Student flats in places like Dunedin's Castle St will be inspected by the Government's tenancy service.
Jane Phare tackles the slime, grime and years of neglect in a student flat in Dunedin’s notorious Castle St, and questions why property managers, in charge of billions of dollars worth of real estate, are not licensed.
It looked okay from the online street view, the little three-bedroom bungalow in Dunedin’s Castle St that was to be my son’s home for the next year.
Reassuringly, the property managers worked for a reputable real estate company in Dunedin. How bad could it be, I reasoned.
A weekly rental of $600 for a rundown place with no extras, double glazing, or insulation in the walls or floor seemed a bit steep.
But this was Castle St, boasting one of the most lucrative rental returns in the country because of its popularity. If my son hadn’t signed up, another unsuspecting student would have.
The property manager sounded a bit vague on the phone when I told him my husband and I would be arriving from Auckland around mid-January (ahead of the boys, who had been paying rent since January 1) to help set up the house. Would the house be clean by then, I asked?
It would, he assured me, but then ... “you might have to do a bit of extra cleaning”, he added. That “bit of extra cleaning” involved an exhausting five-day saga to tackle neglect and filth left not just by the previous tenants, but by years of tenants.
We cleaned mould off walls and doors, cleared blocked plugholes and drains, cleaned cobwebs, dirt and borer dust from cupboards and shelves sticky with old, ripped contact paper, and dealt with inch-high clumps of dust and grime dating back decades clinging to window frames, skirtings and ledges too high to reach without a ladder.
Three doors along, another mum was cleaning up a similar mess in a flat her son and his mates had just rented. She also set traps to catch rodents that had taken up residence.
Dunedin student Liam White, president of the Otago University Students’ Association, sympathises. He had a similar experience last year when he arrived at his flat, finding a mess throughout and bags of decaying rubbish left in a bedroom.
White says there’s a perception, even a “cultural acceptance”, that student flats in areas like Castle St are inherently rundown, which means both students and landlords allow the properties to deteriorate.
He has a point. O (orientation) week has just finished in Dunedin and already videos are circulating of students, let loose from good homes in other parts of the country, systematically destroying their flats – breaking windows, tearing off plaster board and letting rotting rubbish pile up in corners.
But students who don’t want to live like that are often at the mercy of landlords and property managers who are simply not doing their jobs. White thinks the issue of poorly maintained and dirty flats is becoming more prevalent as smaller landlords leave the market, making way for larger property management firms.
“Having said that, there are some good property managers and landlords out there but they’re increasingly becoming few and far between,” he says.
The issue is students, in all university cities, want to be near their university, near their mates, near the fun, and there are only so many flats to go around. Those unlucky enough to move into grotsville often don’t know their rights or the process to fix substandard flats.
They rely on landlords and property managers, some of whom are either overwhelmed by the number of properties they oversee or are simply slack, to do the right thing.
Word in Dunedin is that Tenancy Services, part of the Ministry of Business, Innovation and Employment (MBIE), is on the warpath. MBIE confirmed to the Herald that its Tenancy Compliance and Investigations Team (TCIT), which visits “properties of concern,” will be on the ground in Dunedin in the coming months.
MBIE’s head of tenancy, Kat Watson, says the team will visit a selection of private student rental flats to assess compliance with the Residential Tenancies Act and to “help inform and educate” renters, landlords and property managers on tenancy rules.
Grungy, poorly maintained rentals are an issue that potentially affects thousands of Kiwis, not just students. Just under one-third of New Zealand houses are rented. According to Stats NZ, the country has 661,500 rental properties, and more than 40% of those are overseen by property managers.
Industry representatives point out that most landlords, and the property managers who work for them, do a good job, spending money on maintenance, double glazing, insulation and cleaning. In return, tenants respect their properties.
It’s the “cowboys” they want gone; they say establishing a licensing system will root out the bad ones.
Labour attempted a solution during its last term, introducing the Residential Property Managers Bill which aimed to impose a code of professional conduct, licensing, and an independent complaints and disciplinary process.
However, Housing Minister Chris Bishop kicked the bill for touch last year, saying the Government wanted to concentrate on solving the housing crisis, not add a layer of expense to the rental industry.
Tauranga-based rental property manager David Pearse, who strongly believes the industry needs to be regulated, is pleased the bill was scrapped, saying the cost involved and the bureaucracy would have been too great. The bill also leaned towards the real estate companies having control of the industry, shutting out smaller, service-based members, he says.
“It would have been too expensive for them.”
But he and others in the industry are disappointed the Government hasn’t come up with an alternative.
Pearse is on a motorcycle tour through Tasmania when the Herald calls but he’s happy to hop off his bike to talk. It’s a subject close to his heart. In his role as chairman of the Residential Property Managers Association (RPMA) he’s heard and seen it all.
“Regulation is a must. A week doesn’t go by when I don’t hear about a cowboy property manager.”
And it’s not only the private property managers who are the problem.
“It’s actually some really big real estate organisations.”
Rental managers working for larger companies simply have too many properties to look after, he says. Those managing 200 or 300 properties can’t allocate more than a few hours a year to each. Add in time-consuming Tenancy Tribunal cases and property managers become overwhelmed. Turnover is high in the industry as a result.
