18 degrees celsius. Putting the heat on landlords

  • Why the Healthy Homes Guarantee Bill is going to be a game changer for landlords and tenants in New Zealand
  • Tens of thousands of rental properties may soon become non-compliant

“This is my generation’s nuclear-free moment and I am determined that we will tackle it head on.

— Prime Minister Jacinda Arden talking about climate change

As winter approaches, few will dispute that the majority of rental properties in New Zealand are not up to standard.
Thousands of tenants up and down the country live in cold, damp properties that makes a mockery of our global clean green image.

Late last year a bill was passed through Parliament that will literally change the face the housing in New Zealand forever, yet many people are unaware as to the true impact of this legislation and the cost of compliance.

How warm is your rent roll? Take our one minute survey

The Healthy Homes Guarantee Bill became law in December 2017 and many landlords are utterly oblivious as to the impact of this bill. The Labour backed bill passed through Parliament at the second attempt late last year due to the fact that it had support from the previous National Government coalition partners the Maori Party and from United Futures. Because of this, it passed through the first reading by one vote.
This bill is in our opinion, the single biggest piece of legislation for tenancy law since the introduction of the Residential Tenancies Act back in 1986. It is simply going to change the face of renting forever.
Along with Labour stating that they are going to build 100,000 new houses, we are seeing the largest and probably most ambitious undertaking by any government surrounding housing in New Zealand since the Labour Savage Government of 1936.

Why is this bill so significant and what is going to be the impact for both landlords and tenants?

The bill focuses on the ability of tenants to be able to keep their rental property warm and dry using energy efficient heating. The penalties for landlords who do not comply with this bill will be severe and we believe that the majority of rental properties across this country would not meet the criteria if it was set today.

What does the bill focus on?

The Healthy Homes Guarantee bill states that all rental properties must meet the following standards.

  • Standards about the indoor temperatures that must be capable of being achieved in the premises. We believe that this will be 18 degree Celsius.
  • Probably likely that the source of heating must be energy efficient.
  • These standards have already been set.
  • Moisture ingress.
  • Draught stopping.

If landlords fail to meet obligations in respect of healthy homes standards, then they may potentially face exemplary damages of up to $4,000 plus they will face a work order instructing them to get the property to the standards before they can rent it out.

18 Degree Celsius

World Health Organisation recommendation for minimum indoor temperature

How many rentals many rentals will comply?

The big question we are all asking at the moment is what are the standards going to be? As yet we do not know but if you read between the lines one can assume that the indoor temperature capable of being achieved will be 18 degrees Celsius. This is the temperature set by the World Health Organisation as to what constitutes a suitable minimum indoor temperature for a home.

Many properties around New Zealand simply would not be able to achieve this and to get our current rental stock up to standard is going to be a monumental task. Particularly as we have a shortage of skilled tradespeople and the Government is promising to deliver 100,000 new homes over the next ten years. If you're looking for a new business opportunity, heat pumps, central heating and double glazing is probably the way to go.

We are unsure as to when the standards will be set yet they will become enforceable at the earliest 1st July 2019 but no later than 1st July 2024. Each Tenancy Agreement and renewal or variation will need to have a statement on it stating that the property complies with the Healthy Homes Guarantee Bill. Failure to do so is also an unlawful act with exemplary damages up to $500.

Baby boomer landlords struggle to accept change

It was interesting to gauge the response of an audience of investors that I recently spoke to at an Investor Evening in Christchurch about the changes that they will face. As I explained the impact of this bill and the potential costs associated with improving the current rental stock I watched carefully assessing what the audience thought about it. I think it is fair to say that most of the audience, particularly the older generation really struggled with what I was telling them.

Baby Boomer landlords have generally been able to do what they like with regards to their investment portfolio, but things have changed and many of them don’t like it. I remember being a Property Manager about 10 years ago. When a landlord told you to do something you simply did it without question. Now, it is not so simple, taking shortcuts with regards to maintenance treating tenants poorly could see you end up in Tenancy Tribunal as tenants become more aware of their rights. Do not expect a warm greeting from your local adjudicator if you breach this legislation. The temperature in Tribunal will be as cold as the property you provide for your tenants.

This student flat in Dunedin will not cut the mustard when it comes to the HHG Bill. If tenants cannot achieve an indoor temperature of 18 Degrees Celsius, landlords may face exemplary damages of up to $4,000.

Landlords face double blow as negative gearing to go

The amount that landlords budget for repairs, maintenance and improvements will likely more than double over the next few years to ensure that their stock meets the criteria set in the Healthy Homes Guarantee Bill. Many older properties may simply end up being demolished as the cost of making them compliant will simply not add up.

What will be a double whammy for landlords will be the removal of negative gearing. This is when landlords can offset their losses from their rental investment against their own personal income. Many, including myself think this is a bad move. In some cases investors may be able to offset about $4,000 to $5,000 from tax rebates on a single rental property.

This would go a long way to helping landlords front up with the added costs around compliance. Instead, many small Mum and Dad investors are going to be punished. Labour's policy around negative gearing is to remove tax loopholes which they claim the biggest users are large-scale speculators who own multiple rentals and use losses on new acquisitions to continually reduce their tax. Some may do so, but in our opinion it is the small Mum and Dad investors who own one or two properties that will be hurt the most. Some may be forced into selling their asset when they realise the costs associated with compliance no longer make it financially viable to own it.

Rental warrant of fitness to become compulsory

We have long suspected that the Rental Warrant of Fitness (RWOF) will at some stage be written into law and we believe the Healthy Homes Guarantee Bill will be the instrument for this to happen. Why else would the recent national census ask the question as to whether the property you live in has more than an A4 piece the size of mould in it? This is one of the criteria's under the Rental Warrant of Fitness.

Although the rollout of the scheme in Wellington has been a flop, there is enough support for the RWOF across the power brokers of New Zealand politics and expect it to be incorporated into the standards set around the Healthy Homes Guarantee Bill.

This will mean that every rental property will have to meet the criteria set by the RWOF and have assessments carried out probably every three years at a cost of around $250 to landlords.

This could become a new revenue stream for Property Managers as we see no reason as to why they cannot carry out these checks.

There is no doubt that successful Property Management is based primarily around people skills. However, we predict that more emphasis will be placed on Property Managers having more in-depth knowledge of the property that they manage and eventually move towards Asset Management.

Short term pain for long term gain

Overall, we believe that the Healthy Homes Guarantee Bill in conjunction with the Rental Warrant of Fitness will benefit New Zealand long term. Housing is a basic human necessity and everyone should live in a warm, dry, compliant property. However, the cost of this exercise will be born by everybody. Landlords will have more costs, taxpayers will have to contribute to housing supplements and tenants are already facing greater hikes in rents.

Long term though, it is an investment worth making. It will contribute to a healthier nation with less pressure put on our already straining healthcare system. We will also see a more productive economy with a happier, healthier workforce taking less time off for sicknesses caused by unhealthy housing.

However, Labour could have done better by not hitting investors hard by removing negative gearing. One feels at times they are out of touch with the thousands of property investors up and down the country. Do they really think that they are all evil, wealthy capitalists, pouring hot tar on the poor peasant tenants below? This is the impression we get, particularly when you read their policies on the Labour party website. Many landlords will find themselves being pushed to the limit.

The reality is often opposite. Instead, Mum and Dad investors who own one property simply see an investment in property as a way of funding their retirement. They are about to get hit with a sledgehammer, penalised for being proactive and not looking at the state to look after them in retirement. That simply isn't fair.


Property management industry: Under the spotlight

  • Property management industry under scrutiny after media attention
  • The wellbeing of property managers must be number one priority

Never before has the Property Management industry come under such scrutiny. We have seen the industry attacked from all angles, whether it be Tenant groups, Consumer groups or the media in general. Unfortunately, some of the negative commentaries have been justified, highlighting issues around professionalism and integrity.

