits;
- failing to comply with a lawful summons; and
- acting in contempt of the tribunal.
The Bill is now awaiting its first reading and referral to select committee. If the Bill is enacted there will be an 18-month period to allow for the Regulatory Authority to establish systems and to allow for the making of regulations and operational standards and a further six months will be allowed for residential property managers and RPMOs to get licensed before the regime takes full effect (24 months after enactment).
