The Good, Bad and Ugly for 2019

Government intervention the theme of the year as we take our traditional look at the last 12 months.

It hasn’t been an easy year for anybody associated with our industry. In terms of renting in New Zealand, 2019 continued where 2018 left off. Changes in legislation. Landlords complaining about too much state intervention and tenants complaining about high rents and a shortage of stock.

Don’t expect too much to change in 2020 as this Government tries to implement all of its election promises before we all head to the polling booths again.

Anyway, it is time for us to take a look back on what was another eventful year for our industry as we take our now annual review of the year which includes the good, bad and ugly for 2019.

The Good

The Call For Change Campaign: It has been difficult to find any real positives in a challenging year, but the launch of A Call For Change campaign launched by REINZ back in September in an attempt to regulate the Property Management industry has probably been the best. On the last count, nearly 80 agencies, Property Management companies, advocacy groups and community organisations are now supporting this. 

The launch of 'A Call For Change' was our highlight of 2019 but more needs to be done.

There is no doubt that since Bindi Norwell was appointed as CEO of REINZ, there has been a real focus by the organisation to raise the profile of Property Management. For the first time ever, REINZ has appointed a resource who is solely dedicated to Property Management in Jo Rae, the Head of Property Management. 

In the past, people have been critical of REINZ with their attitude and apparent lack of dedication to Property Management. There may have been some validity in this argument in the past, but no one can accuse REINZ of paying lip service to the industry now. REINZ has showed renewed focus and long may it continue.

It hasn't all been positive however around the campaign. It desperately needs to keep the momentum going and there is a risk that it could run out of steam as other things become a focus or a priority for REINZ. The campaign has also been discredited by PROMINZ, the newly branded Property Management Institute of New Zealand, after their President, David Pearse called the campaign a ‘Cunning and devious plan’ designed to promote REINZ Property Managers. This was during an interview held on Radio New Zealand Morning Report programme.

Listen to the Morning Report interview with Bindi Norwell and David Pearse

Some of Mr Pearse’s comments have been nothing short of outrageous. He was also quoted in the New Zealand Herald stating “Real Estate agencies gave poor service because of their greed and making property managers into slaves by having them manage up to three times the number of properties that they can effectively manage." Comments such as this only damages our industry further, and if someone is going to make comments like this, they have to back it up with facts and not solely their own personal opinion. For the campaign to get further momentum, PROMINZ would be doing our industry a service by putting their support to this campaign. I'm sure A Call For Change was not designed to be a 'REINZ are better than the rest' campaign, the greater good means all organisations should get behind this regardless of what you are a member of.

That aside, the industry slowly but surely is starting to find a voice. As an industry, we manage over 40% of the 600,000 rental properties and this number will only continue to grow. 

Although new Associate Housing Minister Kris Faafoi has initially ruled out the regulation of the industry, I for one am confident that they will recognise the importance of having some structure and regulation around Property Management. Over a quarter a million of residential dwellings are now under the management of a Property Manager so surely it is only a matter of time before the change actually does happen.

Other mentions: 

The rise of Proptech: Property Technology companies or Proptech as it is more commonly known is a hugely exciting development for our industry. Many are headed by young entrepreneurs who are challenging the status quo. At our conference that we held with Palace in March, Michael Abbott, the CEO of Palace said that the Property Management industry was in its infancy. Those comments stuck with me as we are finally starting to learn how to use the data our industry creates. I for one wholeheartedly agree. Also, you have to give credit to the Privacy Commissioner who listened to the criticism of their original guidelines and reformed them to give more clarity as to what you can and cannot ask for when selecting a tenant.

The Bad

Swamp House Tribunal Decision: Remember the ‘Papakura swamp house?’

We reported on the dilemma of tenants Dawn Robbie and Cameron Taylor last December. This young couple with their two daughters rented their three-bedroom property in Papakura. Unknown to them when they rented the property, blocked drains and malfunctioning stormwater lead to an ankle-deep swamp under the property and an unusable flooded yard every time it rained.

Underneath the infamous Papakura Swamp House. Atrocious conditions for the tenants to tolerate.

Their 11-month-old daughter at the time had serious health issues and was admitted to the ICU unit in Middlemore Hospital due to severe bronchitis that was brought on by mould in the property. All of this for $520 a week in rent.

The Tenancy Compliance Investigation Team took the landlord to Tenancy Tribunal on behalf of the tenants and even went to the lengths of getting the tenants to sign an NDA so they could not talk to the media about the case.

