The national landlord membership and lobby group, the Property Investors Federation, has released a guide which it wants members to show to tenants.

Federation vice-president Andrew King said most members were already following the code.

“There’s nothing to stop members breaking it. We don’t have any powers over them – that’s the job of the Tenancy Tribunal and the courts. If we are aware of them not getting things right, then by keeping them as members we have a better chance of stopping them from getting into trouble.

“The code isn’t to regulate them, it’s to inspire professional and profitable behaviour and keep out of trouble.”

Helen Gatonyi, manager of the Tenants Protection Association in Christchurch, praised the code and said all landlords should adopt it.

“Anything that helps the relationship between landlord and tenant or educates both parties has to be a good thing.”

The rules demand that landlords treat tenants with respect, in a businesslike manner.

“A rental property should be treated as the tenant’s home and regard will be given for the tenant’s peace, comfort and privacy,” the code says.

“Members should be aware of what government assistance may be available to their tenants in relation to their tenancy, and assist them if requested. Dishonesty, deception or misrepresentation shall not be used in any activities involving members’ property business activities.

“When asked to supply a reference for a tenant, members will supply true and accurate information in order to assist the tenant and fellow rental property providers.

“Members will provide the premises in a high state of cleanliness at the start of each tenancy and act promptly to investigate and remedy any reasonable request by a tenant, maintaining the premises in a comfortably liveable standard consistent with the age and character of the premises.

“Members will monitor the rental market and take a responsible approach to setting rental prices by considering market rent levels and any other specific or unique conditions of the property.

The code also bans any discrimination.

“In advertising and tenant selection, members will choose the most appropriate applicant and will not discriminate against anyone on the basis of gender, marital status, religious belief, ethnicity, disability -physical or psychiatric- illness, age, political opinion, employment status, family status, or sexual orientation.”

A tenant’s right to privacy is demanded.

“Credit histories will not be obtained without the prospective tenant’s written authority,” the new rules say.

The code demands community responsibility. “Members shall have regard to the neighbours of their rental properties and will take all reasonable steps available to them to protect neighbours’ peace, comfort and privacy from the member’s tenants.”

FLAT FACTS

• More than 1 million Kiwis rent.
• They are in 464,000 rental properties.
• Auckland weekly rents average $384.

This adds to the grim outlook portrayed in property mortgage insurer PMI’s mid-year report, released on Thursday, and Quotable Value’s monthly report, which is out tomorrow.

QV’s Blue Hancock said house prices were declining on a month-to-month basis, although annual figures had not quite caught up.

The PMI report said New Zealand house sales had hit a 10-year low and house prices could drop as much as 10 per cent over the coming year.

But King said more activity and good bargains were coming.

“If people have to sell because they have over-borrowed, or have invested but didn’t know what they were doing, you could see prices fall.”

Hancock said QV had noticed vendors pulling away from tender and auctions in recent months, and listing homes with words such as “desperate to sell” and “mortgagee sale”, attracting bargain-hunters and low offers.

“The advice is: be very careful on how you instruct your agent to market the property,” he said.

“It might not be in your best interest to put in ‘all offers accepted’ or ‘mortgagee sale’ or ‘vendor desperate to sell’ phrases.”

Martin Evans, president of the Property Investors’ Federation, said a greater number of lower-priced properties would come on the market about September or October when a lot of two-year mortgages came up for renewal.

People who bought properties in the past two years that were not returning a high-enough yield would soon be looking to sell, he said.

On the other hand, Hancock said a cut in interest rates and the official cash rate could come sooner than expected and it that would be interesting to see what happened when mortgages were renewed in September.

“If the interest rate reduces we may see a reinvigoration of what’s happening in the market place or a stabilising of it.”

Prices also depend on migration and world events, Hancock said.

Despite investment yields being down, the ANZ’s annual Property Investors Survey, released last week, showed most were still optimistic about the property market.

