House owner wants fees back after - Hamilton

[muppet]

House owner wants fees back after



By NICOLA BRENNAN - Waikato Times Last updated 13:00 06/05/2010

A Hamilton homeowner whose house was trashed by tenants last year is set to take Housing New Zealand to the Disputes Tribunal.
The Waikato Times last year reported on the $30,000 damage caused to Brian and Roz Taylor's Pukete house, which they leased to Housing New Zealand (HNZ) from 2004 until last year.
HNZ eventually paid to have the house restored to a liveable condition, but has refused to refund any of the $8000 the Taylors paid in management fees over the five years.
HNZ manager of lease services Tara Wright agreed the house was "not kept in an acceptable condition during the lease", but disputed Mr Taylor's claims that they did not honour the terms and conditions of the lease.
She said Mr Taylor received continuous rent over the period, even if the house wasn't tenanted. The house was also restored to "an arguably better" state than it was originally.
"HNZ is satisfied that the terms of the lease agreement have been fully honoured," she said.
However, Mr Taylor disagreed and would now take the case to the Disputes Tribunal.
"I would love the money, certainly, but it's the principle behind it," Mr Taylor said.
"They need to actually realise that they have to maintain what they've got and make sure that the tenants maintain the property as though it was leased commercially."
The Taylors' house, which they've now sold, was caked in dirt when their tenant was finally evicted.
The wallpaper had been ripped off and the curtains were falling apart. The bathroom vanity was barely standing.
Mr Taylor said clause 3.1 of the lease agreement stated that the lessee "keep and maintain the premises in clean order and condition".
Mr Taylor said that had in no way been complied with, despite 10 per cent of the rental going to management fees. He said most commercial rental agents charged a 7.5 per cent management fee.
"I firmly believe that the property management was in no way carried out and that HNZ is legally bound to refund me the amount of $8057.33." If that couldn't be done, Mr Taylor was happy to settle for at least half that amount.

http://www.stuff.co.nz/waikato-times/news/3664014/HNZ-tenant-trashes-rental

[essence]

Absolutely agree that he should get his PM fees back.

If it was a private PM company, no one would hesitate to take them to Disputes Tribunal if the same thing happened.

Why, because it's HCNZ, should it be any different??

[Keithw]

Sounds like he believes HNZ should be maintaining the place at their cost (not his).
As far as I understand, they are liable to repair any unreasonable tenant damage, but fair wear & tear are the owners responsibility.
Will be very interesting to see the outcome, as it could cause a change in attitude at HNZ that makes them monitor tenants properly, rather than leave everything until the end of the lease & then worry about "restoring the place to what is was"

[essence]

HCNZ charges 10% in Property Management fees.

Mr Taylor said clause 3.1 of the lease agreement stated that the lessee "keep and maintain the premises in clean order and condition".

It's about HCNZ charging the PM fee and NOT maintaining the premises in clean order and condition.

If they had been doing their job ie inspections, then the property wouldn't've got to such a disgusting state.

Mr Taylor has been paying for a commission for work not completed.

[Keithw]

Ahh but who is the lessee and what relation are they to the PM ?
If it is the responsibility of the lessee to keep the place clean, then it is the job of the PM to ensure it is done (by the lessee) (thru inspections as you say)
So on that point they failed, but does that make them responsible for the cost of maintenance?
I believe regular maintenance will still come down to the owner, & unreasonable maintenance will be down to the lessee (or their tenant)

Is the PM bound by the terms of the lease (assuming the PM is not the lessee) ?
eg could a non HNZ PM manage these places on the same terms as any non HNZ property (ie one of ours)
Under those conditions there would be a PM agreement quite separate from the lease.

[WGN ex-property manager]

There seem to be a few misunderstandings here:

1. HCNZ do not charge management fees. They lease the property from the owner for (normally) 10 years at 90% of the market rent. No fees get paid by the owner.
2. HCNZ are obliged to return the house to the owner at the end of the lease in the same condition as they accepted it in. All tenant damage and most fair wear and tear generally gets covered by this.

A 10% hit on the rent, compared to an 8% (+GST) property manager works out at about the same, except that HCNZ cover all vacancies and all tenant damage. This seems like a fantastic deal to me, especially as HCNZ style houses will generally attract tenants with higher management and maintenance overheads, even if managed privately. So what's not to like?

You hand over a house, get the same $ every week as if it were managed, with zero vacancy risk and zero tenant damage risk, and a free renovation at the end of 10 years. What's not to like?

The only issue here is the rent reviews. If HCNZ were not maintaining the property through the lease, the "market rent" for the property wasn't going up with the market, so they were effectively underpaying the owner due to their own management practices. This seems a stronger argument that asking for refunds of fees that never existed.

