Propertyscouts Dunedin

The expensive mistakes made by NZ's amateur landlords - 8th May 2017

Learning landlording skills is tough in a fragmented "industry" dominated by part-timers.

There are in the region of 130,000 landlords in New Zealand, the majority of who have only one rental.

Figures obtained in 2015 from the Ministry of Business, Innovation and Employment showed just over 104,000 landlords had just one rental, and just under 23,000 had between two and five.

A mere 4100 or so owned more than five, indicating that for every skilled fulltime landlord like current landlord of the year Kathryn Seque, there are dozens of part-timers with varying degrees of professionalism.

Orders published by the Tenancy Tribunal show landlords run the risk of ending up seriously out of pocket if they behave unprofessionally.
 

In most cases disputes are taken to the tribunal by landlords, often for unpaid rent, or damage to a property.

But some reveal instances of landlords, who do not need a licence like teachers, doctors or real estate agents, who possess little knowledge about their own properties, and are unaware of their legal responsibilities under acts like the Residential Tenancies Act and the Building Act.

One dispute arose when a tenant found out his power supply was driving a bore pump that provided water to other houses on the rural property where he rented a "cottage".

The landlord re-routed the power to the bore pump to another property, but sought to increase the rent. The tenant became concerned the extra rent was "designed to make him pay for a landlord cost", and served notice on the landlord to rectify certain problems with the property, which was damp.

 

He also asked the council to investigate whether the cottage had appropriate consents and was safe to live in.

The council inspected and told the landlord it would be classed as an "insanitary building" under section 123 of the Building Act 2004.

It turned out the building was also not fully consented, which came as a "shock" to the landlord as it was not noted on the LIM.

The tribunal found the unconsented property could not be used lawfully as a residence, and ordered the landlord to pay the tenant back $12,600 in rent.

The behaviour of landlords during a tenancy can also undermine their ability to profit from their property, as can failing to check out prospective 

tenants, and failing to prepare for a tribunal hearing.

Unprofessional behaviour can also cause cases taken by landlords to the tribunal to backfire spectacularly.

In one case a landlord asked the tribunal to award him over $2000 in rent he believed was owed to him by a tenant who left three months before the end of their fixed term tenancy.

But the tenant told the tribunal he'd left because of the behaviour of the landlord constantly visiting and entering the property without consent.

He feared the landlord, who visited the property because of rent arrears by another tenant, might even enter the property while he was asleep.

The tribunal accepted the landlord had breached the tenant's right to reasonable peace and privacy, and that his behaviour amounted to "harassment".

The tenant had left the place in a mess, and agreed he should share the cost of rubbish removal with the other four ex-tenants.

But the tenant claimed the place was a mess when he arrived, and the tribunal wouldn't grant the landlord's application for cleaning costs.

The landlord claimed the tenant did not return his key, and that a barbecue was missing, but provided no evidence, so the tribunal dismissed his claims.

The barbecue was not specified in the list of chattels in the tenancy agreement, the tribunal noted.

The landlord knew so little of his tenant, that he didn't even know his age. It turned out the tenant had been a minor of just 17 when he signed the tenancy agreement.

 

The tribunal found the landlord had breached three sections of the Residential Tenancies Act, and ordered him to pay exemplary damages to the tenant.

​BECOMING A GREAT LANDLORD

Kathryn Seque is officially the best landlord in the country, at least, she jokes, until October when the Property Investors' Federation (PIF) names its next landlord of the year.

Seque was born to landlording. Her father was a professional investor and landlord in Dunedin, and she learnt a lot just from chat round the kitchen table.

"I knew tenancy law when I was in high school," she says.

Knowing tenancy law is a must for landlords, but it is only the start.

Being available when tenants need you, and having good interpersonal skills are important, she says. Her tenants all have her mobile number, and email.

Not all landlords behave that way, especially investors who buy property in other cities and do not pay property managers to look after them.

"In Dunedin we get a lot of Aucklanders buying property because it is a lot cheaper," Seque says.

Having long-term maintenance plans, and only renting out decent places is also important.

Landlords don't look like they will face a full rental WOF on their properties unless a Labour-led coalition gets voted in at the next election, but there are insulation standards.

Landlords have to set their own moral standards.

"If I wouldn't live in it, I won't rent it," Seque says.

Where do most landlords get their skills?

"Most, unfortunately, just do it through trial and error, and experience," says Andrew King from the PIF.

In the early days of their landlording, he reckons most just "wing it".

Seque recommends people join the local chapter of the PIF, which runs training, but also to seek out some of the few books on the subject. 

King recommends Brian Kerr's Complete Guide to Landlording.

There may be signs that the skills of the new generation of landlords created in the property boom that started around 2000 are improving.

Despite a rise in the number of people renting, the number of orders the Tenancy Tribunal makes is falling.

King wonders if landlords, forced by insurers to take precautions against meth contamination and rent runaways, have become much better at doing their due diligence on prospective tenants.

And tenants, having come to realise that, are behaving better themselves.

 - Stuff

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