More Regulation: Not helping tenants
Every time there’s an issue in the rental market, regulation seems to be the answer to try and address the problem and ease concern that something is being done.
While ignoring some of the worst ‘slumlords’ in the country, most of us do aim to provide safe, healthy homes to tenants; however, we are at a cross roads. There are a lot of new rules and regulations coming in to the industry, mainly affecting property investors, such as the new smoke alarm requirements, minimum insulation standards, and the proposed meth testing. The amended Health & Safety Act has also had a big impact on the way we do business. These are all justified changes, but when we catch wind of more and more regulation, and more costs, we start to wonder that with current house prices as they are, why don’t I just sell it? It’s just getting too expensive to be in the rental property game.
You might think (sarcastically) ‘oh poor you – it’s tough being a property investor’ – but, this is having a terrible effect on the ability for people to be in affordable housing. Let me explain.
More regulation, more costs
Lately, meth contamination is proving a large problem for landlords and property investors, as well as unwary tenants, and now we’re starting to see regulation rear its head to be the solution to address this issue. My article on how we’re implementing meth testing, in the rental properties we manage, demonstrates the money that is being spent on this internally.
Another cost coming up is where the Health and Safety in Work Act will require that every property under management will need an asbestos register, if there is a risk that the property contains asbestos, from April 2018. To get this assessed, more money needs to be spent, regardless of the presence of Asbestos or not.
At the end of the day, this money needs to be recovered, so the cost of renting increases perhaps more than what is expected.
Then there’s Labour’s policy
On top of more regulation we also have Labour’s housing policy. If they form the next Government we’re likely to be unable to claim losses on rental properties in the future. So, the rents are likely to be driven up further to maintain the current returns on the investment. I’m not sure the Labour policy benefits anyone. Alternatively, with house prices as high as they are, selling the rental stock is an attractive option.
What’s the solution?
At the moment, we’re continuing to see more and more regulation being imposed on the industry, which is driving up costs, but instead we’d like to see that anyone in charge of managing a property, including private landlords, be mandated to be a member of an official association that has a formal complaints process. Like the real estate industry, where all agents need to be registered with the REAA.
This will allow for situations where property owners and tenants have concerns, to deal with problems through a formal process rather than the government regulating our every move.
I am currently a member of the IPMA (Independent Property Managers’ Association). They ensure members are following best practices, adhering to the RTA as well as following the Associations’ rules and Code of Ethics and Practice. They have a formal Complaints Process, and there are strict penalties for not adhering to rules and code of conduct.
I believe this is a way to put some accountability and governance around the industry without being overbearing and increasing costs. It may also weed out some of the ones giving property managers and investors a bad name.