We are in no doubt that the service overall offered by our industry has to improve. This is largely due to our industry being guilty of shooting itself in the foot and also due to a lack of regulation. An oversupply of small Property Management companies has to lead to the practice of undercutting of fees which in turn leads to a drop in quality as profit margins get tighter. It is also the symptom of an unregulated industry where over 50% of Property Managers have no qualification relevant to the industry that they work in.

We will look at issues that our industry has to tackle later.

However, some of the comments made go too far and one article, in particular, is nothing more than a sensationalistic opinion piece by a Business Editor who clearly has it in for Property Managers stating that they make her 'blood run cold'. Her article highlights that in her opinion, many Property Managers are nothing more than money hungry corrupt bullies who deliberately drive up rents.

This article caused quite a stir in the Property Management industry. We asked Ms Stevenson if we could respond to this article via The Spinoff. She declined.

Rebecca Stevenson is the Business Editor of the relatively new online Media outlet called The Spinoff.  Her article earlier this month held nothing back. I can understand that you want to draw attention to yourself and sensationalistic headlines generally do a good job of that. However, if you are going to write an opinion piece you really need to do your homework first and give the industry you so vehemently hate the right to reply.

In this case, Ms Stevenson does raise some points that we agree with such as service levels being inconsistent. However much of the article is offensive and at no point does she seek to hear the Property Managers side. We wrote to her asking if The Spinoff would allow us to respond to her article. She respectfully declined.

Ms Stevenson highlights her three biggest issues as to why in her words, Property Managers suck. Let's look at Ms Stevenson article and respond to her claims.

We are money hungry

I'm sorry Rebecca, are we supposed to do this for free?

One would think a Business Editor would understand the need of a business having to charge a fee so they can attempt to make a profit. The reality is Property Management is probably one of the most undercharged industries for the increasing amount of responsibility that they have to deal with. I visit Property Managers up and down the country and ask them what they would charge their service at by the hour. Many will look at me with a blank face and have no idea.

A Property Management company will spend on average approximately 25 hours a year to manage one property. This includes inspections, rent payments, issuing statements, landlord payments, repairs and maintenance, letting once on average every two years and reporting to landlords. Property Managers need to have an increased knowledge base of legislation which goes above and beyond the Residential Tenancies Act.

They are dealing with The Building Act, Privacy Act, Human Rights Act, Health and Safety at Work Act, The Unit Titles Act, Consumer Guarantees Act to name just a few.

If you break down what Property Managers do by the hour and charged for it at current rates, most landlords would be paying around $50 an hour for the service they get. This is too cheap for the responsibility that Property Managers have thrust upon them.

Property Managers are often abused and sometimes bullied with approximately one in two females and one in four males fearing for their safety at some stage of their career.

In recent times we have heard first-hand events that Property Managers are subjected to.

  • A Property Manager in her 60's was punched in the face by a tenant
  • A tenant having to be restrained at a shop by security guards as she tried to assault her Property Manager who was out doing the weekly grocery shop.
  • A Property Manager being abused on the phone by an angry landlord demanding she signs a backdated letter so they can evict a tenant. She refused.
  • A Property Manager being told to sign a contract with a landlord who does not want 'Heavy people' living in her rental property as she has concerns about the bathroom floor.
Safety is a major concern for the industry yet it is seldom reported in the media.

Safety is a major concern for the industry yet it is seldom reported in the media.

These are just a handful of the distressing situations front line Property Managers find themselves having to deal with. I myself as a Property Manager a few years ago was often abused by both tenants and landlords and on one occasion attacked by a drug fuelled tenant.

And we all remember the terrible circumstances that occurred last year when two Property Managers were shot dead in cold blood by a tenant.

Don't get me wrong, the vast majority of people, both landlords and tenants, are wonderful to deal with.  But property always comes with a lot of emotion and often brings the worst out of people when things go wrong. Too often the Property Manager becomes the scapegoat. But hey, we are money hungry right?

Money hungry? Wrong, big time!

In our last two surveys about the industry, we ask people who work in Property Management what they love about it. With nearly 400 people completing the survey only one person made reference to the money that they make. Overwhelmingly the biggest motivator is helping people.

Clearly, money is not a massive motivator to Property Managers despite what Ms Stevenson assumes. Results from the 2017 Great Property Management Survey

Clearly, money is not a massive motivator to Property Managers despite what Ms Stevenson assumes. Results from the 2017 Great Property Management Survey

To put it plainly, Property Managers do not do this job to earn hundreds of  thousands of dollars. They are kind, hard-working people who often go above and beyond. Many people who answered the question in our survey were quite negative about the industry due to the stress and abuse they are subjected to.

Don't believe me? This response from an anonymous  Property Manager sums up how many feel.

"To be honest, nothing now. It is so stressful, I loved my job for the first 8 years, now I hate it. Tenants are struggling to keep up with the cost of living, owners are stretching themselves beyond normal means which in turn affects maintenance, life is just more stressful these days and we are the meat in the sandwich that cops all the abuse"

But hey, we are money hungry!

Industry under attack>

#2 Your money is not as safe as houses

Here Ms Stevenson alludes to the fact that with the industry being unregulated it is open to widespread corruption and fraudulent behaviour. She refers to three cases in particular that found their way to the court through the REA. Two of them are seven years old and one is eight years old. She also references the recent case of a Ray White Property Manager in Henderson who allegedly owes hundreds of thousands of dollars of rent to landlords which made the news last month.
Do not blame the industry for a lack of regulation. We want and need regulation more than ever and the vast majority of Property Managers want it.
The reality is that with no qualification or regulation required, Property Management is an easy target for abuse as anyone can get into it. This is wrong and should be changed. Trust accounts and Audits should be compulsory, as should Police checks on individuals who work as Property Managers. And we clearly believe that you should be qualified. We agree with Ms Stevenson on this.

What we take umbrage with in her article is that it is written in a way that it labels corruption as being widespread. If all she can find is three cases over seven years old then it hardly points to widespread corruption. We are not naive enough to think that our industry is squeaky clean and you can trust everyone. No, of course not and if you dig deep enough, you will find shonky accounting practices in some parts of the industry.

However, if I dug deep enough in any industry then I would find corruption somewhere along the line. Whether it be Politicians, Accountants, School Teachers and yes, even Journalists, there will be the odd 'bad apple' letting down an industry. Don't paint us all with that brush.

#3 Service levels, um, vary

In her third reason for the "suckiness" of our industry, she refers to the number of issues she has had to deal with as a tenant and a landlord. She has clearly had some bad experiences but we cannot understand why she feels she has to apologise for being a landlord.

It is very easy to put the boot into Property Managers. When things go wrong with a rental property someone is going to be unhappy. You have landlords and tenants with different interests and in the middle is the Property Manager. Rebecca suggests to readers that they go onto social media to see the tale of woe or anguish of renters.

Here it is easy for the gutless keyboard warriors to vent if something they wanted did not happen. Got declined for that rental property you applied for or got evicted because you didn't pay the rent? Let's turn to social media and slag off the money hungry Property Manager.

We do acknowledge, however, that there are parts of the industry that need to raise their game. This is generally not the fault of Property Managers, the majority of which work so hard without acknowledgement. We need to dig deeper to look at why service levels vary so greatly.

The wellbeing of property managers has to be the priority

The greatest concern I have for the industry is the physical and emotional wellbeing of Property Managers. The vast majority enter the industry wanting to do a great job and look after both landlord and tenants. However, they are let down by organisations and employers who have the right intentions but do not have the resources or the skill set to train and support them.

