Innholdsfortegnelse for Aug 2017 i NZ Property Investor

With September’s election on the horizon, addressing housing supply is a key concern for both politicians and voters. Naturally, housing market data is being put under a microscope – even more so than we’ve seen over the past couple of years. Because of this emphasis, the maturing of the Auckland market has been highlighted in the media much more so than it otherwise might have been. For sure, there’s been a softening of the SuperCity market, but the markets outside of Auckland continue to move at their own pace. However it’s only natural to expect that Auckland’s market will have its influence on regional markets soon enough. Certainly, yields have dropped in most locations nationwide and for investors who’ve been active over the past couple of years, it’s time to…

The Council’s Homestar quality verification tool, which certifies the health, efficiency and sustainability of new builds, has been significantly revised for the first time since it was introduced in 2010. It has been re-engineered to make it easier for the construction sector to lift and verify the performance of new dwellings. The Council’s chief executive Andrew Eagles says the standard takes into account current pressures on the construction sector but retains its rigour while significantly easing compliance overhead. “We’ve made it more economical to drive momentum with a concrete, streamlined methodology which helps accelerate the delivery of quality housing stock. “The revised tool provides a clear framework for constructing a quality home that contributes positively to the health and wellbeing of its occupants.” The new standard, which was released on…

1 New meth decontamination levels revealed It’s been a long time coming, but the much-anticipated new meth testing and decontamination standard is finally here – and it’s good news for landlords. 2 New builds: what investors should know Major supply shortages mean New Zealand needs more new dwellings built but there are good reasons why it makes sense for investors to opt for new builds. 3 Day of reckoning to come Falling house price expectations reflect the impact of the “artificial downturn” engineered by the Reserve Bank, according to the Property Institute. 4 Insulation wake-up call Insulation grants are being extended to low-income homeowners – which should prompt investors to get in quick before the scheme ends. 5 National sales volumes plummet Auckland property sales were down by a third…

REINZ HOUSE SALES: DOWN Once seasonally adjusted, sales volumes were again down around the country, and particularly in Auckland, in June. INTEREST RATES: UP Interest rates remain low, but banks are now announcing increases on a regular basis. OCR: DOWN The Reserve Bank left the OCR on hold at the record low of 1.75% in June. IMMIGRATION: UP Annual net migration hit yet another new record in June. Monthly net migration was also up considerably - to just under the record set in January. BUILDING CONSENTS: UP Once seasonally adjusted, building consents were up in May, after a fall in April. Statistics NZ says the overall consent trend is on the increase. MORTGAGE APPROVALS: DOWN Reserve Bank data shows that both mortgage lending overall and the share of lending going…

Property investors often want early retirement and financial freedom as a key outcome of their investing activities – but what about their kids? What will their financial future look like? Author of Kill Your Mortgage and Sort Your Retirement, Hannah McQueen addresses parents’ burning questions in her latest book Pocket Money to Property. Whether you have a primary-aged child learning to count or a twenty-something grown-up kid who can’t get on the property ladder, McQueen has clear and practical advice for parents to help their children to a financially independent future. Through her work as a chartered accountant and director of EnableMe, McQueen has a good grip on the unique financial and job-related challenges facing the young generation. She believes “it’s imperative you identify your child’s unique strengths and tendencies”.…

❝ If your property deal won’t work without you freaking out over every dollar, it’s a sure sign that the margins are ❞ too tight Why do we all love property so much? It’s exciting, it’s interesting, it’s varied and it’s versatile. But let’s not beat around the bush – it’s ultimately about money. And the money is significant. There are thousands of New Zealanders whose own earnings are outdone by how much their houses go up in value in a year, and that can happen year after year for quite long stretches. For investors, each year the rent goes up, the mortgage comes down, and our properties create incredible passive(ish) incomes that set us up for a far more comfortable retirement. Yet I still meet people who want to…

❝ It’s important that when the opportunity to inspect is taken by the landlord, that the entire property is inspected ❞ We all know the theory behind inspections but when it comes to the crunch it’s surprising how many landlords don’t inspect their investment. The reality is we are putting a stranger in charge of one of our biggest assets. It’s therefore logical to ensure that asset is being maintained. PRE-TENANCY INSPECTION Starting from the beginning, before a tenant moves in (but not too far before otherwise it will be deemed to be invalid), a full condition report should be created. The generic tenancy agreements available online provide a form however this doesn’t include a lot of space for detail. At this point, absolutely everything needs to be recorded and…

THE DATA Rental data is sourced from the Ministry of Building Innovation and Employment (formerly the Department of Building and Housing) based on rental bonds lodged. This rental data is supplied to us grouped into geographic areas based on statistical area units used by Statistics NZ for the census and as a result do not always match well with common usage suburb names. The rental data for each area is matched to house price information from our database to determine property prices and therefore yield. The yield is calculated as the annualised rental income divided by the median house value calculated using our E-Valuer. MARKET COMPOSITION The rental market in West Auckland is dominated by houses, with only three (out of 12) areas having less than 80% of the market…

Renters United and ActionStation have just launched “The People’s Review of Renting” which collects and publishes tenant stories about renting. Renters United spokesperson Kate Day says roughly half of the country lives in rentals and yet many renters feel like second class citizens. “Many have to live in places that are cold, unhealthy or unsafe. Others feel insecure in their homes.” “We urgently need to improve the laws that protect renters. The stories we collect will help bring these issues to the forefront this election.” The Labour Party’s Healthy Homes Guarantee Bill is still progressing through Parliament and both Labour and the Greens have minimum rental standards as part of the housing policy they are currently campaigning on. But, at an Auckland Property Investors’ Association (APIA) election debate in July,…

