Renter advocates want private landlords regulated under new bill targeting property managers

A bill that would see property managers subject to disciplinary action if they fail to keep a rental property in a habitable condition was tabled last year, but private landlords, who own 85 per cent of the country’s rental stock, wouldn’t fall under its jurisdiction. Now renter advocates and property investors say it’s time private landlords were regulated. Open Justice reporter Jeremy Wilkinson investigates.

A leaking toilet, mould everywhere, broken windows and a leaking roof that caused the ceiling to collapse were the conditions an elderly man spent the last few weeks of his life living in.

The rental home was in such “dreadful” condition that the Tenancy Tribunal found it had ultimately contributed to the man’s untimely death.

If a realtor had failed to disclose any of those issues to a potential buyer then they would have been hauled before a disciplinary tribunal to explain themselves, as would a lawyer who deposited the money to buy the house into the wrong trust account.

Either of those people in those professions could face strike off, censure and probably a fine.

A Wellington flat managed by property management agency Quinovic that was rented multiple years despite not being compliant with healthy homes regulations.

We already have tribunals and professional disciplinary bodies for everything from teachers, to vets, motor vehicle traders, builders, immigration advisers, health practitioners and even one for whip-heavy jockeys.

Rental advocates and even some property investors are now wanting a quasi-judicial tribunal that deals with landlords and property managers with the power to bar them from managing properties if they’re found to have neglected their duties in the past.

While New Zealand already has the Tenancy Tribunal which enables renters to effectively sue their landlords for poor living conditions, it can’t stop repeat offenders with multiple properties taking advantage of constrained rental housing stock, particularly in student hot spots like Dunedin and Wellington, over and over again and simply absorbing the fines handed to them.

Tenant advocacy outfit Renters United has been wanting a disciplinary tribunal for negligent landlords for years.

“At the moment there’s no way under the Residential Tenancies Act to stop someone from being a landlord or holding them accountable for their conduct,” its president Geordie Rogers says.

In 2022 Labour proposed a tribunal that would govern property managers, but not private landlords who own up to 85 per cent of the country’s 600,000 rental properties.

Renters United president Geordie Rogers says landlords and property managers need to be regulated. Photo / Renters United

Rogers says it was a step in the right direction but didn’t go far enough and he wanted to see landlords also liable for disciplinary action.

“This is an industry that does kill people and frankly the response is very lacklustre,” he says.

“It’s a shame that the Government doesn’t take that view and thinks that landlords at the moment are adequately regulated.”

Rogers said in the Tenancy Tribunal case in Dunedin earlier this year an elderly man died in a “disgusting” house that ultimately contributed to his death and the landlord was handed only a $14,000 fine.

“Their life was literally shortened by the actions of that landlord because he provided a place to live that the Tenancy Tribunal ruled was not a home.

“That’s just a pitiful punishment.”

Rogers says this was a textbook case where a landlord should have been effectively barred from managing his own rentals but there have been numerous examples over the years of people who are simply unfit to be managing people, their money as well as their health and wellbeing.

One of those was Auckland landlord Scott Lovell whose converted garage had bugs crawling on the walls, sockets that would catch fire, no smoke alarms and mould on the walls, ceiling and carpets.

Property managers who fail to keep a rental property in a clean, dry and healthy homes compliant property could be hauled before a proposed disciplinary tribunal. Photo / File

It was a rental in such poor condition that Tenancy Tribunal adjudicator Jane Northwood described it as “most serious I have seen” and awarded the tenant $22,000 which was half the rent she had paid in two years as well as $7200 in compensation.

Regulation

The Residential Property Managers Bill was introduced to Parliament in August and sent to Select Committee in October 2023. It establishes minimum requirements for residential property managers who represent some 42 per cent of the country’s rental stock on behalf of owners and number somewhere between two to seven thousand.

However, the regime excludes private landlords, Kainga Ora and community housing providers. In the proposed bill the Real Estate Authority (REA) - which currently investigates instances of realtor misconduct - would take up the mantle of regulator for property managers as well.

The REA would form a register of property managers - the same as every other professional body in the country has already - and would issue licenses to those who met a minimum criteria of entry and bind them to a code of ethics.

There have been vigilante efforts to collate information about landlords recently that were ultimately shut down by the Privacy Commissioner but the only indicator of the number of landlords in the country is the Bond Office which holds tenants’ bond money until the end of their tenancy, however there’s no legal requirement for a landlord to actually charge a bond.

