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Licensing of property managers

By Ali Frederickson

The Government is proposing changes to the Residential Tenancies Act. But its list of changes doesn’t include the elephant in the room. Currently, property managers do not have to be licensed to practise. They’re not even obliged to have a trust account. Yes, unbelievable, but true.

Any idiot can set up a property management company today. How scary is that? They should be licensed to a high standard – the same as real estate agents.

Why aren’t the same regulations imposed on property managers as those on real estate agents? Why isn’t there a regulatory body for property managers equivalent to the Real Estate Authority (REA)? Regulation of property managers would tighten up the industry, reform that’s urgently required.

Although I pride myself on being a responsible landlord, you do hear some horror stories about unprofessional property managers and bad landlords who are negligent, discriminating and dishonest – and they should be penalised.

Tenancy Services, an arm of the Ministry of Business, Innovation and Employment, has recently initiated a consultation process that will run from late August until 21 October. They are encouraging landlords, tenants and other interested parties to have their say about the proposed changes to the Act. I plan to have my say and I hope you will too, if you’re a landlord, as I am. Of course I am also the director of a real estate company that employs a team of property managers.

Key changes being proposed by the Government include ending no-cause terminations while ensuring landlords are still able to end tenancies for justifiable reasons. The Government is also proposing to increase the amount of notice a landlord must give tenants to terminate a tenancy from 42 days to 90 days and to limit rent increases to once a year. I have no issue with any of these key changes, they’re fair and reasonable.

The rent doesn’t usually go up until tenants move out. Our records show that the average tenant tends to stay for two years and three months.

I think that the Government’s proposed change to place limitations on the dodgy practices of rent bidding is also an excellent idea. The sooner such unsavoury practices are stamped out, the better. This is an ‘imported’ practice and until now there have been no checks on it. In a tight rental market in a bidding system, the person prepared to pay the highest rent gets tenancy.

At Lochore’s we are strongly opposed to the idea of rent bidding. We advertise a fixed rent. We believe that quality tenants are the key to good tenancy management. And quality properties attract quality tenants. If you have a sub-standard property you’re more likely to attract low-quality tenants. We run a very tight ship and we encourage all our landlord clients to keep their properties up to scratch.

But there’s one proposed Government change that has set my antennae on alert and that’s ‘better equipping tenants and landlords to reach agreement about pets and minor alternations to the home’.

Seriously? As a landlord I’m very clear that I don’t want dogs in any of my rental properties. And there’s nothing that would persuade me otherwise. Landlords must have the right to refuse dogs on their properties. A tribunal shouldn’t be deciding if a tenant can have a dog in my rental property.

I also feel very uneasy about the proposed change that refers to ‘better equipping’ me to ‘reach agreement’ about any so-called ‘minor alterations’ that might be ‘arranged’ with a tenant. Who decides the definition of minor? For example, I don’t want my tenants to take it upon themselves to paint a room in a different colour, or to drill holes into walls to install wall shelves or to do illegal alterations.

What I want is for my tenants to respect the property they have been granted the privilege of renting and not to damage or alter it in any way. If they don’t like the colours of my walls they can go live elsewhere. The property owner must retain control of their property in all respects.

I keep my part of the bargain as a landlord by ensuring that repairs and maintenance are kept up to date and that my properties are compliant with the rules about smoke alarms and the new legislation governing insulation. I’m committed to creating healthier, safer homes for my tenants.

The owner must always have final say in who their tenants are going to be. All tenants should have to be of a certain minimum standard. At Lochore’s we want good tenants for our clients’ investment properties. That’s why we turn down over 76% of the tenancy applications we receive. Landlords need protection from bad tenants.

And, likewise, the property managers working for me at Lochore’s Real Estate do their utmost to attend to repairs and maintenance in a timely and efficient manner on behalf of our clients.

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