They finally had their day in Tenancy Tribunal in November 2019 and this looked a straight forward case. The landlord had clearly breached their responsibilities due to the flooding and damage caused by the flooding. The tenant's health had been severely affected by the poor condition of the property and compensation was certainly due. Tribunal agreed yet the sum of money paid out to the tenants was pitiful for what this couple had to tolerate. Compensation of $4,000 and exemplary damages of only $1,000 were awarded to the tenants. The latter was only 25% of the maximum penalty that could be awarded by the adjudicator. Why so little?

When you read the decision which is available online it leaves you scratching your head and asking yourself has justice really been served? You also have to question the ability and judgment of the adjudicator. Adjudicator Benvie makes reference to Boarding House legislation which is utterly irrelevant. Then the adjudicator defends the decision by saying that the landlord did not intentionally commit the breach. This is ridiculous. According to Adjudicator Benvie, the landlord must deliberately flood the property to be liable for the full amount of exemplary damages. As if a landlord is going to do that!

Mr Raj, the landlord, knew it was an issue for an extended period of time and simply did nothing about it. He should have had the book thrown at him. In this case, the punishment nowhere near fitted the crime.

Watch the video about the Papakura swamp house. When you see what the tenants had to tolerate, $5,000 seems like a slap in the face.

Other mentions:

Leaving insulation to the last minute has caused a number of problems for many. The lessons we have to learn from this as we tackle the Healthy Homes is not to leave it to the landlords as many of them simply will not get it done. Also, a shortage of rental stock continues to be a major issue. The current Government promised to eradicate poverty and made housing it’s number one priority in its election campaign of 2017. They even went as far as asking that the then National Government declare a 'National state of emergency' due to the housing crisis. However, people on the waitlist for public housing has now reached 14,000. This has more than doubled since the Coalition Government came to power. Many of these families are now falling into the private rental sector. The approach of targeting landlords has backfired and I still do not see any state of emergency being declared.

The Ugly

Property Managers continue to face risk and abuse: With property, there is always lots of emotion. For landlords, in many cases, it is their nest egg and they may have previously lived in the property meaning that they will have a strong emotional attachment to the property. For tenants, it is their home and many are paying over-inflated prices for a second hand and substandard product.

With this, the financial pressure that is placed on both landlord and tenant has grown in large down to Government policies. The pressure leads to aggression and abuse as Property Managers often become scapegoats to problems that they cannot control. Other factors that have led to the rise in abuse are Property Managers simply trying to educate landlords on what they need to do to have a compliant property. Many landlords do not like it as the costs associated with compliance continue to hurt margins. This will only continue as we inspect the thousands of rental properties for compliance with the Healthy Homes Standards.

Tenants can also be abusive and we have heard of direct threats of violence to Property Managers. Social Media also does not help. Tenants and their associates vent and sometimes become abusive online. This is gutless but unfortunately, it now comes with the territory. 

More needs to be done to protect Property Managers from abusive clients and a ‘zero tolerance’ approach should be taken by our industry. This is where the 90-Day No-cause termination has its place. There is simply no need for the removal of this as tenants already have plenty of rights to protect them from being evicted unfairly.

It has been over two years since our industry was rocked by the shooting of two Property Managers in Northland. Has anything changed?

I cannot help but feel that we have failed to learn lessons from the tragic events of two years ago when two Property Managers were shot dead by a tenant. Property Managers walk into difficult situations all the time and the job can almost feel more like being a social worker rather than a Property Manager. As the financial burden of renting continues to see more and more families forced into desperate situations, Property Managers are often treated poorly. If it becomes too hard to move on antisocial tenants, this will only get worse. 

More needs to be done in this area going forward particularly if we are to attract and retain good people within the industry. Leaving the 90-day no-cause termination as it is, is a step in the right direction.

Other Mentions:

Anti-social behaviour seems to go unpunished if you are a tenant of Kainga Ora, the organisation that was formerly known as Housing New Zealand. The soft friendly let’s all hold hands together stance that the Government has taken to tenants in state-owned properties is starting to cause some grievances. Recently I received a call from a Hamilton Property Manager seeking advice as they have tenants wanting to break a lease due to their neighbours, Kainga Ora tenants fighting in the street every weekend and threatening neighbours. These gang-affiliated tenants look like they are going to staying for a long time as pleas to Kainga Ora have fallen on deaf ears. There was not a lot I could offer in assistance.

Dealing with tragedy and why our industry does not get the recognition it deserves

2019 has seen some horrendous events in our country and too many families have been struck by tragedy in the last 12 months. The Christchurch shooting was particularly disturbing. As a country, we felt like we lost our innocence on that fateful day in March. Christchurch Property Managers have had to deal with tragedy and disaster in the past following the earthquakes but one Property Manager from Ironbridge won the hearts and minds of all at the LPMA Conference. 

