What do the Changes to the Residential Tenancies Act mean for Property Managers

Almost twelve months on from the formation of the Government, the changes around tenancy reform in New Zealand are coming thick and fast. Make no mistake, radical change is coming and particularly around the security of tenure and protecting tenants.

Labour has been in power ( well sort of, there is a coalition as we know) for 12-months and they are treating the rental property industry as one of their hot topics. While this endears them to the downhearted and there is some truth that some landlords take advantage of some tenants, it is unfair to landlords who run a responsible property investment business.

Lets get real here, landlords are in business, they are not a socialist organization created to look after those that cannot ( or will not buy). At the risk of creating fire, I see so many tenants that ‘could never save for a home’ that have expensive cars, eat out, fancy wardrobes. And don’t get me wrong – this is entirely their right and good luck to them. But lets not make someone who worked 2 jobs, invested wisely and is intent on creating financial security, responsible for anyone else.

David Faulkener from Real IQ blogged the following story: He had a call from a Property Manager last week asking for some guidance. The situation arose after a tenant was given 90 days notice to end the tenancy. This is a scenario that many Property Managers, including myself, have found themselves in and many of you reading this will probably be able to relate to this story.

The Property Manager explained to me that a tenant of a particular property was demanding and very ‘nit picky’ when it came to requesting maintenance. However, although this tenant could be demanding, he looked after the property and always paid his rent on time. The landlord who had six properties with this company could sometimes drag his feet in getting things fixed and responding to requests. After a number of requests for a variety of minor maintenance issues, the landlord had simply had enough.

“Give the tenant 90 days notice” was the instruction that came across. “OK” said the Property Manager. The Property Manager then notified the tenant who asked why he had been given notice. The Property Manager in this case correctly stated that they do not have to give a reason but she would ask the landlord.

The landlord responds “Tell him my sister will be moving in after Christmas”. “OK” responded the Property Manager.

After notifying the tenant, the tenant subsequently gives the landlord 21 days notice to vacate the tenancy and move out.

Then the landlord responds to the Property Manager. “Right, can you advertise for new tenants please?”

“Hang on! You just told me your sister was moving in.”

“Yes, things have changed and she may no longer need it”

What is the Property Manager to do? Tell the landlord no we can’t and risk losing 6 managements with an annual contract value of approximately $10,000? Or do you risk it and re-advertise the property and hope the tenant does not go after you for Retaliatory Notice? If found guilty this could leave the company exposed to exemplary damages of up to $4,000.

This is not an isolated occurrence and as more and more tenants start to find their voice and speak up for their rights, more and more landlords may leave themselves and their Property Managers at risk because they make bad, ill informed decisions based on a lack of knowledge and emotion.

Source: Real IQ – David Faulkener

So laws do need to change – but lets not do it too quickly and too voraciously

Tenants like this should be protected, landlords should not be able to take retaliatory action, and properties should be maintained and healthy and clean.

So I am all for a responsible industry and responsible legislation.

Here at A Grade we used Australian Software and get our bank reconciliations audited monthly . I know of NZ companies that advertise "audited NZ Trust accounts" - that have never been audited. All Staff at A Grade are working through the new Property Management Qualification.

So it’s a complicated process but I do see some landlords leaving the industry because they have not organized their finances to be able to insulate or do required R & M. I do see some Property Managers leaving the industry due to pressure to perform.

But there are some great honest hard working Property Managers and responsible and respectful landlords. So I shall be watching the reforms closely to make sure these are not disadvantaged.

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