With landlord and tenant demands increasingly on the rise, we are almost reaching crisis point with the ability to attract and retain people within the industry. Time and time again I see or hear of Property Managers suffering and struggling to cope leading to issues around mental health and burn out. Some end up on medication and self-esteem goes as the constant barrage of demands proves too much for many.

This is where the industry needs to step up. Property Managers wellbeing needs to become the focal point for businesses and the industry as a whole. There is no point attending the latest 'Grow Your Rent Roll Quick' seminar if your Property Managers simply cannot cope with the increased workload and pressures that come with this.

Getting qualified is a start and yes, we acknowledge we benefit from this as a company. However, we truly believe in what we do. With knowledge comes power and more importantly for Property Managers, confidence to give the correct advice to consumers.

Other areas that need exploring include inducting new entrants into the industry so they are fully aware of what they are letting themselves in for. We also believe that focusing on conflict resolution has to be a priority.

Too many Property Managers are available 24 hours a day 7 days a week. Too many try to please everybody without little gratitude or thanks. Too many do not know how to handle the abuse and conflict that comes with the job. Too many lead an unhealthy lifestyle as they cram down a pie for their lunch rushing between appointments. Too many of them wake up in the middle of the night worrying about something they forgot to do the previous day as they were overwhelmed with work.

Try phoning up a landlord Rebecca to tell them that their property has been contaminated with Meth or phone the family of the tenant who has just deceased living in the property that you manage.

If Ms Stevenson had actually spent time at the Property Management coal face, she may not write such a harsh, biased and unfair article.

Leaders need to step up

To see what can be done when we put our team first, look at the story of Continental Airlines. The airline continually ranked last among major airlines in customer satisfaction. It was losing millions and went through CEO's quicker than the cold blood that goes through Ms Stevenson's veins.

“We lost something like $600 million in 1994. In 1995, we made $225 million—with the same people and the same airplanes. So, it wasn’t anything wrong with the employees. It was the management—and it always is.

— Gordon Bethune interviewed by Forbes in August 2015

Then along came Gordon Bethune. He led the company from 1994 to 2004 and turned the company around, saving it from bankruptcy. How did he do this? The main change in mindset was that the employees became the number one priority. If the team are not happy, how do you expect the consumer to be happy?

He was genuinely concerned for his team and had their interests at heart. He was approachable and would often be found at the coal face on busy days such as Thanksgiving, helping out baggage handlers.

So my message to business owners and the industry power brokers is this.

Do not make growth your number one priority. Focus on your team and make them your number one priority. Focus on extending the lifetime value of your clients and focus on providing your Property Managers with the tools they need to do the job effectively and professionally. Focus on staff retention and satisfaction. Focus on the emotional wellbeing of your front line staff. If you get this right, the growth will come.

In our world of instant gratification, where the keyboard warrior rules and we want results overnight, we need to stop, look and assess what we are doing. We need to ask the question why so many leave the industry. We need to stop undercutting each other in an attempt to hit those growth targets and look at how we can retain Property Managers and give them a career and an industry to be proud of.

And most of all, we have to look after the people at the coal face and make them our number 1 priority.

 


Unforeseen consequences of a utopian vision

  • Rent roll values could fall as labour policies bite
  • industry survey shows concern around new government

“If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand

— American Economist Milton Friedman

Imagine a country where nobody is homeless. Imagine a country where nobody has any social issues such as drug addiction or alcohol abuse. Imagine a country where every child goes to school with shoes on their feet after eating a breakfast and then come home to a loving family where they get a warm healthy meal every evening. Imagine a country where everyone has a roof over their head and we all live happily in warm, dry and affordable homes.

This is the Utopian New Zealand being sold to us by our new Government. One cannot deny the good intentions that this Government genuinely has but, and there is a really big but, just how realistic is it and what will be the cost?

Good on them for having such aspirational ambitions however for every good intention there are undoubtedly unforeseen consequences. This was the theory of famous American Economist Milton Friedman. He said that you had to judge policies by their results and not their intentions, and he was also a critic of rent controls believing they caused a shortage of stock.

Not since the Savage Government of the 1930's has there been such a focus on housing and our industry is right in the firing line. Jacinda Arden's Government is about to make more changes to the Residential Tenancies Act giving more power to the tenant, enforcing improvements on hundreds of thousands of rental properties across the country, as well as undertaking a drive to build 100,000 social houses.

Information sourced from the newly published Housing Stocktake of New Zealand.

Information sourced from the newly published Housing Stocktake of New Zealand.

However, as REINZ CEO, Bindi Norwell wrote in her article published in The New Zealand Herald, who pays?

For many a landlord, it may prove to be too much. Some will be forced to sell whether it is through their own choice or the bank's. This is unfortunate as we now need landlords more than ever. 100,000 social houses will not appear overnight and as landlords leave, we are starting to see a shortage of stock and rising rents around the country.

What extra costs are landlords potentially facing?

  • Insulation of the property
  • Additional heating so the property can be maintained at 18-degrees celcius
  • Rental Warrant of Fitness Report every three years
  • Increasing interest rates
  • Meth Testing between tenancies
  • Increased insurance premiums
  • Increased management fees (Abolishment of Letting Fee)
  • Tax rebate removed from negatively geared property

What I do believe is this. The Utopian view of New Zealand sold to us by this Government is already developing unforeseen consequences which is hurting the people it was designed to protect.

Tax loopholes hurt mum and dads more than large scale investors

The closing of Tax loopholes around negative gearing will cause major issues to small Mum and Dad investors. The Labour website says that the biggest exponents of this loophole are large scale property speculators.

I for one disagree. For every rent roll that I see, on average 80% of clients own one property and around 90% own no more than two.

The people who it will hurt the most are Mum and Dad who purchased a second property to help save for their retirement. Most rental properties will run at a loss when you take away the costs associated with running a property. This leaves an investor paying money into the property and then being able to offset the loss against their own personal income.

Closing this will hurt many and some will undoubtedly look to sell before this is implemented which will cause more strain on the already overstretched rental market.

Many landlords are cash poor and only own one property. Typically you would be able to claim back approximately $7,000 of this loss through negative gearing. In proposed future changes this will end.

Many landlords are cash poor and only own one property. Typically you would be able to claim back approximately $7,000 of this loss through negative gearing.  In proposed future changes this will end.

Property management survey highlights concerns about Labour

Our Property Management survey highlighted the growing concern people in the industry had about left-leaning policies and the impact it would have on our industry. The survey was undertaken over a two month period between July and August 2017. As the election came closer, more and more respondents highlighted the prospect of a Labour Government would be the greatest issue facing the industry.

Out of 383 industry employee's surveyed, left wing policies made up three of the top five concerns

Out of 383 industry employee's surveyed, left wing policies made up three of the top five concerns.

The main issue was a concern about the increase in tenants exercising their rights and putting more demands on Property Managers. We have no problem with tenants doing this. In fact, I would encourage tenants to do so if they are genuinely being unfairly treated, but in some cases, we have seen tenants start to push the boundaries as to what is fair and reasonable. An example of this is a tenant trying extract $40,000 of compensation out of a company as he accused a Property Manager of verbally offering an extension to a renewal only to find out the property was going to be sold. No one wants to see tenants being neglected or mistreated and I for one believe in protecting tenants rights, but some will abuse this and push the boundaries.

This sentiment is also reflected in our survey as there has been an increase in Property Managers rating Tenants as being more demanding than Landlords.

Increased tenant rights has seen tenants putting more demands on Property Managers

Increased tenant rights has seen tenants putting more demands on Property Managers

Rent roll values set to drop

With the prospect of fewer landlords coming into the market, revenue being wiped out due to the removal of the letting fee and increase compliance costs starting to bite, all of this is starting to have a detrimental impact on the value of Property Management businesses. From our survey over 50% of Property Management businesses have less than 200 properties and these companies could find themselves struggling. Extra costs and lost revenue will impact on profits.

