Should Property Management Companies be Regulated?

Quality Rental Management (QRM) belongs to two professional associations. PROMINZ (Property Managers Institute of New Zealand) and LPMA (Leading Property Managers Association). Both of these are very reputable organisations. To be able to become a member of PROMINZ, Company Directors are subjected to some strict checking, this includes police checks, credit checks, business and personal reference checks. There are also some strict rules to remain a member.

There has been discussion this week about regulations. Unfortunately what we are personally experiencing is some landlords who privately manage their own properties, break the rules. Some deliberately and others simply because they are unaware of changes that have been made (especially in recent times).

The Real Estate Association is inviting people with negative stories about property management to contact them to share their story. They believe that way they will have support for regulating the industry. We would suggest, to have a balanced view on what is happening and has happened, going to view Tenancy Tribunal Orders online will show a more balanced view. The decisions you see there have been legally proven. The risk of inviting people to share their negative stories, is that they would simply be ‘stories’ – not proven and totally unbalanced.

We believe the result of compulsory regulation will be increased property management fees. An example of private competition is, when we purchased properties in Invercargill there were only Real Estate Companies providing property management services, with this came a management fee (that they all charged) of 10% + GST + inspection and maintenance fees. This was very expensive, it was only when a private property management company entered the region that everyone needed to become more competitive and fees dropped (just about overnight) to 8%. We believe the same thing will happen with compulsory regulation – the good competition may be forced out of the industry as there will be additional compulsory fees for Property Management companies to pay and these will be passed on to landlords which in turn will once again increase rents for tenants (unnecessarily).

For these reasons, if given the opportunity to comment on this please look at the big picture and how it would affect you.