Themes and Issues
Do prospective landlords get the right advice?
Related to concerns regarding the professionalism of landlords are concerns regarding the adequacy of financial and other advice that is used to inform their rental property investment decisions.
There are few regulatory or other barriers to people becoming a landlord. Investment in residential rental property has proved popular over recent years, partly because of the relatively poor performance of other investments, partly because of the tax treatment of such rental property and partly because rental property is an investment that many people feel comfortable with because they have personally experienced renting or owning a home.
There are many agencies and individuals that have set themselves up as advisers to people thinking about investing in residential property. These include banks and other lending institutions, real estate agents, property managers, financial advisers and self styled entrepreneurs. While the information provided is sometimes comprehensive and high quality, this is not always the case. Often it does not include vital information on:
- the rights and obligations associated with becoming a landlord, including the requirements of the RTA;
- the importance of and the ongoing cost of property maintenance;
- information to the effect that residential property and its management is a service industry, not a passive financial investment;
- the importance of communication and relationship management skills in dealing with tenants;
- the risks associated with rental property ownership including those of abandonment and damage.
As a result of inadequacies in financial advice, some residential property investors enter the market with overly optimistic views of the returns to be made and an inadequate understanding of the implications of becoming a landlord including the requirements of the RTA. While Tenancy Services can provide advice to potential investors, it has little direct influence over what others provide.
Questions
- Where do potential property investors and landlords find advice to help them with their investment decisions?
- Is the type and quality of advice available to potential property investors and landlords adequate?
- What can be done to improve the quality of financial and other advice to prospective property investors and landlords?