Carbon Neutral Property Management. Is it possible?

  • We look at the likelihood of achieving a net-zero carbon industry by 2050

  • The government needs to help landlords and we have ideas on how this could work

‘Ok boomer!’ How big is the carbon footprint that the residential rental sector in New Zealand leaves behind and more importantly, how do we reduce it? I am not attempting to offend an entire generation of landlords here, but the comments from Millennial Green MP Chloe Swarbrick after she was heckled by an MP during her speech to Parliament earlier this month have certainly grabbed attention, so I thought I’d try the same approach.

Behind the rhetoric, the disdain and all the media scrutiny that the now-infamous comments received, the attention deflected away from a significant bill that was passed in early November that will have a major impact on every business in New Zealand. This includes the Property Management industry and we will have a monumental challenge in front of us if we are to achieve its target. A net-zero carbon footprint for our industry.

On the 13th of November, Climate Change Response (Zero-Carbon) Amendment Bill was passed. This means that by the year 2050, New Zealand will have a net-zero carbon footprint. What does this mean for renting and Property Management in New Zealand? By my calculation, I will be 78 years old so hopefully, I will still be here to witness it. I certainly expect my kids and future grandkids to be around to see it happen.

Ever since Jacinda Ardern became Prime Minister, I have argued that many of the changes her Government are making around the residential rental sector are motivated partly by reducing the carbon footprint of rental properties. What was it she said in the lead up to the last election? 'Climate change is my generation's nuclear-free moment'. 

Who can blame her, it is an easy target? The condition of housing in the rental sector is notoriously poor and trying to keep your rental home warm in winter can be a costly exercise. The bigger the cost, the larger the carbon footprint. For Labour, targeting landlords is easy as many of them will not be Labour voters and it plays into the hands of their support base as well as coalition partners the Green Party. Not only is it costly to run a typical rental property, but the carbon footprint will be substantial. Probably a lot more than your typical owner-occupied property. What percentage of rental properties will have double glazing or have solar panels? I would be surprised if it was more than 1%.

Landlords have had a lot to grumble about recently, and many feel with some justification, especially after the latest set of proposed reforms announced by Associate Housing Minister, Kris Fafooi early this month. All of a sudden, getting rid of bad tenants just got a whole lot harder. However, as an industry, we have to accept the fact that the carbon footprint rental properties leave behind needs to be reduced and we need to start having serious conversations about how we can do this. For all of the apparent landlord bashing that many claims this Government has been guilty of, few can complain about that the Healthy Homes standards we are currently working towards. 

The Healthy Homes standards, for all of its faults around implementation and timeframe, is a step in the right direction towards building a more sustainable and healthier industry. Better insulated homes with less costly heating appliances will certainly help, but what more can be done?

One company leads by example

Natalie Wendell is leading the charge to make Property Management carbon neutral.

One company is certainly trying to make a difference. In September at the LPMA Conference held in Auckland, Natalie Wendell, the General Manager of Wendell Property Management spoke at length about their commitment to build a more sustainable and environmentally friendly industry. Her husband and head of LPMA New Zealand, Ashley Giles, also shared his insights into this in a recent interview we did with him before the conference. They are clearly committed to making a difference, Wendell Property Management makes a bold statement on their website with the aim of being completely carbon neutral by 2020. Not much time to get that done! However, it is refreshing to see a company within our industry making such a commitment. We all have to start somewhere.

So what does a carbon-neutral Property Management business look like? It can clearly happen, but who pays to make the properties more environmentally friendly and what else is involved to make it possible?

Firstly, you can look at your own footprint as an office and a company. The paperless office is a bit of a buzzword and I have yet to walk into an office without seeing lots of paper on desks but realistically, there is no reason why anything really needs to be printed. Digital signatures are becoming more and more common and widely accepted within the industry. There is no reason why Tenancy Agreements, Bond forms and Management Authorities need to be printed. Surely even the Tenancy Tribunal will move into the 21st century and move away from printing ream after ream of photographs and turning up with three printed copies of evidence.

Other things that can be done in your office are things such as installing solar panels and LED lights. This will also go a long way to reducing your footprint. Change the company car to EV’s rather than drive around in petrol vehicles is also a great way to reduce emissions. Wendell has already done this which is a great statement to make. 

Maybe one day, we will see Property Managers rushing to inspections and viewings on E-Scooters!

Natalie Wendell's tips on a more sustainable industry

  • Provide tools so people can assess their own usage. Click on FutureFit to assess your carbon footprint.
  • Moving your Property Managers to EV's has greater savings on fuel consumption.
  • When renovating, look at restrictions about the materials that you use and look for more sustainable and energy-efficient appliances
  • Encourage longer tenancies as they are better all round for everyone. Less movement means less carbon footprint
  • Waste management in rental properties. Ideas such as worm farms are a fun way to educate tenants and reduce landfill

What about the properties?

All of these small commitments to reducing your own carbon footprint will help, but the real issue is with the properties that we manage. It has been hard enough trying to get all of our landlords to invest in insulating their properties and we are going to spend the next two years battling with some landlords around the implementation of healthy homes standards. Can you imagine the response when a millennial Property Manager calls the baby-boomer landlord to inform them that their student rental in Dunedin leaves too big a carbon footprint and they had to reduce it? I suspect the response would be less than diplomatic!

