Rent Week 2018: Property managers. Two words to make the blood run cold, whether you are a tenant or a landlord. Rebecca Stevenson weighs up the data and anecdotal evidence, and her ruling is final: property managers suck.
Hear me out. I’ve been on both sides; yes, I have been a landlord (pretty much by accident) and I was not rolling around in piles of cash and chuckling while I hit refresh on online banking. It was actually hell – and my experiences as a tenant under the reign of property managers were not much better. That’s why today I firmly believe property managers are shit, for both tenants and landlords (don’t not all landlords me). These are my top three reasons why:
They’re money hungry
Property managers are so good at extracting cash from both tenants and property owners, anyone would think they are in this for themselves. I’ve done a fair bit of scanning the internet over the past few days and it appears property managers charge about 6-10% (PLUS GST OF COURSE) on all money collected or paid out on behalf of a property owner. That can be rent or repairs or any money that is handled by the manager in the course of looking after the property.
Some property managers will even add an eye-watering 15% fee (again, plus GST) to handle the Watercare bill. Water. Bill. 15%. Plus GST. That is not outrageous at all!
Or hey, how about paying a 10% administration fee for a lightbulb to be replaced? So while you are paying your ridiculously high rent and cursing your landlord take this comfort – they are paying through the nose every time you need a plumber (if they have a property manager) and even just when you pay your rent.
Stuck in a bidding war for a rental? A property manager could be to blame. Some property management companies brag about inducing bidding wars, like this one. The lovely folk at Walker Weir Property Management will take it from here: “We leverage the best aspects of your property and create competition among tenants to push the rental rates higher. Your rental rates directly impact the value of your asset because renting it for more means it’s worth more.”
How does it work, you ask? “Properties are advertised for rent with a ‘price guide’, not a set price. Prospective tenants then lodge a tender for the amount of rent they are willing to pay more often than not above the price guide. We then balance the quality of tenant with the highest offers for the property when setting up a tenancy. This method of renting properties makes under renting a property a thing of the past. Walker Weir Property Management is the only company (that we know of) to rent properties this way.”
And of course, any increase in rent means an increased slice for the property manager.
But rental bidding is not just good for landlords – property managers are always looking out for both sides. Walker Weir again: “Tenants can get the property they want and secure it immediately with the right bid. Tenants don’t have to waste time visiting other properties and filling out numerous applications; they can act immediately on the house they want. Tenants drive the value of the property, establishing the amount that they’re willing to pay.” Yay!
Oh, then there are letting fees. Need I say more.
Your money is not as safe as houses
Because property managers are not regulated (no police checks, no code of conduct, no body overseeing whether property managers are doing a good, bad or horrible job) they also don’t have to keep your money as safe as lawyers, for example, because there are no rules about it.
Luckily, we can just trust our property managers not to steal a tenant’s rent or a landlord’s income. Well, except for this property manager, or this property manager or this property manager. Or heck, what about this guy from this week who it is alleged owes 67 landlords in West Auckland more than $350,000.
Again, tenants have been equally well served by this gentleman, with 12 bond payments from tenants not lodged with the bond centre. And we only know about these ones because they were also licensed real estate agents, but I am sure there is nothing for us to worry about, at all.
What does Consumer NZ say about them? Well, they have had concerns since at least 2011. Head of research Jessica Wilson said via email: “Owners and tenants need to have confidence property managers are fit to do the job. The current unregulated market isn’t providing any reassurance this is the case. We can’t see why property managers have escaped regulation when related trades haven’t. At a minimum, we’d like to see mandatory registration requirements, backed up by professional standards and an effective disputes system.”
And a warning from the watchdog: If you use a property management company, be on your guard. There are few safeguards to fall back on if things go wrong.
Service levels, um, vary
Some of them really, really do suck. And I went through a few in the past five years, both as a tenant and again, as a landlord (sorry). There was the property manager who forgot to take photos before the new tenants moved in (so when they moved out and damaged the place we couldn’t do anything), or the property manager that did regular inspections (mm hmm) but had no idea an additional mum, dad, and aunty had been moved in, in breach of the agreement.
Or, this time as a tenant myself, there was the one who tried to bully me into paying to have the carpet commercially cleaned in our earthquake-damaged rental, yet didn’t make the owner vacuum up the dog hair (or pick up the dog shit) everywhere before we moved in. Oh, and there was the time they didn’t do the final inspection until a week after we’d left and then the property manager tried to charge me for landscaping.
And there was the time one of our tenants developed a bit of a hoarder situation. Again, even though we were paying for inspections we had no idea until he’d scarpered. And there were so, so many other things, but I have tried to put it all behind me because being that angry is not healthy for a person. Suffice to say, I am no longer a landlord.
But don’t just take my word for it. Look around, listen. If you know someone, or even just follow someone on social media who lives in a rental property with a manager in situ they probably have their own tales of woe and anguish to tell. What could we do about this suckiness? There are some voluntary membership organisations attempting to pull up standards. A property management company might also belong to REINZ which at least has a code of conduct (you can also find accredited managers through these sites).
We also do have the REA (The Real Estate Authority) dealing with wayward licensed real estate agents/property managers. The agency says it received 13 complaints about property managers between 1 July 2016 – 30 June 2017, and 364 enquiries about property managers during the same period. Of the enquiries, about 140 were from landlords and 140 from tenants. “Generally, we’ll receive an enquiry because they had an issue with a property manager. Most are referred to tenancy services, or to their lawyer. Occasionally it will be something we can look into and our early resolution team will discuss the complaint process with the person,” spokesperson Lucy Corry says.
But despite pressure from some bigwigs like Dame Roseanne Meo (chairwoman of the Real Estate Institute of New Zealand) nothing has happened, at all, in terms of addressing professionalism in the industry other than relying on the Tenancy Tribunal or Disputes Tribunal. Dame Meo’s concerns include: lack of regulation for trust account money, inadequate or no professional indemnity insurance, no screening for property managers and no dispute resolution processes.
We don’t really know how much of an issue it is because we are not measuring it. But I am sure she’ll be right. Eh.
The Spinoff’s business content is brought to you by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.
Check out how Kiwibank can help your business take the next step.