ANZ chief economist Cameron Bagrie said: “You look at what their expectations are and I do think they are a bit rich. They are looking for a pretty quick turnaround and that’s a bit of a stretch, given the dynamics the property market faces at the moment.”

One-third of investors surveyed predicted prices would fall over the coming year.

“The reality has sunk in, but people seem to think the market’s going to bounce back in three, four or five years,” said Bagrie. “People should be a little more realistic and circumspect.”

For some property investors, the hassles of finding tenants, chasing debts and organising maintenance are just not worth it. But hiring a property manager may not mean the end of trouble.

Property managers typically charge a fee of 7.5% – 8.5% of rental income and in return they will handle the messy details such as checking tenant references, inventories and dealing with tenant demands.

But before signing a contract with a management firm, property owners should make sure they know the answers to some key questions. For example:

• Is rent held in a trust account for safekeeping? If not, your money is at risk if the management firm gets in trouble.
• How often is the rent paid?
• How often will the manager inspect the property?
• What will the manager do if a tenant does not pay on time?

Property owners would be well advised to look for a management company big enough to provde cover for holidays and sickness – an overflowing hot water cylinder cannot wait.

A company should have specialists to handle the administration side and others with the sales skills to find new tenants. A jack of all trades may be master of none.

The firm should be able to email reports and photographs showing the state of properties to absentee landlords.

If a property manager’s office looks like a shambles, chance are that the management operation wil be too.

In selecting a manager, it is worth noting that firms who work through the Real Estate Institute are at lest governed by the organisations’s complaints procedures. Independent firms are not, but ther are moves within the industry to polish their performance.

In Christchurch, the Independent Property Managers’ Association is still gathering numbers, but it has a code of ethics, code of conduct and a complaints process that binds its members. The association was formed in 2003 by a group of 10 independent property manaagers and has now grown to 35 members.

Inaugural president Martin Evans said the assocition had yet to hear a complaint against one of its members.

“But we have picked up properties where there have been problems and the owner is not happy with the way rent arrears or maintenance has been handled.”

Evans runs A1 Property Management in Christchurch and is also president of the New Zealand Property Investors Federation. He says the association was formed to give members a voice and set standards for the industry.

Association guidelines say a manager should operate separate accounts for rents received, employ no staff with a criminal history and have a no-tolerance policy for rent arrears.

They should have a good accounting systems, and provide regular statements and property reports to owners.

There are moves in Auckland too.

Next month, property investor Andrew King is starting New Zealand’s first property management broking company to match up owners and managers. Matchmaker King has devised a 57-point checklist of what owners should look out for and expects to get most of his business from people unhappy with their present managers.

King, of Andrew King Property Management Brokers, is vice-president of the New Zealand Property Investors Federation, author of the 2003 Complete Guide to Residential Property Investment, and has been a property investor for 20 years. He says an owner engaging a property manager often does not ask enough questions and ends up with the wrong person – and mostly they put up with the poor service.

His firm will operate in the same way as a mortgage broker. After interviewing the investor to find out what kind of property they have and what kind of tenant they are looking for, he will look for someone to manage it. If King makes a match, his company collects a fee from the property manager.

King hopes to attract investors who are in teh process of buying an investment property and do not want the hassle of looking for a manager. His firm will also manage the transfer for people wanting to change their property manager.

“Some people don’t want the potential unpleasantness – I imagine that will be the biggest market,” he says.

But he also knows of cases where property managers have sacked owners. Such cases usually arise because the owner refuses to carry out essential maintennace, which makes the property almost impossible to let.

Helen Gatonyi, co-ordinator of the Tenants Protection Association, says a large number of the complaints they receive are about independent property manaagers, who are outside the Real Estate Institure’s complaints system.

“Many of them are working without proper understanding about the law and about the relatinship of the two parties that they are representing,” she says. “The whole market needs to be professionalised.”

Gatonyi welcomes the moves by the Independent Property Managers Association to provide a framework for managers.

“Anything that is looking at ethics and constitution and complaints procedures is a good thing.”