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The Property Manager/Client relationship: Is the Property Manager working for you – or against you?

1st April 2016
Is your Property Manager working for you – or against you? Property investors may be surprised at the answer...

Is your Property Manager working for you – or against you? Property investors may be surprised at the answer…

The Property Manager/client relationship in New Zealand is often unclear due to the financial inducements most Property Managers receive – i.e. the letting fees that tenants pay to the Property Manager.

At Bridgman Property Management, we recently saw another property management company promoting the fact that they view the tenant as their client, and the property owner as their business partner.

In fact, many Property Managers have this view: and because they receive remuneration from both the property owner and the tenant, they are confused as to whom they’re actually working for.

This confusion is evident on the ‘Renters’ TV programme

If you watch the New Zealand television programme, ‘Renters’, you’ll see that many Property Managers are confused as to who their client is. This is demonstrated in how these Property Managers act and respond to tenants and property owners.

In a recent episode of ‘Renters’, a Property Manager completed an inspection to find holes in walls, and cabling along the walls for a cannabis growing facility in the ceiling.

Most viewers would ask the question: How long had this damage been present?

Did the damage suddenly appear just before the inspection and the camera crew arriving at the property? Or did this take place over a period of time?

One of the Property Managers in the programme said that she didn’t like doing property inspections because, “I feel like I’m intruding”.

Other examples of property mismanagement…

There are so many more examples of property mismanagement on ‘Renters’.

In one episode tenants were filmed smoking inside the house – and in front of the Property Manager – when this contravened the tenancy agreement. The Property Manager did not take any action.

At another property, dogs were found there – and again, that was not permitted by the tenancy agreement. What did the Property Manager say to the tenant? “Oh well, let’s not tell the Landlord.”

In another episode, mountains of rubbish had built up on the exterior of a property. The property owner commented, “at least we’ve still got our house”.

In these situations, the rent may be getting collected but the property is certainly not being managed.

Unfortunately, tenant problems are never going to be dealt with adequately when Property Managers believe that the tenant is the client.

This confusion is established right at the beginning of the tenancy, when the Property Manager receives financial inducements (letting fee payments) from the tenant.

Other reasons why letting fees are bad news

Letting fees don’t just confuse the Property Manager/Client relationship, they can also affect the profitability of your rental income. That’s because letting fees encourage Property Managers to focus on short-term tenancies, which result in more vacant periods, as well as more wear and tear.

Summary

  • If tenants pay a financial inducement to Property Managers (i.e. a letting fee), the Property Manager will be confused who their client really is.
  • If you want a Property Manager to be working in your best interests 100% of the time, choose one that does not charge a letting fee!
  • Your property investment will be more profitable for you if the Property Manager does not charge letting fees.

 


 

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