One of the greatest challenges we face currently as an industry is coping with cadence of change, and the reality of the amendments to the Residential Tenancies Act.
You talk to any passionate Property Manager or agency, and they will be the first to support any amendment that brings greater stability and safety to the rental market. As an industry, we are desperate for regulation and governance.
However, with all this change, often the area that is overlooked is the impact of all of this change on the property manager. Never has the property management industry been under so much pressure. And the pressure has an impact on all parties; owners, tenants, tradespeople and property management personnel.
There are changes in legislation, new levels of compliance, an increased expectation of training and knowledge of the Building ACT, added costs, supply and demand issues, reduced rental pool, pressure from the media, staff burnout, influences on the bottom line and an increased turnover of investors.
The pressure is coming from everywhere. It is an industry that is captured within all of the components of Real Estate. However, with that comes significant misconceptions and a lack of understanding of the reality of working in the rental market. We are not like sales where commission is tens of thousands of dollars, and it is not a short-term relationship with vendors or purchasers.
Property Management businesses often struggle to make a profit, we enter long-term working relationships with owners and tenants that need to be nurtured over years, and often require our property managers to deal with situations that no level of remuneration could justify. With a diminishing rental pool comes a supply and demand issue that, historically, only the major city centres have seen.
For the current year to date, compared to the same period last year, we have seen a reduction of almost 10% in the number of bonds lodged. This is influenced by the number of investors exiting the market and properties selling to owner-occupiers. It is also evidence that the average tenancy term has increased.
Across provincial New Zealand, the average tenant now stays in the property for 24.4 months.
When you consider the implications of this; it means a reduced turnover of rental properties and a reduction of the rental pool. This, in turn, leads to over-crowding of properties, people sleeping in illegal dwellings, people living in areas of a property that don’t necessarily have smoke alarms, or that might meet the HHS requirements. It also can create stress for all the key stakeholders, namely tenants, landlords, and property managers.
This is a new environment across provincial New Zealand, and the challenges are exacerbated significantly in smaller communities. In smaller provincial towns, everyone knows everyone; there is no hiding. It creates a necessity to have a solid understanding of both the owner and tenants’ expectations, and it is not just a matter of doing our jobs well, it is also a matter of safety. In the current climate, we are confronted with some situations where, at times, individual actions become one of desperation.
When you factor in families, money, safety, livelihoods, homes, ROI, and other people’s actions, it can be a recipe for unpredictable and potentially dangerous situations for property managers.
Looking at a recent example; a property manager was put in a position where the tenant became involved with gangs and Methamphetamine. Unbeknown to the Property Manager, or any agent working in the office (which had also been appraised by a sales agent to sell) the property was visited by the Police over 40 times over a matter of a couple of months. Due to Privacy, the Police did not inform the property manager, and by going to the property to conduct a routine inspection, they unwillingly subjected themselves to an extremely volatile environment.
In this instance, the proposed revision of the 90-day clause to terminate a tenancy would have failed. One of the options is if; the tenant has had to be issued with notices of anti-social behaviour on three separate occasions within a 90-day period AND the landlord has applied to the tenancy tribunal to end the tenancy. The question really is; why were we not told considering it was known that we managed the property?
Neighbours do not want to subject themselves to this sort of behaviour any more than a property manager does.
By submitting a written complaint about a tenant’s behaviour; the neighbour is potentially putting themselves in danger. They simply will not do it. Therefore; what happens if the tenant is paying the rent and we cannot gather evidence to support anti-social behaviour?
The owner may have to sell the property, and with that comes a further reduction of the rental pool. Everyone loses here. No one should be subjected to conditions where they feel unsafe, and with further proposed amendments to the ACT, companies need to look carefully at internal policies to mitigate exposure to risk for their team members. A successful investment and property management experience starts with selecting the right tenant.
And the vast majority of tenants are great. It is only in rare instances where an agency needs to be able to exercise a 90-day notice. Across the industry, professional agencies generally only do this to protect the asset or it is a matter of long-term safety. Agencies must conform with the Privacy Guidelines released in 2019; however, once a suitable tenant has been selected, often agencies need to think outside of the box to fully understand who the prospective tenant is.
In many cases, this process is straightforward but not always.
The mandatory steps are still required, but at times these processes do not present a complete picture. Taking a rudimentary approach may not be sufficient anymore as property management has a habit of becoming personal and potentially dangerous. In the interest of safety, in addition to the usual steps, do agencies need to be more subjective when selecting a tenant?
Further to tenant selection; there are other good solutions for property manager safety. Property Brokers now require Property Managers to wear a Safelet when going to a property. This option has multiple features that can significantly improve personal safety.
However, other simple options mitigate dangerous situations such as;
- Go with another agent/colleague
- If you are going to an area with no reception or data, have a scheduled check-in time set with the branch administrator
- If you feel as though something is off – don’t go
- Listen to your gut. More than likely, it is right
The industry is undergoing a huge transformation, but this should never come at the expense of anyone’s safety.
This is an industry we are passionate about, and it is an industry that is hugely rewarding and satisfying. In most cases, relationships with both landlords and tenants are healthy and enduring, but not always. There are proven ways to keep safe, and as changes come to fruition; we need to adapt, and continue to provide homes for our tenants, and successful investments for our owners.