Property management should be regulated!

This typically comes as a great surprise to most people, and especially Landlords, but unlike the real estate industry, which is highly regulated, the property management industry is overall unregulated. This makes it difficult for landlords when choosing a property manager. It essentially means that anyone with no prior industry experience or qualifications can spend a few hundred dollars for a nice website, set up an excel spreadsheet, and they’re good to go managing someone’s very substantial asset!

The problem – there are no checks and balances to make sure of the quality of their service and that they have sufficient backup for their landlords if something goes wrong. This can leave landlords with considerable financial risk.

Frighteningly, at present there is no mandatory requirement for training in the property management industry – while at the same time property managers are writing and signing contracts for the sole care of a very valuable asset, to most landlords.

Tenancy Services provides a great service for tenants, landlords and property managers alike and if a tenant or landlord is in breach of the Tenancy Act, then there is a clear process to follow with penalties in place for failing to have meet those requirements. BUT, if a landlord and a property manager have a dispute, there is actually no natural third party to call on, apart from talking to lawyers or making a claim at the Disputes Tribunal – it all seems rather unbalanced!

So what should be done?

There is a strong call in the industry to bring some regulation to the property management and rental market. What should be happening is:

• At a minimum, industry training requirements to ensure basic industry knowledge for all property managers. This is more important that ever with the new statutory changes for smoke alarms, insulation, health and safety and the ever-growing threat of methamphetamine in rentals.
• Mandatory police checks for property managers – seems fair when you are trusting them to care for one of your greatest assets.
• Financial regulations over how rental monies are received and the auditing of those accounts.
• A requirement for Property Management companies to hold adequate professional indemnity insurance.

So, as a landlord, what should I be looking out for?

Before choosing a property manager, you need to check very carefully about what backup and support your property management company provides.

When interviewing potential property managers you should consider:

• Do they operate a non-interest bearing Trust Account? If not, they’re taking interest off you for every day your tenant’s rent is held in their account. Ask also if that account is audited and how often.
• What does their service provide? What processes do they have in place for inspections, tenant background checks, non-payment of rents etc. Do they have a consumer guarantee that they’ll meet a list of requirements for you?
• Training – What regular training do the property managers undertake, either through their company or individually. Reference check your prospective property managers thoroughly and/or check their online reviews – get unbiased advice from their clients on how they deal with negative tenancy situations, as well as the positives.

Throughout New Zealand the majority of property managers and companies are very good at providing an honest and comprehensive service to their landlords and tenants. Sadly though, there are still the ‘cowboys’ in operation. Without a regulated property management industry, it becomes vital you do your own thorough due diligence before choosing your property manager.

If you are choosing a property manager, at Iron Bridge we’d be honoured to ‘apply for the job’.