Real estate leader talks about rental property management

Not every operator/property manager can be said to have sound management practices, he says

By Mina Martin

07 Mar 2022

Peter Thompson, managing director of real estate agency Barfoot and Thompson, has spoken in support of rental property management regulation as it comes under government spotlight.

“I support in principle the plan the government announced earlier this month to regulate the residential property management sector,” Thompson said. “The larger real estate companies involved in property management already operate under self-imposed regulatory regimes, and although many other property management company have sound management practices, the same cannot be said for every operator.”

Thompson said anyone can set up a business as a “property manager” with limited or no experience, and that one probable reason why this area of real estate has been left unregulated for so long is that many landlords are, in effect, their own property managers.

Thompson also clarified that his “support on principle” is on “the basis that how effective the regime will be is dependent on the specifics, and at this exploratory stage there are limited details as to how it will operate.”

When the government released the discussion document, it was estimated that 58% of all rental properties were under owner management, Thompson said. He added that the paper clearly stated that owners and trusts who manage their own properties were excluded from the provisions.

“It will be interesting to see the eventual definition of ‘owner’ and whether this extends to cover family members and friends, who might undertake this task on a voluntary basis on behalf of owners who, for example, might go overseas,” Thompson said.

What this means, Thompson said, is that the rental market would be split into two classes of rentals: one which management will be governed by a professional regime, and the other under a more informal one.

“I must admit to being a little surprised that the discussion document appears to have a limited understanding of the number of entities engaged in property management,” he said. “The estimation given in the discussion paper ranges from a low of some 2,000 to a possible high of some 8,000. In many respects, it points to how little authorities know about how rental property management operates.”

One regulation Thompson is particularly keen to see imposed on all property management businesses is for the funds they handle on behalf of landlords to flow through audited trust funds.

“Regrettably, this is not a practice operated by all property management businesses currently and it leaves tenants, and landlord clients, extremely vulnerable,” he said. “I believe well-thought-through and enacted regulations have the potential to improve the quality of accommodation and service provided to tenants. It will also provide a pathway for smoothing relationships between landlords and tenants and, over time, potentially give government agencies a better understanding of the challenges the private sector faces in the provision of rented accommodation.”

Thompson said an interesting statistic included in the paper undermined the popular claim that property investors with multiple holdings distort sales and prices and are a key impediment to first-time buyers being able to enter the market.

According to the document, 78% of all landlords have only one rental property, 19% between two and five, and 3% have six or more.

“It is clear the ownership of investment property remains the domain of everyday people looking to provide for their future, and the management of more than half of all properties is undertaken by the owners themselves,” Thompson said. “Our own data supports this. We are the largest private property manager in the Auckland region and we managed some 18,000 properties. The vast majority of our clients have only one investment property.”