We are also seeing large Property Management companies who would usually be in the market to buy, wait and take stock of the situation. They do not want to invest so heavily in a rent roll if 30% of the landlords decide to sell in the first 12 months.

Industry results from the Net Promoter Score. We ask people who work in the industry whether they would recommend it as a career. 0-6 Detractors, 7-8 Passive, 9-10 Promoters. Results are down from the previous year. Potentially because of more demands being put on Property Managers

Industry results from the Net Promoter Score. We ask people who work in the industry whether they would recommend it as a career. 0-6 Detractors, 7-8 Passive, 9-10 Promoters. Results are down from the previous year. Potentially because of more demands being put on Property Managers

What is the solution?

Everybody is in agreement that we need more housing. What is important is the right type of houses are built.  Also, social housing should not mean a lifestyle choice, it should be a safety net for those in genuine need. There will be a risk that many people will take advantage of the Government's generosity and abuse the system. I can picture the scene now. A working family with two jobs paying $500 a week in a 1970's property sees a family claiming the benefit move into a brand new property paying a fraction of the rent as they are subsidised by the Government. They look at themselves and ask "Why are we bothering to work so hard?". Hard work must always be rewarded.

If there is one thing that I would criticise the National Government for over the last 9 years, they did not foresee the skill shortage required to build more houses and the need to get young people into apprenticeships.

Local Government has to take responsibility as well. I have lived in Wellington for three years now and the lack of construction of residential buildings is disturbing. Local Government also has to ensure that the right type of houses and apartments are being built. Not massive four bedroom plus properties, but three bedroom townhouses for young families.

Throwing up cheap property quickly without the infrastructure, schools, shops and entertainment has the potential to cause social issues. Growing up in the UK, I remember clearly the council estates in the 1980's were 'no-go areas' and lessons must be learnt from those mistakes.

Christchurch proves it is supply demand, not greedy landlords

If ever you needed proof that the issue is increasing the supply that controls prices then take a look at Christchurch. Since the earthquake, a massive build-up of residential property has taken place and Tenants are actually renegotiating rents down when it comes to renewal time. This is simply because there is so much choice available.

There are twice as many properties available in Christchurch compared to Wellington, even though the population is about the same. Yet due to an oversupply of property, rental prices are approximately 20% less. Although many residents would argue it has taken far too long, Christchurch is slowly getting it right and in a few years time, it will be a magnificent city. Wellington simply has to release more land for development of residential property ensuring the right type of property that is being built and infrastructure is in place to support the development.

PROPERTIES AVAILABLE ON TRADE ME

The information is taken from Trade Me figures as of the 16th February 2018

The graph provided from Trade Me shows that Christchurch and Canterbury have stable rents. Compare this to Wellington and other centres where rents are rising. This highlights the biggest issue is the lack of supply.

Where to from here?

Everyone agrees that more housing is the key, but when a Government starts to try and control the housing market and particularly renting, it can lead to unforeseen consequences such as a drop in rental supply leading to rising rents, hurting the individuals the laws were designed to help.

What the Government should do is work with local councils and the private sector and focus on getting more quality houses built in the right regions and the right size. Get the infrastructure right and encourage more young people to move into trades and out of University. We don't need one or two bedroom apartments or massive four bedroom properties, we need three bedroom properties with a combination of building up and out.

The Healthy Homes Guarantee Bill will improve the quality of rental housing stock and we have always supported this. But some of the proposed changes will only increase costs and rents. A Rental Warrant of Fitness is just another bureaucratic initiative that will add more cost to landlords and we have long argued we should adopt a European style energy efficiency certification for every residential property and not just rentals.

Other issues that lead to an impact on rental supply is short term lets such as Airbnb. I saw this firsthand whilst doing a recent job in Wanaka where there are hardly long-term tenancies available and rents had increased by over 10% in 12 months. Yet when you go to the Airbnb website, hundreds of properties sit there vacant.

It is time to start taxing Airbnb and an idea could be to introduce a Vacancy Tax which is similar to what was introduced in Vancouver when they had a similar issue with vacant properties leading to a shortage of stock and driving up rents. London also has a major problem with vacant properties and the Labour party in the UK have also proposed levies on vacant properties.

If the Government can pull off this ambitious plan, it has to do so with astute financial management. Driving our country into debt is not the solution. The previous Government did have its faults, but they did get us through all types of challenges and maintained a prudent balance sheet in the process.

As Ms Norwell asked from the outset, who pays? The answer is everyone who pays taxes will have to pay for the social policies undertaken by the Government. Landlords will be paying because of more costs. Tenants will pay as landlords will try and put some of the costs onto the tenants and subsequently the Taxpayer pays for the massive undertaking of such an ambitious social housing policy.

In conclusion it is clear that property management will have a key role to play maintaining the vital link between landlord and tenant. The impending changes in the housing market and regulations will pose issues for everyone in the industry. Knowledge and management skills will be essential in this new environment. Real-iQ stands ready to support you during this period of change.

As ever, we welcome your feedback.


Is 2018 the year the meth myth finally gets busted

  • New housing minister talks tough on ending 'moral panic' after potential millions wasted on testing and cleaning
  • 2018 could be the beginning of the end for many in the meth testing industry

At last! Someone with power and influence has the guts to come out say what we have been arguing for a long, long time. The 'moral panic' caused by certain Meth testing companies was instigated to make a quick dollar according to new Housing Minister Phil Twyford. Here at Real-iQ, we wholeheartedly agree.

Although we acknowledge that there are many reputable companies operating under IANZ Accreditation, many companies have been set up to try and cash in on the 'moral panic'.

Back in early 2016, we held a webinar highlighting the alarming amount of companies being set up to carry out Meth testing, warning that the industry was nothing more than a money making scam.

Is Phil Twyford right? Have your say.

Over the last few years, millions upon millions of dollars has been spent within the private and public sector on testing and cleaning properties without any evidence to suggest that low levels of meth are a risk to occupants.

In the public sector alone, $73 million has been spent on testing and decontamination whilst 900 families have been evicted from their homes.

We argue that the millions of dollars that have been fleeced out of unsuspecting landlords have probably caused more health issues. This is due to stress caused by the financial burden of dealing with the fallout of a positive Meth test. This is compared to that of a tenant living in a property with low levels of Meth contamination.

And what about the tenants? Many have probably been accused, unnecessarily so, of damaging properties. Many have been evicted out of properties when there is no actual evidence to suggest that living in the property is causing damage to their health. Instead, they find themselves being removed from a property, having to deal with the upheaval of a move which in itself takes its toll of tenants, especially those with young children.

Who benefits? Follow the dollar

In retrospect, the new guidelines of 1.5 micrograms are nothing more than a sham. With the working group of 21 who developed the standards, nearly half of this group had a financial interest in keeping the standards as low as possible. It wasn't until the 11th hour that REINZ came onto the committee and even this was after late petitioning. Dr Nick Kim, the person who seems to have the most knowledge on the subject, with absolutely no financial gain or conflict of interest in regards to the setting of standards was not even invited onto the committee.

We have seen a dramatic increase of Methamphetamine cases going to Tribunal over the last 3 years. In January 2015 there were 3 cases increasing to 38 in November 2017

Number of meth related cases

Number of cases involving Methamphetamine have increased by nearly 100% over the last two years. In 2017 1.96% of Tribunal Cases were Meth related compared to 0.99% in 2015

Dr Kim of Massey University has long argued that the guidelines, originally written for Meth labs, which are different to where a property has had Meth smoked only, are 'incredibly conservative'. His comments state that readings of 12 micrograms are more realistic. Dr Kim went on to say that even the lowest dose recorded to have a pharmaceutical effect is still 500 times higher than this 12-microgram figure, or over 3000 times higher than the 1.5 level set in the new standard.