Not long after the shooting, a Property Manager found a tenant hiding whilst doing a routine inspection. This tenant had been in one of the Mosques when the shootings took place and were clearly in a distressed state. The tenant was terrified and in desperate need of help. The Property Manager went above and beyond in helping this tenant. They made sure that the tenant got the support they needed and spent time reassuring the tenant that they would be ok. It is a shame as I cannot remember her name, but it highlights the qualities that we know our industry has. It's funny how stories such as this do not get mentioned in the media.

Make sure that you take good care of yourselves over the holiday period. Have a great Christmas and we will see you in 2020. 

Signing off for 2019

 

David Faulkner


The Residential Tenancies Act Reform Survey: Results

We have had over 300 responses to our RTA Reform survey. Thank you to all who took time out to complete the survey. The result showed that the majority of people surveyed want the 90-day no-cause to remain whilst the Property Management industry should be regulated.

Approximately 50 landlords and over 250 Property Management employees took the survey.

Unsurprisingly, the vast majority of people surveyed want the 90-day no-cause to remain. Out of the small group that did say no, 85% of them worked in the Property Management industry.

Over 75% believe that tenants names should appear on Tribunal orders, even when they make the claim. 10% of Property Managers believe that tenants have the right to remain anonymous when the tenant claims.

This was split with no obvious majority. This question always creates a lot of debate. Of the 25% who are not sure, one can suspect that they will be ok but under a strict criteria.

This was very interesting to see. Over 60% of people who completed the survey believe that exemplary damages do need to increase. 63% of Property Managers believe they need to increase.

Again, another question that split opinion. There was no difference in the voting between landlords and Property Managers.

Tenancy Tribunal could become very busy with the introduction of the 90-day no-cause terminations. We believe it needs a lot of work to modernise, but what did you think? Well, only 3.5% believe that it works fine. Most of you are split between it works ok but needs modifying or it needs a lot of work. 11% believes it needs a massive overhaul and it is completely broken.

Onto regulation. Overall, the vast majority want to see the industry regulated. This is a similar story between landlord and Property Manager.

And when it comes to Property Managers, they overwhelmingly believe that landlords should undertake some basic training if they are to self manage. Just under 50% of landlords believe that this is a good idea.

COMMENTS BY PARTICIPANTS

Over 100 of you told us what you thought about the reforms and naturally, many were not happy. In particular, the 90-day no-cause was hotly disputed and commented on. Some landlords are saying that they are going to sell up. Only time will tell if that will be the case.

READ OUR COMMENTS FROM THE SURVEY

Thanks to everyone who participated in the survey.


Burnout: Why the Property Management industry is facing a crisis

  • Shortcuts by landlords and tenants exercising rights lead to a crisis within the industry

  • Well being and safety are major concerns as demands increase

“It’s getting ridiculous!” these are the comments I hear from an experienced Property Manager as I walk into the office of a company in Wellington. “I’ve had enough!” The business owner looks at me and asks ‘Is it just us going through this?” 

I answer her, “No, it's happening everywhere”.

A few hours earlier, I received a message from a client in the South Island. They were losing their best Property Manager. She has simply had enough. She was sick of dealing with landlords complaining about all the work that they are being forced to undertake and also dealing with tenants, many of which now had a sense of entitlement. ‘I’ve spoken to Tenancy Services and know my rights!” She wasn’t leaving for another job, she had simply had enough and the straw that broke the camel's back was a call from an abusive landlord. These are not isolated cases.

It is happening every day and our industry is staring down the barrel of a crisis. A crisis created by too much change happening too quickly leading to an increasing shortage of rental properties, with many small Mum and Dad investors leaving the market leading to an over-inflated increase in rents. A crisis self-created by the Property Management industry, as a deregulated industry, consumed by an oversupply of Property Management companies, undercut each other in an attempt to secure business. This has led to a drop in fees meaning that the Property Manager has to manage too many properties to make the business worthwhile, which in turn leads to staff feeling underpaid and overwhelmed with high staff turnover.

Do not get me wrong, tenants should stand up for their rights if they feel that they have been exploited. However, there are more and more cases of people exploiting the system. The abuse that comes with this has intensified and conditions for property managers have probably never been tougher. 

Many people are now leaving the industry and new people who enter the industry struggle to cope - shocked by the intensity of their role, they often leave after six months.

