REINZ chief executive Jen Baird says in an industry where a modest one-person property management business can oversee assets totaling $60 million, it is inconceivable that such a significant sector remains unregulated.

"No other profession handling assets of this magnitude operates without oversight in New Zealand."

Nearly one in three households rent, that number will continue to increase and REINZ will not give up on the bill without a fight, she says.

“There are no minimum standards requiring residential property managers to ensure they are up to speed on landlord and tenant laws.  There is no legal requirement for property managers to hold insurance.  There are no checks and balances to ensure tenant bonds and landlords’ rent monies are protected in an independent trust account.  Rent and bond fraud is not uncommon. Having no safeguards for client funds puts landlords and tenants at risk,” Baird says.   

Housing Minister Chris Bishop instructed the Social Services and Community Committee to stop work on the Residential Property Managers Bill as the previous Government’s analysis shows the cost-benefit is marginal.

Baird says amidst a housing crisis, the need for landlords to have confidence in professional management of their assets is paramount.

“This, along with measures to incentivise private investment, will be pivotal to increase rental supply.”

She says equally, vulnerable tenants deserve to be protected from rogue property managers who do not always abide by the law. Concerns with bond refunds consistently rank among the top three Tenancy Tribunal disputes. 

The Bill would have imposed minimum standards and protections on an unregulated industry that manages billions of dollars in assets for everyday New Zealanders.

NZPIF president, Sue Harrison says the bill would have been beneficial for the industry.

“Many members of nationwide property investor associations professionally manage properties, making it reasonable to expect financial regulation regarding the substantial rental payments flowing through managers' bank accounts.”

The federation supported the proposed licensing and regulation regime, emphasising the importance of enforceable obligations.

While the regulations would have contributed to upskilling professional property managers, Harrison says that, as with any licensing regime, there is no guarantee that trained and approved individuals will consistently demonstrate honesty and competence.

She says one of the reasons for scrapping the bill was ongoing costs, but those would have been funded by charges imposed on the regulated parties, not tenants.

“The costs would ultimately have been absorbed by owners, as property managers would need to adjust their pricing models to cover the legislation costs.”

REINZ members manage about 40% of privately managed residential housing stock, but for the other 60%, standards of professionalism and competence vary wildly.  “Sadly, not all property managers act ethically,” Baird says. 

REINZ and NZPIF say they will not give up the fight for minimum standards and basic protections for landlords and tenants and will continue constructive discussions with the Government and other key stakeholders.