What will happen next?

It appears that Mr Twyford is set to overhaul the new guidelines after stating that what has been set is not 'fit for purpose'. Judging by the way the new minister has started, he is not going to waste time. I for one, applaud him for doing so.

Expect to see a new, smaller committee who have no conflict of interest set up to reassess what new standards should be. I would not be surprised to see Dr Kim being invited to share his views on what the standards should be.

They will then report back to the minister with readvised standards put in place much higher than what we currently have to deal with.

Sugar soap and elbow grease should do the job of removing low levels of Meth residue according to Dr Nick Kim.

Insurance companies also suffer

At the recent LPMNZ Conference in Queenstown, Real Landlord Insurance Director Diane Nelson was equally condemning of the Meth Testing industry and gave a fascinating insight into the financial burden that insurance companies have been hit with. She even hinted that insurance companies may no longer cover Meth claims.

No matter what way you look at this, the only benefactors from this sorry state are the companies who make money from testing and cleaning. Everybody else is forced to pay, whether it is landlords, tenants or the taxpayer paying for HNZ properties to be tested and remediated.

The original guidelines had been set up for Meth labs however clever 'spin doctoring' has successfully scared us all into believing that we are living in 'Meth Armageddon'. Every house touched by a trace of Meth will cause us all to have health issues. However, have standards been set around ' second-hand smoke' from tobacco? No they haven't.

We believe that finally, people with influence are waking up to what this truly is. Scaremongering, playing of peoples fears whether it be through health concerns or fear of litigation.

Although we may not agree with everything Mr Twyford says and does, we are behind him 100% on this. The sad thing is, many a landlord and tenant have probably already suffered hardship both financially and mentally, probably unnecessarily so.


2017 The good the bad and the ugly

  • A year of unprecedented upheaval comes to an end
  • We review the last 12 months picking out the good, the bad and the ugly

It is hard to know where to start in a year where property and in particular renting, has featured so much in the limelight. In our final blog of 2017, we summarise what we believe is the good, the bad and of course, downright ugly.

The list we provide comes in no particular order and is purely our opinion, however, we would love to hear your feedback on what has been without a doubt, an intriguing year. First of all, lets keep it positive and start with the good.

The good

The Announcement of Banning the Letting Fee: Some of you will be amazed to hear me say this, however after the initial shock of the impact of the change of Government, I honestly believe that the removal of the fee will be of long-term benefit to the industry as a whole.
In my opinion, we have become complacent in charging this and you simply cannot justify charging a tenant a fee for $800 in one region and $300 in another just because the rent is different. The removal of the fee will make us innovate and look to develop new income streams. A great focus will be on maintaining properties and improving their capital value. Evidence has shown that the more companies spend on maintenance the longer the tenants stay on in the property. A marketing or administration fee will be charged to the landlord who will subsequently increase the rent.
The other impact this will have is that we'll see less of an incentive for more startup Property Management companies. I do not want to be the person to stifle ambition, but the reality is we have far too many companies undercutting each other and the removal of the fee should put a massive slowdown in the number of startups.
The Relaunch of the NZRPM Level 4 Qualification: Ok, we have an interest in this as a company, but nobody can deny the benefits of being qualified and early evidence suggests the take up will be big.
For me personally and the team at Real-iQ, being involved in the roll out of this has been the highlight of the year and it is much improved from version 1 which was largely irrelevant. We expect a busy 2018 getting the industry qualified.
The Healthy Homes Guarantee Bill: Regardless of what your political stance is, I have no doubt that long-term, this bill will benefit the country as a whole. Many properties around New Zealand are of poor standards and this contributes to ill health, a strain on the healthcare system and a lack of productivity. A country as progressive as ours should not have the most vulnerable living in third world property. Unfortunately, it still happens. My only concern is that the standards that will be set will be too draconian with the new Government rushing through legislation without proper consultation.

The bad

Tribunal Crazy Decisions: This is in recognition to Dunedin adjudicator J Wilson who awarded the tenant over $10,000 claiming that the landlord had rented out a non-complaint property. The decision caused a sense of panic that we had gone way too far in beating up landlords. Vic Inglis, the landlord, did not know that the converted kitchenette did not have consent and only when the tenant subleased the property the issue became a problem. The tenant had the nerve to claim a full refund in rent even though they had subleased the property without consent. Fortunately, the landlord appealed and it was overturned by the Judge at District Court. The reason being that the tenant did not suffer due to the lack of consent and it was only a technical breach. The property received its necessary compliance and commonsense prevailed.
I would have loved to see the landlord take the tenant back to Tribunal to receive damages for the removal of smoke alarms and subleasing without consent. I wonder how the adjudicator would have ruled it. I also wonder if the tenant has paid back all the rent!
A knock on effect of this case has been the increase in opportunistic tenants seeking rent refunds for non compliant properties.

Vic Inglis had an eventful 2017 as a landlord.

Not to be outdone, I was witness to a remarkable decision by an adjudicator in Lower Hutt. A client had been advised that a tenant was allegedly doing drugs on the property after a composite drug test result came back in excess of 65 micrograms from seven swabs for a small two bedroom unit. When the Property Manager gave the tenant notice under s.59a (7 days property badly damaged not habitable) the tenant refused to leave. An application was made but was subsequently dismissed as the adjudicator needed to see discrete individual samples so he could ascertain that the rooms were over the 1.5 micrograms guidelines. Surely basic maths comes into the equation. 65 divided by 7 leaves an average of 9.3 meaning it is a mathematical impossibility that the property was safe.
Not according to the adjudicator. Case dismissed!
Too Many Landlords in Denial: I fear that many landlords falsely believe that their properties are compliant and as the 2019 deadline for insulation comes closer, many of them could be in for a rude awakening, especially now that tenants are becoming way more aware of their rights.
A number of landlords will be up to speed as to what is required but many still are oblivious as to what they need to do to ensure their properties are compliant. Throw into the mix the fact that tenants will need to have the means to maintain their rental properties to a particular temperature as part of the Healthy Homes Guarantee Bill, I can picture many landlords rushing to find Heatpump and Insulation installers at the eleventh hour. Don't put it off guys, get in done now or risk Exemplary Damages up to $4,000. I suspect that adjudicators up and down the country will be more than happy to make examples of people.
It is also a good time to be in the heating and insulation business.

The ugly

The Undercutting of Fees: Everywhere I go I hear complaints of companies undercutting fees to simply win the business, many going as low as 5% to secure business. By doing this, we are slowly damaging the quality of service that we are providing to the consumer and doing no good for the reputation of the industry.
This is a sign of desperation from many companies. With over 50% of Property Management companies managing less than 200 properties, profit margins will be all but non-existent.
If ever there was a time to regulate the industry it is now. Increased legislation should kill off many of these small cowboy operators. At the start of the year, I predicted more properties would be managed by fewer companies and budget boutique Property Management would die. You can still do boutique management, but you must charge accordingly.
The Northland Shooting: This was the low point of the year. A mother and daughter heading off with a contractor to a property in a remote rural location and being gunned down and murdered. What, if anything, has changed?
The risks are still apparent yet many people put it down to just 'being in the wrong place at the wrong time'. I do not subscribe to this view. Better training for Property Managers will help go a long way to prevent incidents such as this from happening. It may have been unavoidable but it simply cannot be brushed under the carpet.
What is good to know is that WorkSafe is investigating the events and I for one am glad to hear this. They will no doubt release their findings in 2018 and we sincerely hope that changes are made to ensure that all Property Managers are safe. Assaults and threats to Property Managers are common as highlighted in our 2017 study. Many are martyrs to the demands of their landlords and put themselves unnecessarily in harm's way. Let's hope lessons are learned from the tragic events and do not happen again.

