Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Property Manager Launches New Training Standard As Govt Abandons Regulation

Government changes to interest deductibility and a 90-day eviction law have not impacted a chronic shortage of residential rental properties, according to new data.

An industry expert says systemic issues in the industry need to be addressed to counter its ‘wild west’ image, restore investor confidence and increase the supply of rentals.

New figures show the number of prospective tenants viewing each rental property has continued to grow, doubling over the last six months. Residential vacancy rates have dropped from 3.8% to 2.3% and, prices have increased by 6% over the same period.[1]

Rishabh Kapoor, former tax lawyer and CEO of Impression Real Estate which manages around 1,000 rentals in the Auckland region, says while the Government has abandoned plans for regulation, it is critical the industry adopts a level of self-regulation to help rebuild trust in the sector.

Rishabh Kapoor Photo:Supplied

He says the data shows the recent changes to interest deductibility on residential rental properties and the 90-day eviction law have not improved the supply of properties necessary to create a downward pressure on costs to tenants.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Kapoor says while the return of interest deductibility and the ability to evict tenants with 90-day notices will be welcomed by some landlords, more is needed to address the growing supply deficit and reduce rental prices.

“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 disincentivises 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 says his real estate firm has moved to introduce a new qualification standard for its team of property managers to help address a chronic shortage of rental properties.

The company is aiming to become the first in the market to have all property managers independently certified to the same level four standard that was to be introduced under the Residential Property Managers Bill - before it was abandoned by the Government.

Kapoor says introducing a minimum training standard will provide the same reassurance for investors as would have been present under the Bill.

He says they will also increase transparency by mapping their processes and displaying them on their website so property owners can understand how they structure their approach.

“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 says an immediate review is also needed into the minimum standards for liveable rental accommodation to protect tenant wellbeing and mental health.

He says he has seen matchbox-size apartments as small as 12sqm or those with no windows at all enter 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 says the rental properties in highest demand at the moment are between a rental range of $450-$750 per week.

“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.

[1] Impression Real Estate Data from Nov - April 2024 measured across over 1,000 properties in the Greater Auckland region.

Bio - Rishabh Kapoor
Rishabh Kapoor CEO of Impression Real Estate began his career as an income tax lawyer in New Delhi, appearing in the High Courts and Supreme Court of India before moving to New Zealand and transitioning into the real estate sector.

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Business Headlines | Sci-Tech Headlines

 
 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.