REINZ Calls for Regulation of Property Management Industry

September 10, 2018

Recent news of property managers vetting prospective tenants’ bank statements has REINZ calling for industry regulation that offers clarity and transparency for renters, landlords and property managers. 

Conduct of Property Managers under microscope

Around a third of Kiwis are now renting, making the rental market a pressure cooker for all parties involved. The result is property managers and landlords taking extra measures to ensure candidate tenants are capable of paying the rent.

A social services select committee hearing submissions on the Residential Tenancies Amendment Bill (No 2) — which would eradicate letting fees — was told by Auckland property manager, Rachel Kann that she routinely asks would-be tenants for bank statements to help her assess their ability to pay rent. Kann said she sees lots of people from low socio-economic backgrounds whose bank statements are filled with transactions from fast food outlets, court fines, vehicles and goods they “can’t afford”, which she dubbed “mismanagement of money”. Kann said the practice is becoming common place in the industry. 

The backlash from politicians and consumer and real estate industry groups

A stream of backlash to the comments made in late July flowed thick and fast from politicians, Consumer NZ and groups within the real estate industry.

It was described as “unethical” and “very concerning” by Consumer NZ chief executive Sue Chetwin. She said the consumer watchdog had received complaints of the same practice and posed the question: if the same proportion of income was spent with vendors and in areas related to a higher socio-economic group, would that indicate a more reliable money manager?

Stunned by Kann’s admission was Darroch Ball, the NZ First MP who was on the select committee and submitted the audio to the Herald. Ball called the act of vetting bank statements “outrageous” and a “gross invasion of privacy”.

Housing Minister Phil Twyford said Kann’s words reinforced calls for regulation of property managers.

Andrew King of NZ Property Investors Federation claimed he had no knowledge of his members carrying out the practice and would warn them against asking for bank records. He said standard background checks such as Tenancy Tribunal searches, references and credit checks should give property managers and landlords enough insight into renters’ finances. 

Real Estate Institute of New Zealand (REINZ) says comments grow case for regulation

Following Kann’s statement, REINZ chief executive Bindi Norwell said the so called ‘KFC test’ was just another reason why they think the industry should be regulated. Speaking to the NZ Herald, Norwell said the focus of background checks needs to be on the candidate having stable employment and the ability to pay the rent, not on how they spend their disposable income.

REINZ has been campaigning for regulation of property managers for a number of years according to Norwell. She said that there are lots of amazing property managers in New Zealand, but unfortunately their high standards are undermined by the lack of regulations and a small group who don't share the same ethics.

In addition to regulation addressing the background check issue, Norwell said we are in need of consistent standards to ensure the industry and consumers have adequate protections. Among the list of issues REINZ want regulation to cover are consumer protections around money being held in a trust account; ensuring property managers have a dispute resolution process in place, have appropriate insurance to operate in the industry, and that they are adhering to regulatory compliance while operating under a qualification recognised industry-wide. 

First Avenue Property champion move for industry regulation

With skin in the game, First Avenue Property are keen proponents of the drive for regulation in NZ’s property management industry. Managing Director, Melissa Benge says, “I believe this is essential action to reduce risk for New Zealand landlords, as well as providing integrity for our industry and the growing requirement for professionalism and high standards for service levels.”

KFC’ by Mike Mozart under CC BY 2.0

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