As many of us return to the office our industry got a glimpse of what the future of Property Management could and should look like. David Faulkner argues that we must learn lessons from the lockdown and evolve to thrive in a rapidly changing world. 

If you are looking at investing in some new cars for your Property Management division, then I suggest you look no further than the classic DeLorean made famous in the classic movie Back to the Future.  The last couple of months it has felt a little bit like being in a time machine as we have had a glimpse as to what the future of Property Management may look like. The lockdown forced us to not just think differently, but act differently.

I have been writing articles about the Property Management industry for over 5 years now. One of the things that I try to do is challenge the status quo. I want people to stop, think and ask why things are done the way they are. This isn’t about being controversial for the sake of being controversial, people can see through that, it is about evolution and progression. Every day, life and businesses evolve and in moments of crisis, you can be certain that there will be an increase in innovation as we look for new ways to function in the new norm. This crisis will be no different as every industry has been forced to adapt and innovate. What the last two months has also demonstrated is that our industry is remarkably resilient as regardless of the circumstances, people will always need a property to rent.

However, new technologies are already changing the landscape. How we have operated our businesses, will and in many circumstances should change. We need to question what we do, ask why we do it and what benefit does it have for our landlord clients and tenants. Then we must decide whether it is still relevant and whether it can be replaced through automation and artificial intelligence or by focusing on a more personalised approach. Either way, we must focus on providing an enhanced consumer experience whilst also protecting our profit margins. There is no point in being the slickest at what you do if your bottom line has numbers in brackets.

With that in mind, I have decided to get back into the DeLorean, get the speed up to 88 mph and head back to the future and have a look at what Property Management could look like in the not too distant future.

Are three monthly inspections really necessary?

Two months ago, just after the WHO announced that COVID-19 was a global pandemic, I wrote an article suggesting that inspections should be postponed and made the recommendation that tenants could do their own inspections with the Property Manager being present remotely via video link. I copped a fair amount of criticism for making such a suggestion, but the reality is I am not the first person to suggest this. Some high profile industry heavyweights such as Will Alexander have also made suggestions in the past as to this being the way of the future.

As many Property Managers get back to arranging inspections after two months of cancellations, I have found myself wondering why we do these every three months and whether it is necessary for them to be done so often. On many occasions, you sometimes feel as though you are being rather invasive on the tenant, especially when they have a good history and are clearly looking after the property. There is also the environmental impact of this activity as well with more cars on the road heading to inspections meaning more emissions from the vehicles that we drive. The typical routine inspection takes about 15 to 20 minutes whilst your Property Manager does a site inspection of the premises. This does not take into account the time it takes to get to and from the property. The reality is that many landlords do not even open the inspections once they have been sent so it can often feel like a futile exercise. 

Insurance stance needs to evolve to offer a more tailored solution

In reality, there is no reason other than it panders to the needs of our insurance companies. In a recent article written by the highly respected Diane Nelson of Real Landlord Insurance in the REINZ weekly newsletter, she outlined her underwriter’s stance towards remote and video inspections. In doing so, she also highlighted the failings of such an archaic methodology. In her article, she stated that video inspections carried out by a tenant cannot be viewed as a routine inspection. She then gives her reason as follows. ‘Often property managers find leaks that tenants have not been aware of, such as soft floors’. Although I can understand her support of her underwriter, I simply do not share this view. How can a tenant who has potentially lived in a property for years not notice an issue when there is a problem yet a Property Manager who probably spends no more than one to two hours per year inside the property will instantly pick this up? I would rather call it what it is. A tenant noticing the problem but because they do not own the asset, they could not be bothered to report it. That is most likely the issue.

This is where the tenant education becomes so important.

Many Property Managers have carried out ‘remote’ inspections with their tenants during the lockdown. We believe that this could be the way of the future.

If what I am suggesting is the case and an insurance company refuses to honour a claim due to gradual damage then the tenant should be facing the liability of the cost of the claim. Under the Tenant’s Responsibilities in the Residential Tenancies Act, a tenant must notify a landlord as soon as possible after the discovery of any damage to the premises. By failing to notify the landlord they are potentially waving the landlord’s insurance policy and therefore they should be fully liable for the cost of the repair.

By insurance companies taking their current stance, they are labelling every single tenant as potentially anti-social and problematic who frequently breaches their Tenancy Agreement. This is unfair and outdated. Take car insurance as an example. The insurance policy will take into account the level risk of the insurer. An 18-year-old driving a modified sports car is going to pay higher premiums than a middle-aged person who has never made a claim due to the level of risk. Why are tenant’s treated in such a way that means a Property Manager has to visit and inspect a property every three months?

Should Property Managers be able to inspect the property on a regular basis? Absolutely they should, but this should be determined purely on the basis of the quality of tenant, how they look after the property and the level of risk associated with this. If a tenant is being problematic and not fulfilling their obligations under the Tenancy Agreement, then inspections will be required more frequently. However, if a tenant has lived in a property for a number of years without any issues, then are three-month inspections really necessary?

Talking houses

This leads us to our next suggestion. In the not too distant future, our rental stock will have devices attached to the property that tracks its performance and lessens the needs for three monthly inspections. Last year, I interviewed Brandon van Blerk, the CEO of Tether, which produces a device that tracks and monitors the healthiness of a home. The device measures the following.

