Property managers to Govt: ‘Please regulate us’
Ditching plans to regulate residential property managers will allow “unscrupulous practices” to continue, and is a setback for the industry, property managers say.
Housing Minister Chris Bishop announced on Tuesday the Government would not be supporting legislation that would regulate property managers through further parliamentary stages. He said that New Zealand was in the middle of a housing crisis and that “adding more regulation to the rental property market isn’t the way to open up more housing supply”.
The Residential Property Managers Bill is currently at select committee stage, and submissions were heard on it in February, but Bishop said he had asked the committee to end consideration of the bill.
It was a move that took the property management industry by surprise, and it has sparked outrage and criticism from the industry which has campaigned for regulation for many years.
Real Estate Institute chief executive Jen Baird said it was “inconceivable” a sector that managed billions of dollars in assets for everyday New Zealanders remained unregulated. It was an industry where a modest one-person property management business could oversee assets totalling $60 million in retirement savings, she said.
“No other profession handling assets of this magnitude operates without oversight in New Zealand.”
The government’s decision was “disappointing” as the bill would have imposed minimum standards, requirements and protections on an industry that currently had none, she said.
There were no checks and balances to ensure tenant bonds and landlords’ rent monies were protected in an independent trust account, for example.
“Rent and bond fraud is not uncommon, and having no safeguards for client funds puts landlords and tenants at risk,” she said.
“Amidst a housing crisis, the need for landlords to have confidence in professional management of their assets is paramount.”
This, along with measures to incentivise private investment, would be pivotal to increase rental supply, Baird said.
“Equally, vulnerable tenants deserve to be protected from rogue property managers who do not always abide by the law. Sadly, not all property managers act ethically.”
Property Brokers property management general manager David Faulkner said the Government’s decision was a significant setback in ensuring fair practices and accountability in the industry.
It was unacceptable that the minister had “turned a blind eye to the rampant exploitation and mistreatment of tenants and landlords by certain property management firms”, he said.
“The absence of regulatory oversight has allowed unscrupulous practices to proliferate, leading to dire consequences for renters and investors nationwide."
There was an urgent need for comprehensive regulations to safeguard tenants and landlords, and increased regulation would not hinder housing supply, Faulkner said. “Regulating the industry would help to increase supply by installing greater confidence in our industry, and provide a framework to expose cowboy practices with serious repercussions for poor practitioners.”
The benefits would outweigh the costs associated with regulation, and he called on the minister to reconsider the decision, he said.
“The failure to regulate the industry perpetuates injustice and undermines the stability of the housing market as a whole.”
Ray White head of property management Zac Snelling said the industry collectively managed about $140 billion in property and $6 billion in rent, and was responsible for the homes of over one million people.
It was shocking to hear the Government say it was not a priority for the industry looking after that volume of money and that many people to be regulated, he said.
“This Government’s MO is around removing and cutting down on red tape, and setting up the licensing and regulatory regime required might seem too onerous and costly.
“But there should at least be some minimum financial and legal protections put in place. Those elements are much-needed, and important.”
The minister had signalled support for regulation as recently as this year, and the announcement had left the industry stunned as the vast majority of the industry wanted it, and was preparing for it, he said.
“It’s just a real shame to see that some customers will miss out on protections as some in the industry will now feel that they don't have to act ethically and responsibly.”
Eighty-four per cent of respondents to a snap poll by Tenancy.co.nz did not support the Government’s decision to not proceed with regulation of the industry.
There were 79 respondents to the poll, which was conducted in the company’s Facebook group for property managers.
Baird said the institute would not give up the fight for minimum standards and basic protections for landlords and tenants, and would continue discussions with the Government.
Faulkner and Snelling said their organisations would continue to run as though they were regulated, and had to meet certain standards, and that they would keep advocating for fair and ethical practices in the industry.