Renters get poor deal from property managers - Consumer NZ

Renters who deal with property managers are much more likely to live in mouldy, poorly heated homes than those who rent directly from landlords, Consumer NZ has found.

A survey of 1062 Consumer members has found that only 35 per cent of those renting through property managers rated their managers' service highly, compared with 54 per cent of those renting directly from landlords who rated their landlords' service highly.

"Tenants who rented through a property manager were much more likely to report their home lacked adequate heating and had mould that was hard to remove," the survey found.

Property managers took longer than landlords to make repairs. Forty-two per cent of tenants with property managers said they'd made requests for repairs but were kept waiting for a response.

Only 36 per cent of tenants with property managers were satisfied with the condition of their homes, compared with 51 per cent of those renting directly from landlords.

Homes managed by property managers were also on much shorter-term tenancies, with 54 per cent on leases of one year or less and only 1 per cent on leases longer than two years.

Andrew King says landlords who manage their properties directly have a more personal relationship with their tenants than property managers with large portfolios. Photo / File

Property Investors Federation executive officer Andrew King said he was surprised by the results but could understand them.

"Most owner-managers only own one or two rentals and can give quite a lot of personal care, and because they have a direct ownership they are more likely to care about what happens and care about the tenant," he said.

"There is probably much more of a personal relationship between them, and it may signal that some managers are potentially taking on too many tenancies."

King said property managers also introduced "more bureaucracy" and might need time to obtain a landlord's permission before spending money on repairs.

"Personally I think anyone who is earning their living as a property manager needs to have a reasonable amount of money that they get delegated authority to spend so that they don't waste time and can get things done."

King said property managers should have delegated authority to spend "at least $250" when required.

The survey found that 37 per cent of renters were renting through property managers, in line with what King said was the national ratio of "about a third".

Roughly equal numbers in the survey had fixed-term leases (41 per cent) and "periodic" tenancies with no fixed term (45 per cent).

King said most tenants preferred periodic tenancies.

"If you ask them what would you like, periodic or fixed-term tenancy, 99 per cent will say periodic," he said.

Shamubeel Eaqub advocates changing the standard rental agreement from one year to three years. Photo / File

The new Labour Government has proposed legislating to give tenants more security of tenure, but King said landlords would oppose a proposal by economist Shamubeel Eaqub to change the standard template for tenancy agreements on the Government's tenancy bond website from one year to three years.

"If it's a fixed term, then you can't increase the rent or issue a 90-day notice."

He said the average tenancy lasted two years and three months.

The survey found that 34 per cent of tenants had problems with pests infesting their homes, 29 per cent had insufficient heating or insulation, 28 per cent had doors or windows that don't close properly, 26 per cent had "mould that's difficult to remove or reappears" and the same 26 per cent had water leaks.

Smaller numbers reported faulty appliances (17 per cent) and locks (14 per cent).

Asked why they were renting, 64 per cent said the main reason was because they couldn't afford to buy a house.

Only a minority were renting by choice: 26 per cent said "it suits my lifestyle right now", 5 per cent said "I like the flexibility of renting" and 5 per cent said "it's cheaper than paying a mortgage".

Nearly one in four reported their landlord would turn up unannounced, a breach of tenancy legislation. Eight per cent said they'd been charged unexpected fees during the tenancy and 6 per cent hadn't been given required notice of a rent increase.

Consumer NZ's report calls for four changes: regulating property managers, limiting the circumstances in which landlords can end tenancies without cause, blacklisting "unfair terms and fees", and creating a tenants' advocacy service.

Labour's election policy promised to abolish no-cause terminations of tenancies, ban letting fees, abolish all 42-day notice periods (currently allowed in limited cases), and limit rent increases to once a year, with a formula for increases included in tenancy agreements.

King said he saw no need to regulate property managers, but he agreed that "improving security of tenure" would benefit both tenants and landlords. He has called a meeting with three tenants' groups next Tuesday to discuss the best way to achieve this.

Housing and Urban Development Minister Phil Twyford. Photo / File

Housing and Urban Development Minister Phil Twyford said while the Government is working to restore the Kiwi dream of home ownership, it is committed to making life better for renters.

"We are modernising the law to ensure rental houses are warm and dry, and to make renting more stable and secure. This reflects the fact that renting has become a life-long reality for many families," he said.

"Last December we passed legislation to enable healthy homes standards to be set for rental properties and we recently introduced legislation to ban letting fees from being charged to tenants, which will help reduce the price barrier some people face when securing a rental home.

"We are also reviewing the Residential Tenancies Act, to improve the overall standard of behaviour in the renting environment, and ensure there are appropriate protections in place for both tenants and landlords. It will also look at quality standards for boarding houses."

Twyford said he welcomed the Consumer NZ research and recommendations in this area.

"Landlords, tenants, property management companies and other interested parties such as Consumer NZ will have the chance to provide feedback on the Residential Tenancies Act reforms before legislation is introduced to Parliament.

"The information received from this consultation will ensure the Residential Tenancies Act strikes an appropriate balance between tenants and landlords in the modern renting environment," he said.