Other notable mentions

The Rental Warrant of Fitness: Right intentions but needs work. Expect to see this become mandatory as part of the Healthy Homes Guarantee Bill.
Labour and new Housing Minister Phil Twyford: Delusional or visionary? Only time will tell but I for one, have my doubts.
Tenant Power: Tenants are becoming a lot more demanding as their rights have been broadcasted across the media. This is one thing which is apparent from our 2017 Property Management Survey.
New Meth Guidelines: 0.5 to 1.5. Why wasn't Dr. Nick Kim part of the committee? He appears to be the only voice of reason on this matter as the gravy train continues to run. Labour has made some worrying comments around rent abatements if tenants cannot be held responsible for contaminated properties. More $$$$$ for the Meth testing and cleaning companies!!

The Rise and Rise of the LPMNZ Conference: Out of all the conferences I attended this year, this one has become the stand out for the Property Management industry. Well marketed, great speaker line up, stunning venue and great to see the awards as part of the conference. Well done to Bob Walters and team.

It would be great to hear your choices for the Good, Bad and Ugly of 2017. In the meantime, take care of yourselves over the Christmas holidays. Look after your families and we wish you an enjoyable and relaxing break. We look forward to connecting with you in 2018 with our predictions for the year ahead.


houses-on-hill-wellington

Rental Warrant of Flopness

  • Why the rental warrant of fitness will not work in its current format
  • UK style rating is the way forward for healthy houses

First of all, let me start by stating that this is not an article beating up the people who have designed and implemented the Rental Warrant of Fitness. The intentions of these people are good and they are thinking of the most vulnerable of citizens within New Zealand. I also genuinely applaud the Wellington City Council for trying to get this off the ground. The current Mayor Justin Lester campaigned in the mayoral elections stating that if he was elected he would implement the Rental Warrant of Fitness. He is as good as his word and he should be commended.
However, the current guidelines for the Rental Warrant of Fitness are seriously flawed and in my opinion, are bordering on 'Nanny State'. This was a criticism of the previous Labour Government with policies around new standards for light bulbs and restrictions around hot showers.


Professor Philippa Howden-Chapman and Wellington's Mayor, Justin Lester discuss the newly launched Rental Warrant of Fitness.

The Rental Warrant of Fitness(WoF) is the brainchild of the University of Otago and in particular Prof. Philippa Howden-Chapman and Dr. Julie Bennett who have spent nearly two decades researching and designing the WoF. The WoF was launched by Wellington City Council in late August with much fanfare however the scheme recently hit the headlines for the wrong reasons when it was revealed that only two landlords had taken up the voluntary scheme and one of them had complained about it in the media.

Read about landlords feedback in media.

The criticism came from landlord Joseph Williams who stated that his tidy clean and relatively new rental property in Johnsonville had failed, even though it passed a basic council inspection in 2011. He also went on to state that the report was poorly written and full of spelling errors however these are minor issues that should be easy to rectify. Currently, the Sustainability Trust carry out the WoF inspections and charge $250.

The WoF inspection has 29 criteria and 63 questions that an inspector will assess. The assessment covers insulation, heating, ventilation, structural stability, sanitation and hazard identification. Where the main issues lie is that it is a simple Pass or Fail with a six-month window to get the property up to scratch if it fails the first time around. The idea is that landlords can promote the property as WoF passed to prospective tenants when advertising it.

In principle, it seems like a good idea but when you take a closer look it is seriously flawed.

I first came across the WoF when I was involved in the REINZ Property Management committee about 4 years ago. Nick Smith was the National Party Housing Minister and he sent out a proposal seeking feedback on the WoF. As a committee, we were asked to critique it and at the time I felt it went too far, measuring cupboards, having window strips on and having security stays on windows more than 2 metres off the ground. My opinion hasn't changed. In the end, the National Party threw it out stating it would add more cost onto landlords and subsequently it would increase rents.

I use my own house as an example. We recently renovated our own home and have gone to huge lengths to ensure the property is warm and dry. We have done the following work.

  • Insulation installed in the ceiling, most of the walls and underfloor
  • Installed double glazing windows throughout the property
  • Had central heating installed throughout the property
  • Installed a Showerdome
  • Installed a ventilation system
  • Had a polythene sheet installed on the ground under the property

You would struggle to find a warmer, healthier home in Wellington. However, our house would fail the WoF because we do not have window strips and we have no intention of installing them.
There are other factors seriously wrong with the WoF as well. Let's take into account issues around mould. The WoF guidelines state The house must be reasonably free of visible mould, having no more in total area of mould than an A4 sheet of paper. That is a very generic statement. There is a big difference in size between a 1 bedroom unit and a 5 bedroom mansion yet they are both measured on the same criteria. Also, what if the tenant is causing the issues around mould? This is a constant grey area that is often debated. It does not seem fair that a landlord may fail a WoF because of the way in which the tenant may live in the property.

What is in the warrant of fitness?

What we believe is a better model is to replicate the UK style Energy Performance Certification (EPC) on all properties, making it compulsory for all residential housing to show how the property performs in terms of its energy efficiency and its environmental impact through Carbon emissions. If homeowners and landlords do not display the EPC when a property is on the market, then they may be fined. We prefer this scheme as it gives a property a rating, similar to that of any household appliances rather than a simple pass or fail.

This is a far more productive way to demonstrate whether a property is energy efficient

The EPC is valid for a period of ten years compared to the WoF which is valid only for three, saving the landlord and subsequently the tenant money, as any increased costs are likely to be passed on to the tenant. The cost of an EPC is anywhere between $120 and $240 which is similar to New Zealand but as it is valid for ten years rather than three means there are significant savings to be made.

If every house has a rating, this will make landlords and homeowners more incentivised to ensure that their properties perform more efficiently providing warmer, drier homes for prospective tenants. It will also lead to long-term tenants reducing vacancy periods.
This could become the framework around the standards for the upcoming Healthy Homes Guarantee Bill, ensuring that the standards set are transparent, compulsory and easy to follow.

In all my years involved in Property Management, I would have been into thousands of properties up and down New Zealand. I have seen tenants living in conditions not befitting of a country as advanced as ours and our housing stock has to improve. I for one, applaud initiatives to raise the standards for tenants across the country. The nation as a whole benefit with less sickness, less time off work and less of a strain on our healthcare system. However, this format will not work.
The new Labour lead coalition also has to take into account whether or not there will be enough skilled people available to do all the work. They have already announced they are going to build 100,000 affordable houses in ten years. That is one challenge they've committed to but who is going to do the work on the rest of the countries housing stock?
Maybe increasing immigration is the answer? Oh, I forgot, NZ First is in the coalition. Winston Peters would never stand for that!


Tragedy Highlights Risks In Property Management

I enjoy writing about the Property Management industry. It is an industry that I am extremely passionate about. Words normally come easy to me but the tragic circumstances around the shooting and killing of Property Managers Wendy and Natanya Campbell by tenant Quinn Patterson, left me feeling numb and struggling to find words.

A man has lost a wife and daughter, a community is in shock and our industry is struggling to understand how such a terrible incident could have happened.
However, as awful as the news was, I have to admit I was not entirely surprised.
Three years ago, we witnessed the cowardly murder of two WINZ employees by Russell John Tully at a WINZ Office in Ashburton. At the time, there was an outcry regarding the risks that WINZ employees faced on a daily basis when dealing with the public. As such, many WINZ offices now have security guards in place.
Following the call for greater security of WINZ staff, a call which I fully support, I couldn't help but feel that Property Managers across the country were exposed to the same risks. This lead me to write an article for the REINZ Magazine that was published in the Spring of 2014. I have attached the article below. The article was written not just for Property Managers, but for business owners who'd focus more on sales and may not fully appreciate the risky situations that Property Managers all over the country could find themselves in.

