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Property managers to be regulated

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Thursday, 17 February 2022

The government finally makes moves to regulate property managers.

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.

Article source: https://www.landlords.co.nz/article/976519922/property-managers-to-be-regulated?utm_source=LL&utm_medium=email&utm_campaign=Landlords+Daily+News+for+17+Feb+2022

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