Dame Rosanne Meo is the Chairperson of the Real Estate Institute of New Zealand and she is worried: while real estate agents are under the law’s thumb, most property managers are not, and she – and many others – believes that needs to change, to deal with some serious issues.
Along with others, Dame Rosanne has been lobbying to get the law changed because, although property managers within a licensed agency are regulated under the Real Estate Agents Act, those outside are not.
A major issue of concern is that there is no legal requirement on property managers to hold client monies in a trust account. This means that monies could be held in a mortgage account and interest paid could off-set interest payable on the property manager’s mortgage. What would be the resulting fallout for landlords and tenants in the event of a business failure?
However, at this stage, the Government is satisfied that problems experienced by property owners, who use property management services that are not regulated, do not give rise to a sufficient risk of significant harm to justify regulatory intervention.
Dame Rosanne’s, and a significant group legal and business groups, concerns include lack of regulation for trust account money, inadequate or no professional indemnity insurance, no screening for property managers and no dispute resolution process.
As Anne Gibson, reporter for the New Zealand Herald pointed out, property managers oversee properties worth an estimated $40 billion dollars and administer an estimated $2 billion dollars of funds annually. Central to the concerns of Dame Rosanne and others is the fear about the safety of funds under management and the question of who’s managing the largely unregulated residential property managers.
Even Tenancy Tribunal adjudicators have expressed concern about property owners’ lack of redress to an official authority.
The concerns and questions will continue while the sector remains as unregulated as it is today. Many of us property management companies are licensed real estate agents, and therefore governed by the Real Estate Agents Act. We report fully to our Auditors on a monthly basis and get fully auditored three times a year. We feel we are taking every precaution available to us to protect our clients interests. We hate to think of peoples funds being unprotected and recall vividly the demise of a number of financial institutions that fell over during the last decade.
As we said before, the arguments will continue until perhaps, there is a situation where the public is “significantly harmed”.