The article I wrote for REINZ in Spring 2014 following the Ashburton WINZ shooting

At the time, I was Chair of the REINZ Sector Group and the Department Manager for Property Brokers, a large provincial real estate company. I was based in their Head Office in Palmerston North and was responsible for over 30 Property Managers who worked across much of provincial New Zealand.
Throughout the region, many of the properties were in low income small regional towns with many of the tenants having poor credit or tenant history. You may wonder why high risk tenants were placed into properties, but you have to understand that on numerous occasions you had to select what you believed to be the best applicant from a far from perfect selection of applicants.

Listen to David Faulkner being interviewed on Radio New Zealand

Property Managers would be well aware of the pressures put on them by landlords to find a tenant to cover the mortgage as quickly as possible. If no quality applicants came through, you would leave it to the Property Manager to make the judgement call. It was either that or risk losing the management.
The Property Managers did it tough and found themselves dealing with all types of situations. I myself as a Property Manager have been abused and threatened, not just tenants, but also by landlords who often take out their frustrations on a Property Manager, even if the Property Manager had done nothing wrong. Social problems such as drug and alcohol abuse, damage to property and verbal abuse would be issues that our team encountered on a regular basis.
On multiple occasions I would be concerned for the wellbeing and safety of the team who sometimes had to be protected from themselves. They were so committed to doing what they believed was right, they would put themselves in harms way, often without even realising it.

Whilst running the team, we introduced numerous policies that would help protect Property Managers such as stopping them from doing evictions, sharing calendars so we knew where they were and installing alarms at reception.

Could this tragedy have been prevented?

We will be asking this question for some time no doubt. What, if anything, could have been done to prevent this?
There will be many questions that will be asked about how the tenant, Quinn Patterson, was able to acquire such an array of firearms, especially as he had a criminal record for a violent assault. The fallout of this is not something that I will go into though no doubt one could argue that Worksafe may have grounds to investigate Trade Me, the source of many of Patterson's transactions.
Although I am acutely aware of the sensitivity of this question, my belief is that we have to ask it and cannot put it down to just being at the wrong place at the wrong time.
I speculate somewhat when I write this and I could be wrong, but I cannot help but think that the Property Managers knew Mr Patterson was a risk. Why else would you send two Property Managers to a job with a contractor?
No doubt the Police will turn their investigation to communication between the Property Managers and tenant and some of the questions may well be answered. However the reason I write this article is to ensure that Property Managers can identify and minimise the risks that come with the job. As such, through my experience as a Property Manager all the way through to being a Trainer and Consultant, I have compiled a list of things that every Property Manager needs to consider to help keep them safe.

Twelve tips to help keep you safe

1. Listen to your gut

This is the most basic of human instinct that nature gave us hundreds of thousands of years ago to warn us of impending danger whether it be from rival tribes or Saber Tooth Tigers. Like when selecting a tenant, if it doesn't feel right, you're probably right. If you arrive at a property and something makes you feel uncomfortable, leave immediately and do not second guess yourself.

2. Ensure your colleagues know where you are

As obvious as this may sound, I still see Property Managers leaving the office without anyone knowing where they are going. Colleagues need to know when you are leaving the office and where you are going. All appointments should be in a shared electronic calendar that can be accessed by key people. Each morning, your team should have a quick 5 minute catch up so everybody knows what everyone else is doing that day. Key people in your team need to know exactly where you are going and at what time.

3. Don't do viewings after dusk<.h3>
I strongly believe that no viewings should be done after 6pm or when it goes dark. There is simply no way your team can know if you are in trouble and by which time it would be far too late. Use online booking facilities such as Viewing Tracker and Inspect Real Estate to their full potential so you have a record of who attended the viewing. Have open home registers at viewings.

4. Have a back up emergency plan

Between your team, come up with a plan that you can use if your safety is compromised. It could be an Emergency App on your smartphone that will connect you to the office. Consider having GPS in the cars or use Apps such as Find a Friend. Some offices will have a code word they will use when they contact an office. It may not be ideal, but having some back up emergency plan is better than nothing and may save your life.

5. Never do an eviction on your own

Gone are the days when the battle axe Property Manager will head up to the property with eviction notice in hand and a determined attitude to get the tenant out. I myself, once evicted an ex-prisoner who was the member of a gang for non payment of rent. I remember being petrified knocking on the door and vowed never to do that again. Use the bailiff for all evictions and if the poor landlord has to wait a few days for a bailiff to be available then tough. Safety comes first, that is non negotiable.

6. Have a Photo I.D. Badge on you

This is as much for the tenant as it is for you. The only company I have seen who carry an I.D. Badge on them with a photo of the Property Manager on it is Feron Property Management in New Plymouth. A simple idea that gives the tenant an assurance of who you are and gives you a far more professional appearance that will earn respect.

7. Make it easy to leave

It didn't matter what neighbourhood I was doing an inspection in, I got into the habit of parking my Property Management car in a way that I could easily access it and drive off. Do not park facing a dead end of a cul-de-sac and never park up a driveway if possible. If you do park up someones drive, reverse up it so you can easily drive off.

8. Have alarms on you

This may sound a little dramatic and you will probably never need it but it makes sense to have one, even if you are a male. On one occasion, I remember a young female Property Manager in Whanganui entering a house to do a routine inspection. Unknown to her, the tenant, a Doctor, had sublet the property. The individual living in the property had no idea that this young Property Manager was in the house and was in the bathroom when she entered. When the man confronted the poor Property Manager, she was subjected to a tirade of abuse and the only exit was to walk past the man who continued to shout and scream at her. She was understandably shaken and we sent her home as she was too distressed to continue working.

9. Learn to read the situation

Reading the media, by all accounts Quinn Patterson was in financial trouble. He may well have been facing eviction and the people threatening this became his number one enemy. Often we have to give bad news in Property Management to both tenants and landlords. Sometimes, we may be the tipping point in a persons life and the breach notice that we send may just do this. I am a big believer in emotional intelligence which is the ability to be self aware of the impact you may have on other people. If you are awaiting a Tribunal hearing or waiting for a tenancy to end and you suspect there may be some animosity towards you or feel your presence may antagonise the situation, don't visit the property no matter what the circumstances. Wait for the tenancy to end. Also, learn to read your environment when turning up at the property. Are there dogs present and how dangerous are they? does everything look normal? can you access every room? How many tenants should there be? If you are new to the industry ensure you do your first few inspections with someone experienced who can teach you the tell tale signs that something may not be right. I would highly recommend getting someone like Phil Thompson of Protect Self Defence to do training with your team. He has spoken at REINZ conference in the past and is excellent.

10. Choose how you communicate carefully

As said before, we regularly have to give bad news to people in this job. Delivery of those words can be paramount to defusing difficult situations. Don't use words such as 'You haven't paid your rent'. Reword it with the phrase 'We haven't received your rent'. Be aware of your body language when confronting someone. Listen actively to whom your are confronting and use their name. Never raise your voice and smile using eye contact. As rents increase across most regions, the margins for families become tighter and tighter. This can lead to extra pressure and frustration. When there is money and property involved there is always the potential for emotions to take over. Always show empathy, especially when giving bad news and try to remove yourself from any emotion, focusing on the problem at hand and not the people. It is easier to deal with people if you understand the pressures they may be under.

