The new government has clearly signalled we are about to see changes in residential tenancy legislation which are designed to improve the lives of those who rent residential properties. This includes banning the letting fees that are paid by tenants, but there is still very little legislative protection for those people who actually own rental properties.
This lack of protection was evident recently when the NZ Herald reported that the company owned and run by Auckland property manager David Sharma, operating under the branding of Ray White Henderson, owed 67 landlords more than $350,000 in unpaid rents. The number of landlords owed money by Sharma has since increased and is now confirmed as being 72 and growing. The liquidators report that most of the rental payments owed to rental property owners dated to January and February of this year, and there were no company assets available for immediate recovery. The company’s bank accounts were also overdrawn, making the chances of any of these owners seeing their overdue rental monies anytime soon, pretty much nonexistent.
So how was this allowed to happen? Aren’t there legislation and rules to prevent these sorts of things from occurring?
Unfortunately, the answer is ‘no’. Up until 2008, property management was an activity for which a real estate licence was required, and the industry was overseen by the Real Estate Institute, however, when the Real Estates Agents Act came into effect, there was no longer a mandatory requirement for property managers to be licensed. This very low barrier for entry meant that a lot of new people were able to come in to the industry, cutting corners and service delivery.
Why weren’t the rental monies at least being deposited into a trust account?
Again, because it’s not mandatory for property managers to operate one. But it is a question every rental property owner should ask their property managers, as it’s not just the smaller players who don’t run trust accounts for rental monies. Sharma is a good example of this, as although his business traded as Property Management Out West Ltd, it was under the branding of Ray White Henderson.
At Quinovic Property Management, we view a trust account as imperative to protecting our owners’ money and the integrity of our property management services. All our rental monies come into a centralised trust account from where they are disbursed directly and automatically to our rental property owners. This system means that no rental monies are received or controlled by our individual branches.
At Quinovic Parnell and Quinovic Viaduct, we assist rental property owners to put into place plans and strategies that ensure their property investment is not just professionally managed to the highest standard, but we can also give you peace of mind, knowing that your rental income is protected.