Robert Whitaker is still smarting from a $500 bill he was handed – for basically nothing.

It was the letting fee charged on his rented Wellington home, when he signed up for the tenancy. He didn't even get a key cut in return for the payment, and the tenancy agreement was drafted on paper that still referred to long-gone government departments. The property manager would not even deliver the paperwork to him.

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Robert Whitaker said property managers were always working in the interest of the property owner.

"What's the tenant getting for the letting fee? Nothing."



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There are calls from landlords and property managers to regulate and tighten the standards of those who manage the country's rental properties. As the number of people in rented accommodation grows, Whitaker says it feels as though those managers have all the power.

Until 2008, property management was an activity for which a real estate licence was needed, overseen by the Real Estate Institute. But when the Real Estate Agents Act came into force, there was no longer a requirement for property managers to be licensed.

"What that's meant," Quinovic Thorndon property manager Kevin Edmunds said, "is that a lot of real estate agents who had rental property management companies have separated them off from their sales companies. It's also meant that other people could be in the industry and there has been a large number come in."

He has come across "horrendous" practices – managers giving prospective tenants the keys to properties to look through by themselves, "there's nothing to stop them going down to the locksmith and getting a key cut and coming back once the property's tenanted"; "inspections" conducted at 7am while the young female tenant was in the shower; and managers relying on written reports of property condition – not photos that would give a clearer picture of what damage was already there when a tenant moved in. Some skimped on inspections, he said, which could jeopardise landlord insurance cover.



He said there should be standards imposed across the industry and even private landlords should be licensed based on a simple test to determine whether they were aware of the law.



"Anyone can be a property manager, it's wrong," said David Faulkner, of property management consultancy firm Real iQ. "It should come under the Real Estate Agents Act. They're dealing with property the same as a real estate agent. Fifty per cent of the property stock is rented out and if you sell it you have got to be regulated but if you rent it you don't. It's a no-brainer. You should have to be qualified. You should have to have training every year."

The influx of new property managers had left people competing on fees, which lowered the quality of the service offered, he said.

SUPPLIED Kevin Edmunds: "We've had queues out the office door at times."

The Independent Property Managers Association represents the industry but membership is voluntary and president Karen Withers said it tended to attract only managers who were operating well, anyway. "There are always property managers that bring us into disrepute."

She agreed change was needed, whether it was licensing, certification or regulation. "There are wonderful property managers out there but you don't hear about them because they're getting on with their daily work."

Whitaker, who also works for tenants' rights group Renters United, said there was an imbalance because property managers were always working in the interest of the property owner. "Property managers as they stand at the moment have very little focus on providing a service to tenants."

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Most Wellington managers required tenants to sign one-year fixed term tenancies, which made it easy for rent to be increased every year. They were usually structured so they came up for renewal between January and March, at the time the market was busiest. "Everyone is looking for a place at the same time. It benefits property owners and managing companies because it maximises rental returns but it also means no security of tenure."

Faulkner said it was likely that properties with a property manager would have more regular rent reviews. "Private landlords can have a tenant they are happy with so they don't put the rent up. Sometimes you see a big gap between a company and private manager."

Whitaker said he had heard complaints from tenants that if they fell foul of a rental property manager, they could be blocked from other properties with that company. Faulkner said that was unlikely. "Property managers have quite a bit of sympathy. A lot of the issues are due to a lack of supply."

Edmunds listed a Thorndon apartment on Thursday evening. By Tuesday, when he returned to work after the Wellington Anniversary Day holiday, it had had 39 email inquiries, plus phone calls.

"That's not all that unusual for this time of year," he said. "We've had queues out the office door at times when people who can't find a property come in to see what we've got."

The new government has indicated an intention to do away with letting fees and review the Residential Tenancies Act. "I hope this will be one of the areas looked at," Whitaker said. "Letting fees are pretty egregious in my opinion. It's the landlord who gets the service, it's the landlord who should pay for it."

Faulkner believed the removal of letting fees would sink smaller property management firms.

Housing minister Phil Twyford said the government had no plans to regulate property managers under the Real Estate Agents Act.

"The Justice Ministry carried out a review of the regulation of property managers in 2009. It concluded there was no evidence that property managers should be further regulated. It found most disputes involving property managers were valued at less than $15,000 – the monetary limit for the Dispute Tribunal – and that property managers were already subject to a wide range of obligations under other laws, including contract law and the Fair Trading Act, which can be enforced through Disputes Tribunals and the courts.

"Since 2009 there has not been any substantial work into this question."