[WGN ex-property manager]

Ahh but who is the lessee and what relation are they to the PM ?
If it is the responsibility of the lessee to keep the place clean, then it is the job of the PM to ensure it is done (by the lessee) (thru inspections as you say)
So on that point they failed, but does that make them responsible for the cost of maintenance?
I believe regular maintenance will still come down to the owner, & unreasonable maintenance will be down to the lessee (or their tenant)

Is the PM bound by the terms of the lease (assuming the PM is not the lessee) ?
eg could a non HNZ PM manage these places on the same terms as any non HNZ property (ie one of ours)
Under those conditions there would be a PM agreement quite separate from the lease.

Still not quite right here.

HCNZ is the leasee, and assume responsibility for the maintenance of the property. They also have the right to sub-lease.

Its not the same as using a private PM at all.

[Keithw]

So there is no PM !

[Austrokiwi]

Sounds like he believes HNZ should be maintaining the place at their cost (not his).
As far as I understand, they are liable to repair any unreasonable tenant damage, but fair wear & tear are the owners responsibility.
Will be very interesting to see the outcome, as it could cause a change in attitude at HNZ that makes them monitor tenants properly, rather than leave everything until the end of the lease & then worry about "restoring the place to what is was"

You seem to be confusing leasing with renting......most leases require that the Lessee (Ie the one paying for the use of the house pay for the maintainance of the building)................ the fact that HNZ charges a management fee for leasing a property is bizarre.

I think the owner of the property may have recourse through the contractual mistakes act. Who would rent a house and then allow the tenant to charge a management fee? That said a lease should be cheaper than a rental.

edit

I hadn't read all the previous posts.....which had already covered my point ( and far more accurately)

[Keithw]

You seem to be confusing leasing with renting......most leases require that the Lessee (Ie the one paying for the use of the house pay for the maintainance of the building)................ the fact that HNZ charges a management fee for leasing a property is bizarre.

for most commercial leases i would agree, but HNZ leases are quite different
take a look here at their description

http://www.hnzc.co.nz/hnzc/web/rent-buy-or-own/guaranteed-rent-through-home-leasing/guaranteed-rent-through-home-leasing_home.htm

and here for the actual lease http://www.hnzc.co.nz/utils/download...8D75538FDF.doc

seems to be pretty much a rental agreement in the form of a lease.

[Austrokiwi]

I am not sure how you see HNZ leases as different, like all leases as they are long term they are (if written into the deed) covered by the property law act of 2007 ( previously 1957)


your link shows how HNZ is, IMHO opinion, really taking property owners for a ride: Look at these conditions that HNZ leases require of the owner:

What payments do property owners get?
Our payments to property owners are based on market rental rates less a lease margin. A lease margin is usually between 8-10 percent of weekly rent and covers the cost of tenancy management, bad debt and vacancies. The market rental rates are set by an independent valuer. For longer than five year leases we will negotiate. Lease payments are monthly and paid in arrears. They are based on occupancy of 52 weeks a year, even if the property is vacant. We both have the option of requesting a review of the market rent each year.

I think the term lease margin is a way of HNZ explaining to owners why a lease pays less money than a residential tenancy except the real rip off is in the following section:

Who organises and pays for repairs and maintenance?
If there is a health and safety issue (for example a gas leak, blocked drains or electrical faults), we consider it urgent and will arrange for the work to be done immediately.
We charge the property owner for this work unless it is due to damage caused by the tenants, in which case we charge the tenants.
If maintenance work is required due to normal wear and tear, we will let you know. The work will need to be organised by you at your cost. It is important to note that Housing New Zealand does not act as a property management company and you are still responsible for normal maintenance work.

Have a look at the 2007 property law act.

Now as I understand it ( I could be wrong) the property owner can also inspect the property. I suspect that the HNZ lease excludes this possibility. Over all I wouldn't lease my property to Housing NZ unless I, as owner, could dictate the terms of the lease as intended by the Property law act.

As I see it HNZ uses the lease system to escape the requirements of the Residential tenancy act...............

I suspect that if someone had the money they could possibly win a case against HNZ under the contractual mistakes act and have both the lease Margin maintenance costs refunded.. Why I say this is it is possibly arguable that housing NZ is applying unfair, to the property owner, lease conditions.

[WGN ex-property manager]

You all raise a good point here:

If there is "no PM", thus no scheduled property inspections, how can HCNZ or the owner tell what is "wear and tear" and what is "tenant damage".

Image I hand over a freshly renovated house (including new carpet) to HCNZ, for a 10 year lease.

I never set foot in it for 10 years, they never do property inspections for 10 years.

At the end of the lease, the carpet is stained, smelly, and generally trashed.

Who pays for new carpet?

If HCNZ pay, then I have no problem with them acting as poor PM's for 10 years, as I'm OK anyway, and they carry the cost of their poor practices, and the whole deal seems reasonable.

If they turn round and say "it's wear and tear", how do I prove that its actually an accumulation of tenant damage (which should have been taken out of Bonds in chunks over the year according to which tenant split which coffee stain and let their dog pee in which corner). If I have to do 3 month inspections to prove the accumulation of tenant damage, then I'd effectively having to act as a PM anyway, so why am I giving away 8-10% of the market rent as well?