Rental property managers would need a licence, and be subject to an independent complaints process under the government's preferred option for regulation.
Associate Minister for Housing Poto Williams this morning released a discussion document, seeking feedback on proposals to have property managers comply with a code of conduct.
Labour committed to the move in its 2020 election manifesto.
The document includes several options for regulating property managers, though it would not apply to landlords who own a property as they are already subject to regulation under the Residential Tenancies Act.
It noted there are no regulations that apply to all residential property managers, and groups including property managers themselves had pointed out the risks that posed "to property owners and tenants and to the reputation of residential property managers."
Commercial landlords would also be exempt.
The document estimated up to 7881 property managers were operating in New Zealand, responsible for about 42 percent of rental residences, but only about 80 were members of the Property Managers Insititute which had a code of ethics and carries out credit and criminal history checks.
The government's preferred option for regulation would include the introduction of entry and industry practice standards for residential property mangement, alongside an independent disciplinary and complaints resolution scheme.
Individual property managers would be required to hold a licence to be renewed annually, and the regulator would maintain a public register of those with licences.
Offences and penalties would be added for failure to comply with the code of conduct, similar to other laws like the Real Estate Agents Act.
To join they would need to be over 18, be a "fit and proper person", and complete a 15-hour course covering requirements and knowledge about managing a property, how to manage tenant relationships, and financial aptitude.
Things like dishonesty-related conviction, financial problems like bankruptcy, or a history of violent behaviour would preclude someone from being fit and proper.
After that, they must complete 20 hours of professional development, hold insurance and ensure trust accounts are annually reviewed and available for audit by the regulator.
The proposal expects a "significant proportion of costs" for the regulator would be recouped through fees and levies and cost recovery, rather than government funding.
Options the government is seeking feedback on include whether to only require registration rather than licensing as well, or using certification to allow property managers to use a title like "certified property manager" rather than requiring it for entry to the profession.
Another option would be requiring on-the-job training before allowing managers to practice independently.
Licensing could also apply to individuals only, or to the organisations employing them as well.
Williams said New Zealand was one of the few countries that did not regulate property managers.
She said the government had made several changes to strengthen tenancy laws in recent years, such as the Healthy Homes Standards, and prohibiting more than one rent increase a year.
"Today's proposals are part of a suite of initiatives designed to improve the operation of the residential tenancies market and ensure New Zealanders have access to secure, healthy, and affordable housing," she said.
Submissions close on 19 April.
Call for government to act faster on behalf of renters
Renters United spokesperson Ashok Jacob said there had always been a power imbalance between renters and those keeping a roof over their heads.
That problem had only been exacerbated by a lack of housing supply.
"People don't even necessarily have the option of moving and finding somewhere else to live ... so people are going to put up with more and more crap from their property managers," he said.
He welcomed any changes that would better regulate the sector.
The discussion document will go out for feedback, with submissions closing mid-April.
But Green Party housing spokesperson Chloe Swarbrick said renters could not live in a discussion document and the government should be moving faster.
The residential property management sector manages about 42 percent of rentals on behalf of property owners.
Swarbirck said the changes would miss more than half of the sector.
"There is no intention to also regulate landlords who regulate their own properties. Of course, this is also a huge problem and gap when it comes to upskilling people so they are aware of their rights and responsibilities," she said.
The Greens wanted a register for both property managers and private landlords.
Jacob agreed and said there was no evidence that private landlords were any better than property managers.
"I think if you are providing a home to somebody, that's a human right, it's the most essential service that you can have. It is kind of insane to me that you can do that with pretty much no government oversight," he said.
Williams noted the Residential Tenancies Act also helped even the playing field between renters and private landlords.
"However, there is still the issue of bad behaviour by some landlords who won't be looking to comply with anything and that's another issue that we will need to tackle.
"What we hope to do is to look at this as part of a whole suite of changes since we've come into government," she said.