Greater demands on landlords following through to Property Managers

As rents have increased disproportionately due to demands placed on landlords by the Government, the demands of tenants have increased as well. This has played into the media's hands. Many tenants have highlighted their plight in the media, creating a victim mentality amongst many. Tenants have a far better understanding of their rights and are not afraid to exercise them. We have absolutely no issue with tenants justifiably standing for their rights and in many cases, we implore tenants to do so. However, we now have a situation where many tenants are exploiting the system, trying to secure a windfall $4,000.

In my time working within the Property Management industry, I cannot recall a time when conditions have been so bad for Property Managers working up and down the country. Many of them give their all, working in what can at times feel like a thankless industry. The demands of the job have increased dramatically over the last two years. This has largely been created by increased legislation and changes in the political landscape. However, there are other demands as well. 

As the rental crisis increases, our industry has come under intense scrutiny from the media as they lap up stories from Tenant Advocate groups and individuals trying to make a name for themselves. Journalists constantly seek news stories and troll Tenancy Tribunal orders, looking for shock stories which lead to more and more tenants looking to exploit the system.

Evidence of this is the tenant who recently won a Tribunal case due to the Property Manager insisting that the carpets of her rental needed to be cleaned. Is a case that is worth $90 in carpet cleaning really worthy of making national news?

Then we get a further crass piece of journalism from the Property Management industry’s greatest fan, Rebecca Stevenson. Yes, we all remember Rebecca, with her Spinoff article Why property managers are terrible – for everyone. This time, she makes the accusation that the only reason carpets are cleaned by Property Managers is so we can take our cut.

The sad case is, although there are always things that we can improve on, the Property Manager was doing what she believed was the right thing to do.

Then there is the abuse and sometimes, threats of violence.

The case in question led to abusive comments on social media and a very good Property Manager left feeling distraught. Yes, mistakes were made and it could have been handled differently, however, she was only trying to do the right thing by her owner. Making money was the last thing on her mind. Doing the right thing for the landlord and trying to protect the asset was all she was trying to achieve.

What wasn’t reported in the media was the sterling work this company does for their local community and the money it raises for charities such as Daffodil Day and Breast Cancer Awareness. But that isn’t newsworthy.

Threats of violence and abuse in our industry are getting worse.

Only a fortnight ago I listened to a Property Manager, telling me she had to put up the rent on a West Coast property after instructions from the landlord, only to receive a threat from an associate of the tenant warning that “she can expect a brick through the window of her family home.” Should anyone have to tolerate threats like that?

Earlier this year, I heard from an anonymous business owner who had her office set on fire allegedly by the tenant, after refusing to extend a tenancy due to the abuse one of her property managers received. This case is under police investigation.

Everywhere I go around New Zealand, I see the depressing signs of tired Property Managers who no longer have the energy, desire or will to deal with the increasing demands of the job. 

Landlords are putting more and more unfair demands on Property Managers as too many try to dodge and avoid or work around changes in legislation that leaves Landlords and Property Managers open to sanction. Some just simply bully their Property Managers into submission. Property Managers have spent years advising landlords on multiple occasions in terms of their legal responsibilities yet even at this late stage, many landlords still simply ignore these demands.

Then there is the incessant whining. 

“They won’t even turn the heat pump on! Why should I install it?”

“I’m putting up my rents by $40 a week!”

“Get them to clean the mould, they are creating it!”

In the near future, we expect to see more changes being announced in terms of protecting tenants, such as the removal of no cause evictions. But before Government announces this, we want them to stop and think.

It has been nearly two years since Natanya Campbell and her mum Wendy Campbell Rodgers were killed when they were making a property inspection in Northland.

Nothing has changed

In July 2017, Property Managers Wendy and Natanya Campbell turned up at one of their rental properties with contractor Jeff Pipe. Jeff had been instructed to install smoke alarms at the rental property to ensure that it was compliant under the Residential Tenancies Act. It seemed something wasn’t quite right as it is a little unusual for two Property Managers to turn up with a contractor for such a basic job. As they approach the property, the tenant, Quinn Patterson, opened fire on the party, killing both Wendy and Natanya Campbell and injuring Jeff Pipe.

The event sent shockwaves throughout the Property Management industry though unfortunately many, myself included, were not entirely surprised.

Now, nearly two years on from these tragic events, I ask myself have we actually learnt anything?

The simple answer is no. If anything, things have become worse and unfortunately, it would not surprise me if these tragic events happened again. 

So I finish with this. The average Property Manager in New Zealand knows that they will have to deal with conflict, it is unavoidable and part of the job. But abuse, threats and ridicule through social media is not in the job description. The number one priority of our industry should be to protect the thousands of people up and down the country who just want to do a good job. Look after them and they, in turn, will look after you.