  • Carbon Dioxide
  • Relative humidity
  • Indoor temperature
  • Ambient noise
  • Pressure
  • Ambient light

The benefit of such devices being attached to our housing stock is obvious. The moment we see a spike in a particular measurement, you can immediately identify that there is a problem. 

Brandon van Blerk is the founder of Tether. A device that measures the performance of a property

An increase in humidity may mean the property is overcrowded or not being sufficiently ventilated, but it could also mean that there is an undetected leak. The device will notify the Property Manager who can act quickly to ensure the issue is resolved.

There are potential privacy issues with this, but these should be overcome as devices such as Tether benefits all parties. It should also remove the need to inspect a property just to keep insurance policies valid. Why inspect a property when a device will identify the leak that the tenant failed to report?

Also, with the increase in maintenance applications which allow tenants to simply report issues, you have an automated response that allows the tenant to have maintenance requests assessed quickly with estimates for jobs being easily obtained through benchmarking of similar jobs. We are even seeing the introduction of artificial intelligence that can help troubleshoot maintenance issues with tenants without the need to interact with their Property Manager. 

Smart devices come into all walks of life. It will only be a matter of time before we see a multitude of devices and applications becoming mainstream that makes our rental stock more efficient and easier to manage.

Property Management is dead. Long live Asset Management

If my Property Manager is not doing three monthly inspections, then what are they being employed to do? 

This is a valid question. I believe that Property Managers have an increasingly important role to play in the management of our rental stock but it needs to evolve from our traditional model. This is where the industry really needs to innovate to ensure we remain relevant. My view is that the term Property Manager will eventually be replaced by Asset Manager. This means that we become more focused on helping landlords utilise the equity that they have in their portfolios to help them grow financially. It means we will measure, monitor and learn how their property portfolio performers.  We will have a better understanding as to how a property can perform efficiently providing a warm safe environment for the tenant which also reduces the carbon footprint of the property. By doing this we make it far more affordable which benefits both landlord and tenant. 

The perfect place to start is getting members of your team qualified as HomeFit Assessors.

Andrew Eagles is the CEO of the NZ Green Building Council. He has a vision for New Zealand housing that we share.

I recently caught up with the highly impressive Andrew Eagles, the CEO of the New Zealand Green Building Council and we discussed at length the issues we face in trying to get our rental stock assessed and compliant in time for Healthy Homes deadline. I raised the issue that there are simply not enough recognised assessor available to carry out the work within the specified period of time. One suggestion we discussed was to start making Property Managers qualified as HomeFit Assessors. Some big companies are already ahead of the curve in partnering with the HomeFit initiative. Properties that are assessed and qualify get the HomeFit tick of approval which will be displayed on property websites such as realestate.co.nz and Homes.co.nz. Councils, such as the Auckland Council, are adding HomeFit to the LIM statement so any prospective purchasers can see that the property complies with the Healthy Homes criteria.

This can transform our industry and improves the skill level of our workforce. When a landlord engages an Asset Management company, they get access to a raft of services. Not only will they have the standard level of service that a traditional Property Management company can offer, but they will also have access to a whole new range of services that will help them grow their equity whilst the tenant has a less intrusive customer experience.

  • Healthy homes assessments which give your property the Greenstar HomeFit approval, making it more efficient and desirable for tenants.
  • Inspections that can also be used for remote valuations so landlords are able to utilise equity that banks can lend against meaning that they have more power to grow their portfolio.
  • The ability to access specialised insurance products that are tailored not just to the property, but to the tenants. Tenants can insure themselves against bond disputes, loss of income for rent protection and this, in turn, means that no upfront bonds are required and you reduce the need to resolve disputes in Tribunal.
  • Tenants will be able to access discounts to relevant ancillary services that can be arranged through the Asset Management company. This goes beyond your traditional utility connection providers. This can be for a host of local businesses that help improve the communities that the tenants live in.
  • 5 to 10-year cash flow projections with long term maintenance planning for investor portfolios can be produced with the ability to predict what maintenance spends will be required over that period in relation to what rents are likely to achieve.

The list can go on and on.

Finally, home is where the heart is!

The concept of working from home has been welcomed by many in the industry

To finish off, I have to confess, part of me did not want the lockdown to end. I loved the concept of working from home and on returning to our office as a team, we decided that working from home is the way of the future. 

There is a place for the office. You have the camaraderie that cannot be developed through video links. There is also something to be said for the creativity that working in an office can inspire as we brainstorm and work together. However, everyone I have spoken to up and down the country has found working from home makes them far more productive. I must concur with this opinion. We have also already proven that we can actually have a paperless office and digital signatures can become the norm!

Personally speaking, I have loved being able to work from home and spend time with the family. In the evenings we would sit down together at the table for dinner, something that rarely happens in our busy lives. We’d play cards, board games and go for plenty of walks. Maybe, just maybe we will adopt some of the lessons we have learned from working in the lockdown. Our families must come first and having the ability to work around our family improves the balance that so many of us struggle to find.

Our industry has a massive role to play in the development of our country but only if we evolve. We must work more collaboratively with tenants and landlords to improve lives by providing quality, efficient and safe rental accommodation that benefits not just landlords and tenants, but the entire country.

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