With over 600,000 rental properties accommodating over one-third of the population, trying to make all these properties carbon neutral will take a monumental effort and it will also need a collective buy-in. Try getting every baby-boomer landlord to start investing in solar panels and double glazing for their rental properties. See how far you get before you start seeing them either sell up or move to another company. Getting a collective buy-in, will be nigh on impossible, especially whilst the majority of rental property is owned by the Boomers. This is why we need to start discussing how we do this now. All the issues that this Government has faced in terms of dealing with Kiwibuld and the housing crisis are not going to go away anytime soon as a lack of builders, expensive materials, costly and time consuming resource consents, as well as the current condition of the majority of rental stock are all issues that we will have to contend with for decades to come.

Millennial landlords will probably be more receptive to change, after all, it is their generation that is going to have to live with the effects of global warming. The reality is however, we simply cannot wait till the Boomers depart and leave it to the next generation of landlords. So what can be done?

Doing our research and talking with Wendell, the typical property in New Zealand will use approximately 8,000 to 10,000 KwH per year. Getting this down to zero is not going to happen in the short term but as an industry, we should be looking at ways we can reduce the usage. As it is highly unlikely that landlords will start retrofitting houses with double glazing, LED lights, solar panels and wind turbines, what can be done to help convince them that doing some or all of this is not only a good idea, but there are incentives to get them to do so?

Subsidise landlords to invest in renewable energy

As Christmas approaches, I cannot think too many landlords will be wanting to send Jacinda Ardern a Christmas Card. Many think that the Government is trying to force landlords out of the market. However, we need good landlords more than ever as what the last two years have demonstrated is that if you target landlords with extra compliance and cost, all you do is drive up rents and reduce the stock. This strategy has simply failed as twice as many families are now seeking emergency accommodation compared to when National was in power. Rents in some regions have gone up over 20% in two years and this is typically for a substandard product. Hammering landlords simply does not work. 

How will we get properties such as these in Dunedin to reduce their carbon footprint?

One idea we believe warrants exploring is subsidising landlords who invest in making housing more energy efficient. If landlords invest in solar panelling or double glazing, the Government could be able to offer them interest-free loans to get the work done. The landlord has to commit to renting the property for a minimum period of say seven to ten years to get the interest free loan and if they sell the property or move into it during that period, then they are charged interest on the loan. The benefits of this scheme are that landlords are committing long term to rent out their properties which give added security to the tenants. The other obvious benefits are that the property will be cheaper to run meaning that tenants will have the extra money in their pocket whilst the carbon footprint of the property is reduced.

As landlords can no longer offset losses on their rental property after the Government changes rules on negative gearing, this is an added sweetener and the savings the Government make on more tax will simply be reinvested in the interest-free loans. The property will increase in capital value whilst tenants will be healthier which means there will be further savings in medical bills and less of a strain on the system.

Focus on smart home devices to track consumption

One thing that the Healthy Homes standards have led to is the increase in companies conducting inspections in regards to what is required to meet the standards. One such company we had the pleasure of meeting was the Sustainability Trust in Wellington. This is a not for profit organisation committed to improving the quality of housing by making them more efficient. They are especially focused on the rental sector and their new tool for reporting on Healthy Homes is excellent. 

We will also see an increase in smart devices such as Tether which measures temperature, ambient light and Co2 emissions. Tapi with its artificial intelligence will make reporting and fixing maintenance issues more cost-effective and quicker. In short, it won’t be long before houses can talk and transmit messages to their Property Manager when there is an issue. Tenants will have devices that tell them how much power they are using in dollar value in real-time. All properties will be marketed with energy-efficient star ratings on them and if they fall below a certain star rating, then the landlord will be in breach of Landlord’s Responsibilities. All of this will help see houses run more efficiently leading to a reduction in the Carbon footprint.

Plant trees to offset emissions

This all sounds very exciting, but reducing every rental property in New Zealand to zero emissions is not going to happen soon. I struggle to see how it can happen by 2050 so what else can we do? 

David Faulkner talks to an audience of mainly Boomer landlords about the relevance of Greta Thunberg

Apparently, 10,000 KwH equates to approximately 7 metric tonnes of Carbon Dioxide emissions. With approximately 6 trees required per metric ton, that means the typical rental property will need about 40 trees to absorb the Co2 emissions. When I interviewed Ashley Giles and asked him what can we do to be Carbon neutral, I was half-joking when I suggested we just plant trees for every property we manage. I could tell by his response however that he was deadly serious when he said that this is exactly what we should be doing. 

His wife, Natalie in her LPMA presentation also made the suggestion that as an industry, wouldn’t it be a great initiative if we pulled resources together and started planting trees for every house we managed. A quick estimate would mean that we would have to plant about 10,000,000 trees to offset the Co2 emissions of 250,000 premises that the industry manages in New Zealand.

If however, we were able to work smarter and gradually reduce emission from say 10,000 KwH per annum down to say, 5,000 KwH within the next decade, then down to 2000 KwH by 2040, then we could be on our way to having a zero net gain in emissions through exciting initiatives such as tree planting to balance the effect of running a rental property. 

By this time, Millenials will be the landlords and they will understand the importance of providing an environmentally sustainable property to their consumers. Future tenants will simply demand it and the landlord will have a legal responsibility to provide it. Maybe, just maybe, Wendell are onto something. Every movement, every idea has to start somewhere and I firmly believe that to achieve great things, sitting in your comfort zone is not going to get you there. Many landlords currently will not buy into this, but when Greta Thunberg’s generation become landlords and enter the workforce, they certainly will.

Well done Wendell for starting the discussion, I’ll plant a tree or two to that!


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.