Pearse started in real estate in 1986, switching to property management in 2004. Now his company, Pukeko Rental Managers, owns 30 rental property franchises around the country, which look after 1350 properties.
“I personally believe that any property manager cannot provide an adequate service for over a hundred properties.”
Once the number gets up to 150, properties become neglected and complaints start mounting, he says.
As it stands, the industry has been left to rely on self-regulation and voluntary skills training. In the meantime, some tenants, often students, are living in scungy properties with a formal complaint to the Tenancy Tribunal their only redress.
The ad for my son’s Castle St flat said “all heated by way of heat pump. Courtyard at the rear of the property“. What it didn’t say was that the heat pump didn’t work – and still doesn’t at the time of writing – and the concrete courtyard was covered in years of dirt and shattered glass.
The outside toilet looked like no one had dared to use it in years. The outside laundry wasn’t much better. An old concrete incinerator was full of dirt, glass, rubbish and weeds.
The food scraps bin was broken and so full of a rotting, unidentifiable mess that we chucked it in the wheelie bin. The smaller inside food scrap bin on the kitchen floor was in a similar putrid state.
Curious as to why the water in the bath was slow to drain, we poked a wire coat hanger down the plug hole and pulled out a stinking mess of decaying soap and hair.
The drain outside the bathroom was similarly blocked. I had to get elbow deep to scoop out what was vintage muck, more black hairy slime, rocks and an RTD can.
Added to that was maintenance that should have been done by an alert property manager – broken curtains, a bedroom blind covered in black mould, a back door that constantly swung open because of a broken latch, a laundry window painted shut, missing shelving and fridge parts, and a letterbox with the entire back missing. Not to mention the heat pump.
And so started a series of texts and emails to the property managers – some answered, some not – asking for help and pointing out things that needed to be fixed. Some of it we did ourselves, dashing to Bunnings for tools, fixtures, buckets and brooms.
Eventually, the property managers sent a cleaner to help one evening; he had to come back the following afternoon to finish what was an enormous job.
Nearly two months after the boys started paying rent, there are still things waiting to be fixed.
Dunedin property manager Kathryn Seque-Roche has some sympathy for those who are overseeing large numbers of properties. She knows how busy it can be managing her family’s portfolio of 51 student rentals, including two of her own.
Student properties tend to take more time to manage than the average family rental in a good area, she says. And a shortage of tradies across New Zealand is another issue, causing a bottleneck at the beginning of the year.
“The maintenance people are just overrun with work, especially at the start of the year in Dunedin.”
Seque-Roche, too, supports the introduction of a licensing scheme for property managers, supported by education, as long as it’s not costly and “overrun with red tape”.
White says students often find it too difficult to push for improvements, while landlords either assume the flats will just be damaged again or simply accept that substandard conditions are the status quo, he says.
“Ultimately, unless a student has a clear-cut case or access to a solid legal advocate, they’re often left navigating a broken system with little recourse.”
He’d like to see some form of regulatory enforcement around housing quality.
“One that doesn’t place the burden on young, largely first-time renters like students.”
It could be in the form of a rental warrant of fitness, more robust Healthy Homes compliance audits, or a similar mechanism to ensure minimum living standards, he says.
Among those disappointed at the scrapping of the Rental Property Managers Bill is the Real Estate Institute of New Zealand (REINZ) which has campaigned for regulation since 2019. Chief executive Jen Baird says REINZ will continue to push hard for change in an industry that collectively manages billions of dollars worth of housing stock.
No other profession managing valuable assets is unregulated, she says. Even a one-person property management business overseeing 100 properties is entrusted with $60 million in assets (based on a median price of $600,000) without any established regulations.
Currently there is no legal requirement to ensure client funds are ring-fenced, Baird says.
“Rental income and tenants’ bond monies can be deposited in any bank account without safeguards, increasing the risk of mismanagement and bond fraud.”
This month Baird was among an industry group who met Bishop to again highlight the importance of regulating residential property managers.
Pearse, too, won’t let the issue drop with the Government. He says the RPMA will be “strongly advocating” to Bishop this year, constantly bringing cases of wayward property managers to his attention.
“We’ll be saying ‘look, here’s another case. These people shouldn’t be in business.’”
Pearse argues New Zealand needs to move away from an Australian model based on sales whereby property managers are encouraged to gather more houses into their portfolio.
“Our argument is that we are a service industry and we don’t fit with the real estate regulatory system that is focused on sales.”
In the meantime, in an attempt to self-regulate, the RPMA has established its own guidelines, running professional development webinars and introducing qualifications members can pass.
But it’s a voluntary organisation and there are plenty of unscrupulous operators still out there who give the industry a bad name, Pearse says.
“We know who the cowboys are. They’re always doing the same thing but they’re allowed to operate. If they were under our own association we could then cancel their licence.”
Complaints to MBIE’s Tenancy Services have risen steeply in the past four years, from 588 in 2020 to 954 last year. Tenancy Services holds around $900m of rental bond money in its trust account. In the past two years, more than 1260 applications to the Tenancy Tribunal included a claim that landlords or property managers had not lodged the bond.
Jane Phare is a senior Auckland-based business, features and investigations journalist, former assistant editor of NZ Herald and former editor of the Weekend Herald and Viva.
NZ market follows lead of the US.