What do property managers do?

Tuesday, 14 August 2018

Protesters from Renters United gathered outside the Tory St, Wellington offices of a Quinovic franchisee after a series of advertisements that outraged renters was pulled by the property management company.

Property managers have been in the headlines lately for all the wrong reasons.

Earlier this year, a former property manager was investigated by the Real Estate Authority for owing more than $350,000 to 72 landlords.

Last week property managers checking potential tenants' bank statements provoked public anger, and most recently, the country's largest property management company Quinovic caught flack from outraged renters for its advertisements.

Property managers continue to be unregulated. There are no rules for who can be one, no rules for what they must do with money they receive on behalf of landlords, and no oversight of their behaviour other than the Tenancy Tribunal. Unless they are also a real estate agent, then they are covered by the rules for that industry.

So who are they, and what exactly are they meant to do?

* Call to licence, sanction property managers

* 'Degrading' adverts that outraged renters are shown the door**

What does a property manager do?

Property managers are supposed to look after the daily running of residential and commercial properties.

According to Tenancy Services, they are the landlord's agent.

They should take over all of the jobs you would expect a landlord to undertake.

This controversial advert was published by a Quinovic franchisee.

If there's a problem with your plumbing, the property manager should fix it.

They should carry out regular inspections, and it's also up to them to liaise with a tenant if they're having issues with the rental they are currently living in.

There are no specific requirements to become a property manager, although there are courses and qualifications for the industry - they're just not mandatory.

What can they ask for from tenants?

Until 2008, property management was an activity for which a real estate licence was needed, overseen by the Real Estate Institute. But when the Real Estate Agents Act came into force, there was no longer a requirement for property managers to be licensed and the industry was opened up to anyone.

As property managers are not overseen by an industry body, nor do they require a license to operate, the rules around what they can ask in applications is unclear but is covered by overarching rules against discrimination.

Tenants have to submit to a lot of scrutiny to get a home.

Earlier this month, an Auckland tenant was asked to submit both her bank statements and payslips with her renting application.

Other things being requested from tenants include social media checks, car inspections, proof of identification and credit checks.

Tenants renting through a property management company are more likely to experience problems than those who dealt direct with the owner, a Consumer NZ report showed earlier this year.

It found tenants dealing with a property manager were more likely to worry about the repercussions of making a complaint, fearing they'd be evicted or their rent would increase.

What is their cut from the rent?

Tenants renting under property management companies are more likely to face problems like pests, heating or mould, a Consumer NZ report says.

According to the Ministry of Business, Innovation and Employment, property managers charge a fee between 7.5 and 8.5 per cent of the rent.

However, there are additional charges for carrying out credit checks, advertising the property, handling fees for payments.

Eight per cent of respondents from the Consumer NZ report also said they had been charged unexpected fees during the tenancy, and 6 per cent hadn't been given required notice of a rent increase.

Also, property managers are not required to keep payments in trust accounts, like real estate agents.

In February, a former Ray White property manger in Auckland came under investigation by the Real Estate Authority for owing $358,000 to 72 landlords who were missing rent payments.

Why do people complain about them?

In an unregulated industry, it's not surprising the quality of property managers varies.

The letting fees charged by property managers are one of the more contentious issues with the industry.

The main issue with letting fees is they are essentially money for nothing; the tenant gets nothing from paying a letting fee, there is no service provided for them and the tenant is paying for a service a landlord benefits from.

Housing Minister Phil Twyford has introduced an amendment to Parliament which would ban them completely.

The bill proposes that no person, including property managers, can require a tenant to pay a letting fee, or any other fee, in relation to a tenancy.

'Letting fees can represent a significant up-front cost to some tenants, on top of other costs such as bond, rent in advance, and other moving costs such as transport. Prohibiting the charging of letting fees is the first step in improving the accessibility of rental properties by reducing price barriers that might make it harder for some tenants to find a suitable rental,' MBIE says.

What further steps might the Government take to reign in property managers?

A licensing scheme to control who works as one could be considered as could a requirement for licenced property managers to put rent and money into a safe, separate trust account.

The Government has also talked about strengthening tenants' rights in terms of doing away with fixed term rentals and removing the ability for landlords to kick out a tenant with 90 days notice.

One thing we do know, change is coming.