Review of the NZ Real Estate Agents Act

The justice department is carrying out a review of the NZ Real Estate Agents Act.
The REINZ is keen to gain a monopoly of property management business in NZ. They currently have about 16% of the business. They hope to do this by getting rid of Private Property Managers like me. Here is a copy of my submission re this review.
My wife and I operate a private property management business. We have been managing other people’s properties for 12 years. I have sat and passed the Real Estate Sales persons Certificate and was engaged in selling residential property in 1993 and 1994. My wife is a qualified and licensed Accounting Technician. We own residential, commercial retail, industrial and warehousing rental properties all of which are located in Nelson. We currently manage approximately 100 tenancies. We use industry standard Vision property management software. Our business has grown by word of mouth since leaving the real estate sales position. By far the bulk of our clients have had their properties managed by Real Estate firms in the past, and wish to have an alternative hands on approach to management. Because we are property investors ourselves many of our clients feel that we understand their position better than other suppliers of property management services. Initially many of the properties we manage were of lower quality, the type that attracts very difficult high risk tenants. Most of my REI property manager collegues were more than pleased to give me these properties to manage.

My brief experience in real estate selling has been of immense help in conducting my business and I am in no way anti the current real estate industry nor their operations.
My business has a good relationship with all members of the REI in Nelson. I regularly pass on listings to REI members and share tenant details with all other property managers. Your attention is drawn to the MOH response to the REINZ president’s news releases concerning private property managers. Nigel Bickel the National Manager Tenancy Services Ministry of Housing states “the Ministry has no position on the issue of licensed v unlicenced property managers and our only comment on this matter to date has been to state that the Ministry has come across issues generally with both groups”

In reference to the paper produced by the Ministry of Justice I make the following comments.
Part A
A market share of 90% of all residential property sales is claimed by the REI. But no comparative percentage is given for the management of residential rental properties. Perhaps this figure is left out because of the embarrassingly low market share that they enjoy. For instance in Nelson REI members management not more than 1000 tenancies. The last census recorded that there were 6000 rental properties in Nelson urban area. This would indicate that REI members enjoy a market share of around 16%. The balance of the market is clearly handled by owners themselves or by private property managers.
These comparative market share percentages speak for themselves. The Public of New Zealand accept and respect the skills of the Real Estate industry in their ability to efficiently and expertly arrange for the sale of residential, rural, and commercial property.
However a completely different view is held of their skills of managing residential rental properties. The market has voted already and taken their business elsewhere. And as for management of commercial property. They do not even make a mention of their activity in this area.

Part B
Section 3.1.1 Reference is made to the Residential Tenancies Act. The Ministry of Housing administers this act. The MOH are charged by the Government to control the industry. Provision is made in the RTA to licence Accommodation Brokers although the ministry has never issued the regulations that the RTA specifies concerning this industry. If the Government considers that more control is needed of property managers then this would be best carried out by the MOH through the RTA. This then would ensure a consistent standard is achieved through out the industry. Your attention is drawn to one of the proposed amendments to the RTA currently waiting to be approved by the Government. Section 17 (4) (c) “concerning the special privaledge that Real Estate agents enjoy permitting them charge tenants a letting fee” is being rescinded. There has to be a good reason why this amendment is being made.
I note a considerable amount of ignorance in the market by both tenants and property manangers re what is permissable concerning letting and finders fees.
B 4.1
The current act requires people engaged in the business of property management in a Real Estate firm to have a sales persons certificate. This is the same qualification, as a sales person needs. The RTA component in this certificate is comparatively small and no space at all is given to property management. There is no requirement for property managers to sit the REI property manager’s qualifications.
C 2.1 (page 20)
The REINZ argues that there are no compulsory qualifications for Private Property Managers. Well neither are there any compulsory qualifications for REI members to be qualified in property management. Neither the actual property managers nor the Principles nor the Managers of the firms operating Residential Property Management services are required to have any more than a sales persons certificate with respect to property management. Mention is made in page 20 by the REINZ that “in recent years most cases of theft by licensed real estate agents have related to property management.” Perhaps this is brought about by the lack of adequate training, qualifications, and knowledge that principles of Real Estate firms have and that perhaps they leave the operation of their Property Management divisions to their unqualified and uncertified property managers. There is currently no requirment to carry out credit nor police checks on staff / private contractors engaged by Real Estate firms to conduct their property management business.
C 4.1.2
Requirements for Real Estate Agents. (b) Qualifications (page 31)
Only one of the 6 options offered is required to become qualified. If for instance the “Residential Sales” is chosen then “Residential Management” is likely to be missed out.
The comment that “the public can assume licensed agents have enough knowledge” is not true because so few REA’s have the necessary qualifications to adequately supervise their Property Management Division – there are after all being no legal requirements to be qualified in the business in which they are engaged, this being the National Certificate in Real Estate specialist option Property Management.