Property Manager Initiates Training Benchmark Amid Government Withdrawal from Oversight

Recent legislative amendments concerning the deductibility of interest and the introduction of a 90-day eviction rule have not alleviated the persistent shortage of residential rental properties, as indicated by recent statistics.

A professional in the field believes that deep-rooted problems within the industry must be tackled to overcome its chaotic reputation, rebuild trust among investors, and boost the availability of rental properties.

Recent statistics indicate that the interest in rental properties has surged, with the number of potential renters per property doubling in the past six months. The residential vacancy rates have decreased from 3.8% to 2.3%, alongside a 6% rise in rental prices during this period.

Rishabh Kapoor, former tax lawyer and CEO of Impression Real Estate , which oversees approximately 1,000 rental properties in the Auckland area, states that despite the government's decision to drop regulatory proposals, it's essential for the sector to implement some form of self-regulation to restore confidence in the industry.

He argues that the evidence suggests the recent amendments to the deductibility of interest for residential rentals and the regulation limiting evictions to 90 days have failed to enhance the property supply needed to reduce rental costs for tenants.

Kapoor mentions that while landlords may appreciate the reinstatement of interest deductibility and the option to issue 90-day eviction notices, further measures are necessary to tackle the increasing shortage of housing and to lower rent costs.

“Over recent years we have seen a sustained period of imbalance in the rental market, especially in the CDB where landlords have had no perceived control over their tenancies and where logic just wasn’t seen to prevail in the tribunals.

“The tribunal was seen as a tenant’s service rather than a rental tribunal.

“When you have a situation where you have an antisocial tenant who you can’t evict, it disincentives landlords to stay in the market.

“In this environment, landlords tend to act far more conservatively to cover themselves – which manifests as the introduction of strict terms in tenancy agreements. However, when you balance things out it motivates people to have rental properties and to be more relaxed with their tenants as well.

“The people that pay the price here are often society’s most vulnerable as the regulatory climate covering landlords does not encourage risk-taking.

“The 90-day eviction act is a positive step towards rebalancing the market however there is more that can be done to restore investor confidence.

“There are a number of property managers out there working out of the back of their car who simply don’t understand the industry’s requirements and legalities. The downstream impact of this is that it can result in thousands of dollars worth of damage for owners and as a result, they often want to exit the rental industry.

“The Residential Property Managers Bill would have changed that by ensuring property managers were licensed, well trained, and subject to a complaints and disciplinary process if they don’t adhere to industry standards.

“Other investment sectors already have similar protections around advisors and we need a way of signalling to the market that residential property management is no longer operating like the Wild West and their multi-million dollar investment has appropriate safeguards,” he says.

Kapoor states that his property management company has implemented a new set of qualification criteria for its team to tackle the ongoing scarcity of rental units.

The firm is striving to be the market leader by ensuring that all its property managers achieve independent certification to the proposed level four standard originally outlined in the Residential Property Managers Bill, which was ultimately discontinued by the government.

Kapoor suggests that implementing a basic training requirement would offer investors the same level of confidence that was expected with the Bill.

He mentions that they will enhance clarity by outlining their procedures and sharing them on their website, enabling property owners to comprehend their methodical strategies.

“At the moment a real estate agent, who you have a relatively transactional relationship with to sell your home for just a month, is held to a higher level of regulatory oversight than a property manager renting the dwelling on your behalf – who you might work with for decades.

“We believe it is possible to replicate the standards that would have been provided by the recently abandoned regulation. Property managers are subject to the same consumer legislation that other industries however without the regulation it is harder to hold them to account,” he says.

Kapoor advocates for a prompt examination of the basic standards required for habitable rental properties to safeguard the welfare and mental health of tenants.

He mentions witnessing extremely small apartments, some as tiny as 12 square meters, and others completely lacking windows, being introduced to the market.

“We have healthy homes standards designed to prevent illness but there are no regulations in place to consider the mental health of tenants.

“There are examples of apartments with no windows at all being rented for $350 per week which can be depressing as tenants have no access to sunlight. It’s just an extra space that has been opportunistically carved out into an apartment because an additional $200,000 profit could be made.

“The introduction of minimum standards required to create liveable sizes and spaces would help protect tenants market. We need to lift the quality of the whole industry to encourage a well-balanced environment for both investors and tenants,” he says.

Kapoor mentions that the most sought-after rental properties currently fall within a price range of $450 to $750 weekly.

“The ideal properties are also clean and tidy, compliant with healthy home regulations and with low maintenance costs associated with them – often these are new builds which are renting faster than older homes with larger rooms and backyards.

“Location is important but not the only defining factor. Tenants also prefer properties with decent-sized bedrooms, en-suites and sufficient storage space.

“With the rise of flexible working, properties that have comfortable home office spaces are also in demand. These properties can be studios, one bedroom or two bedrooms,” he says.