11. Diarise all communication

This is commonsense and should be best practice in each office. However it doesn't always happen. Any aggressive or threatening behaviour must be recorded in a Health and Safety diary as well as your Property Management software. Regardless of whether it is a tenant or a landlord, your superior has to be notified and the situation has to be assessed and recorded. Doing this also gives any new members of staff prior warning before they confront a tenant or a landlord.

12. Trust is earned

This may sound somewhat cynical, but if we get into the habit of trusting people on their face value then we are asking for all types of problems. Ensure you use companies such as T.I.N.Z or Tenancy Practice Service for background checks. Double check references that tenants give you. Are they who they say they are? Can they afford the property? If more than 40% of their net income will go on rent they will likely struggle to make rent payments. Also, do not take on slumlords who we would class as D-grade clients. They add to stress and are seldom profitable. Do background checks on new landlords. Have they been in Tribunal? What do other companies say about their dealings? Have a suspicious mindset and again, listen to your gut, it seldom lets you down.

Real-iQ will be hosting a FREE WEBINAR in August around Property Management safety. A time and date has yet to be confirmed but we will be recording it and making it available to all. We will advertise this via LinkedIn, Facebook and through our company Newsletter. We also cover Property Management Safety extensively in our Induction Bootcamps that we host around the country.

We will not be able to remove the risk entirely from Property Management but more can and should be done. We can all take steps to ensure that we get home safely to our loved ones every day.
Look after yourself, look after each other and keep safe.


meth-testing-patch-on-wall

New meth standards will solve nothing until practice notes issued

  • Opinion split on the risk from meth contamination
  • BRANZ report states 1600 kiwis die every winter due to poor condition of housing
  • Methsolutions defy REINZ stance on property managers doing testing

Late last month the eagerly anticipated new standards around Methamphetamine contamination were released. This has come after a lengthy process which also involved a large amount of public submissions. Clearly, there is plenty of emotion involved around this hugely controversial topic. This was evident during the recent REINZ Seminar involving members of the panel that helped introduce the new standards. Included on the panel where Lisa Gerrard (REINZ), Darryl Thompson (Auckland Council), Miles Stratford (MethSolutions) and lawyer Richard Hern.

The seminar was held in conjunction with the release of the new standards and many left the seminar with more questions than answers as opinion appears to be split on what is deemed a safe and acceptable level of contamination for a property to be lived in.

Although no one doubts the issues around Meth in society, there is large debate around how much of a risk low levels of contamination are to the public and also to residents who live in such houses. The new NZS 8510 standards that have been set are as follows.

  • Contamination cannot exceed 1.5 micrograms per 100cm2 for high level areas (living areas, garages)
  • Contamination cannot exceed 3.8 micrograms per 100cm2 for low level areas (under a property or in the attic)
  • Qualifications will be available for Meth testers however, this is still some time away

With insurance giant IAG setting a precedent with its stance around Meth, it seems unlikely that the new NZS 8510 Standards will impact its stance on refusing to pay out on claims where it cannot be established when the contamination took place.

Should property managers do meth testing? Vote now

Property Managers doing Meth Testing? No problem according to Miles

Probably the most controversial moment of the REINZ seminar was Miles Stratford’s stance that Property Managers did not have a conflict of interest if they carried out testing - even though Lisa Gerrard and Richard Hern advised the room of Property Managers not to engage in Meth testing and leave it to an independent company.

We questioned Mr Stratford about his relationship with Bolitho Property Management in Nelson who are certified Meth Testers trained by MethSolutions. We asked Mr Stratford whether he disagreed with the stance of REINZ and of lawyer Richard Hern. After pressing him he finally said yes he disagreed with REINZ.

Lisa Gerrard of REINZ advised members at a recent seminar to stay well clear of testing. Only one person disagreed on the panel.

How big is the risk?

The need for Head Adjudicator Melissa Poole to release Practice Notes is now becoming critical as going to Tenancy Tribunal is almost like playing Russian Roulette as different adjudicators have differing opinions, highlighted in some of the rulings that we have researched. We sympathise with the role the adjudicators face as they are clearly as confused as we are as to how big the risk is. The main bone of contention is whether a property with a ruling of under 1.5 micrograms per 100cm2 is reasonably clean. Opinion is split.

1st June 2017, J Tunnicliffe awards cleaning and testing against the tenant despite readings of only 0.89 micrograms per 100cm2. This is due to the property not being left in a reasonable clean condition at the end of a tenancy.

30th November 2016, A Macpherson throws out a claim by tenants for full compensation of rent after a third full diagnostic report found that after 12 samples were taken none exceed 1.5 micrograms and only one exceeds 0.5 micrograms. This is the first major case to refer to the new “Review of Remediation Standards” which was carried out in October last year.

  • 13th June 2016, W Lang awards $35,764.72 to the landlord after detailed results show the property is contaminated with the highest reading being 2.6 in the hall.
  • 18th August 2016, D Malcolm states that LJ Hooker are jointly liable for $6,788.44 only because they stated that they were the landlord on the tenancy agreement
  • 11th April 2017, J Setefano states that Barfoot and Thompson are liable for $15,020.44 which contradicts the previous order by D Malcolm.
  • 19th April 2017, D Cullen dismisses a claim for Meth cleaning and decontamination. This was after Debra Young from Methsolutions gives evidence to suggest that undetected levels of methamphetamine can bleed through a surface over time and decontamination cleaning can elevate levels of methamphetamine detected in a home.

The only real way we will get certainty on how to proceed is for Ms. Poole to come out with Practice Notes around how Tribunal should rule on different levels of Meth contamination.

Real-iQ are advising clients that according to the ruling by A Macpherson in the case between Forkett and Lodge City Rentals, anything under 1.5 micrograms is an acceptable standard and there is no reason why a tenancy should not commence.

Are Testing company adverts misleading?

One issue we do have here at Real-iQ is the advertising and press releases around how many properties tested are contaminated. You will see companies portraying the problem that 40% of properties tested are contaminated. However, results will pick up levels as little as 0.02 micrograms per 100cm 2. In a recent webinar, Miles Stratford states that of the 40% which come back positive, 30% would be over the 1.5 micrograms reading from baseline tests. This means that only 12% would be over the new standards and this is for baseline testing. The reality is that if you did the detailed discrete testing the results would be even lower, probably under 5%.

That is a big difference from 40%.

Miles Stratford gives his opinion on this webinar around the new standards. Click the video to watch

1600 Kiwis die each year through cold housing according to BRANZ

Unfortunately, as winter grips, the real problem around New Zealand housing is overlooked as Meth continues to dominate the news. A recent article in the Listener magazine referred to a BRANZ report highlighting that as many as 1600 Kiwis die each winter due to the poor condition of the properties they live in. Unsurprisingly, tenants are most at risk. In our opinion, this is real problem that needs to be addressed around rental properties in New Zealand.

1600 people dying unnecessarily is a national disgrace yet we aren't aware of anybody dying from living in a property with low levels of Meth contamination.

Testing companies will push Tribunal and local councils to have as lower levels of acceptable readings as possible, arguing that a property is not clean if it has traces of Meth. They will be the main benefactor from lower Meth readings.

Insurance companies will also be diving for cover forcing landlords and prospective purchasers to spend money on testing whilst we all wait for Tribunal to give us some guidance as to how to tackle this problem.

At Real-iQ, we are advising clients to recommend that testing is done inbetween tenancies but this is ultimately the landlords decision. The only reason we are doing this is to protect our clients from litigation.

We are hopeful that Practice Notes will be released soon and we do not have to wait too long for qualifications to be established for the Meth Testing industry.

Meanwhile as winter truly bites, thousands of Kiwi's battle sickness and ill health caused by the cold and damp properties, many of them are tenants and struggle to make ends meet. Surely we have our priorities wrong and this should be our focus.