If the new code of ethics was breached it could be investigated by the REA initially and then referred up to the Real Estate Agents Disciplinary Tribunal - which is overseen by the Ministry of Justice - if the conduct is more serious.

But the chair of the Residential Property Managers Association of New Zealand (RPMA) isn’t convinced it’s going to work and said as much on behalf of his organisation in submissions against the bill.

David Pearse, Residential Property Managers Association of New Zealand president. Photo / File

“The proposal to give the regulation over to the REA makes us cringe,” David Pearse says, noting that his organisation would be in favour of a new entity being formed as he doesn’t feel the authority is equipped to deal with the pressures of assuming responsibility of perhaps 7000 new members.

Pearse does support aspects of the bill like having a code of ethics and a qualification for property managers and notes that the RPMA already has a code for its 100 or so members.

“I think having a constitution is an integral part of having a property management profession,” he says.

“There’s a lot of cowboys out there….We’ve just found that there’s a lot of them that simply don’t know what they’re doing.”

Pearse says there’s a high turnover in the industry as it stands and property managers receive little training and manage up to 300 homes - meaning on average they can only spend five hours on each property per year, if that.

In an ideal world he says New Zealand would model itself after the Welsh who imposed a system where property managers and landlords have to relinquish their management duties if they’re found breaching the code three times.

The proposed bill does have a similar clause that would amend the terms of the Residential Tenancies Act to allow the Tenancy Tribunal to order a private landlord to employ a property manager if they’re found to be unfit to manage their own properties and have committed an unlawful act twice in five years by failing to keep their rental safe, clean, dry and compliant with the healthy homes regulations.

The Property Investors Federation is the only organisation that represents private landlords and submitted largely in favour of the bill as it stands.

However, its vice president Peter Lewis said it wasn’t in favour of making private landlords subject to the same potential disciplinary action as property managers would be under the proposed legislation.

“We support the bill as it currently stands on the basis that property managers handle money for other people and should be regulated,” Lewis said.

“However, regulation isn’t enough to stop breaches… we have tribunals for teachers and lawyers and every other week one of them seems to have been hauled before a tribunal for some kind of offence.”

The main thrust of the Federation’s submission was that attempting to subject private landlords to disciplinary action would simply drive many of them underground and ultimately the cost of managing such a tribunal would be passed on to the renters themselves.

“It’s not going to achieve anything,” he said.

Auckland Property Investors' Association vice-president Peter Lewis. Photo / Michael Craig

Instead, he says that private landlords should sign up to the Federation which provides free training resources about how to manage a rental property as well as advice to its members.

Currently they have over 3500 landlords on their books, who own a combined 25,000 properties between them.

Otago University housing researcher Dr Lucy Telfar-Barnard said that not including private landlords in the proposed disciplinary measures was a missed opportunity.

“Regulating property managers is a good first step because they’re the middlemen for potentially a lot of money, but in my view private landlords need to adhere to the same standards,” Telfar-Barnard said.

Telfar-Barnard said that if they want to be seen as legitimate businesses then it wasn’t too much to ask they be subject to the same kinds of standards any other profession is held to.

At the very least she wants to see a register for landlords, something which is currently lacking in New Zealand.

Resercher Dr Lucy Telfar-Barnard says a register of landlords would help with policy setting.

“It would at least give us a better picture of the rental property market in New Zealand and allow us to better set policy,” she said.

“At the moment it’s anyone’s guess who owns what and how many they have.

“And there’s a lot of them who simply don’t know what they’re doing.”

As for the two-strike policy she sees it as a fair middle ground and was better than not having it in the bill at all and hoped it wouldn’t be added to the policy bonfire National started within its first week in office.

National campaigned against a range of policies that Labour had introduced in what its leader Christopher Luxon called “the war on landlords” and has promised to repeal a series of renter-friendly policies like banning no-cause evictions and introducing rules that allowed fixed-term tenancies to roll into periodic tenancies.

Incoming housing minister Chris Bishop said in a statement to NZME that National supported the Residential Property Managers Bill at its first reading and campaigned on making sensible changes to our tenancy laws to incentivise landlords into the market.

“The Coalition Government is currently reviewing all legislation before the House at the dissolution of the 53rd Parliament,” he said.

“Ministers will make decisions on whether to continue pursuing previous Government legislation in due course.”

Jeremy Wilkinson is an Open Justice reporter based in Manawatū covering courts and justice issues with an interest in tribunals. He has been a journalist for nearly a decade and has worked for NZME since 2022.