Hannah Macdonald Don't be afraid to shop on trade me, you can pick up a whole kitchen for under $1000 ours was $1000 including sink taps oven and stove. Dishwasher was under $200. Funky wallpaper. Jess Riou Never over capitalise. The style/price of the kitchen should match the quality/style of the house. Entry level house=entry level kitchen while still being functional and tidy. Lauren Young Even something as simple as removing a drawer to add a dishdrawer can add value, or a splashback! Sian Draper Even the most handy-challenged can save significant money with DIY flatpacks. My one came with all the hardware and complete instructions. All I needed was a flat space and a screwdriver. I ordered the benchtop pre-mitred from Mitre 10 then paid someone for a couple…

❝ As investors, consolidating your existing portfolio is a good place to start❞Peter Norris It’s midnight on a Saturday night and you’re out on the town. It’s been a great night so far and now you’ve got a decision to make. Finish your last beer, down a glass of water and grab a cab home knowing that this decision will make your Sunday a lot more productive. Or go with the alternative; you finish your last beer, grab a cheeky tequila shot and then move to spirits, not getting home until the early hours of Sunday morning. This decision causing you to spend the rest of your day feeling sorry for yourself with an horrendous hangover. This is the current state of the New Zealand housing market (certainly Auckland). We’ve…

How much will hosting the America’s Cup add to our economy? At least half a billion dollars, if previous Cups are any indication. A report found the first Cup hosted here resulted in an additional $640 million of ‘value added’ to the economy, of which one quarter was spent outside Auckland. It created around 10,500 jobs (specifically, “full time equivalent years of employment”), including 2,500 outside Auckland. As Helen Clark noted at the time, "While Auckland gained enormously, it's good to know that the flow-on effects benefited the country as a whole." These whole-of-country benefits, including promoting New Zealand as a destination, mean it would be surprising if the Government didn’t chip in to help meet the costs of hosting. Aucklanders should brace themselves for big projects in the city…

❝ I believe prices, occupancy and rents will all continue to climb steadily, albeit slowly at first, in the lead-up to the Cup ❞ I have spent the last couple of months suffering from America’s Cup withdrawal – it’s a hell of a high to come down from. Watching the action, seeing New Zealanders all get together behind the team, and experiencing a real-life underdog story that captured everyone’s imaginations. We tend to use the word innovation far too liberally, but Emirates Team New Zealand showed that genuine innovation can propel our tiny nation to punch above our weight – and our budget. When our team lifted that cup above their heads it was like the end of a great movie: I was so thrilled with the finale but at…

❝ The safest way to buy is to develop or manufacture your own equity in a property purchase ❞ The media is all over the place at the moment. The day I am writing this article, Barfoot figures in Auckland show drops in ‘sale prices’ and ‘days to sell’ increasing in many areas around Auckland and state that the medium price is the same as 12 months ago. Of course the Herald has jumped on the bandwagon saying that Auckland is again behind the rest of the country. This last statement is probably correct, it happens about once every ten years, and when that happens it is time to be very careful and cautious when purchasing. As far as the Auckland market being the same as 12 months ago, the…

❝ It just isn't fair that landlords could be held financially responsible for their tenant’s damage when they cannot get insurance to cover the cost ❞ Public submissions have been called for on the Residential Tenancies Amendment Bill (No 2) which covers three key areas. Unlawful rental properties, meth in rental properties and fixing up the debacle of tenants not being responsible for damage that they cause. Measures to address tenants not being responsible for damage cannot come fast enough, so the NZPIF welcomes this part of the Bill. Tenants will once again be responsible for their damage, however it will be limited to the landlord’s insurance excess or four weeks' rent (whichever is lower) for each incident of damage. Although the proposed changes are significantly better than the current…

At Home Property Management 022 303 3449 www.athomepropertymanagement.co.nz Bay of Plenty Regional Council 0800 884 881 www.boprc.govt.nz B&N Property Management 0800 111 252 www.bnproperties.co.nz Bayleys Real Estate 0800 BAYLEYS www.bayleys.co.nz/commercial Click Property Management 0800 1 CLICK www.click4rent.co.nz D&D Financial Consultants 09 369 5144 www.dandd.co.nz Discount Property 021 280 6655 www.discountproperty.net.nz G.J. Gardner Homes 0800 424 546 www.gjgardner.co.nz iFindProperty 021 486 000 www.ifindproperty.co.nz Impression Real Estate Ltd 09 300 5001 www.impression.co.nz Keith Hay Homes 0800 KEITH HAY www.keithhayhomes.co.nz Key Exchange Property Group www.keyexchangepropertygroup.com Kris Pedersen Mortgages 09 476 1199 www.krispedersenmortgages.co.nz Methsafe 0508METHSAFE www.methsafe.co.nz Meth Solutions 09 929 4546 www.methsolutions.co.nz Maintain to Profit 09 929 4546 www.maintaintprofit.co.nz Martin Davidson & Associates Ltd 09 294 6262 www.martindavidson.co.nz Ministry of Business, Innovation and Employment 09 928 2858 www.mbie.govt.nz NZ Property Investors Federation 03 357…

In mid-July, the Government announced that five of New Zealand’s fastest growing councils will receive funding for nine infrastructure projects from the $1 billion Housing Infrastructure Fund it set up last year. Auckland and the Waikato were the big winners, but Tauranga and the Queenstown Lakes region were also allocated significant funds. Finance Minister Steven Joyce says the funding allocations will help provide another big step forward in housing supply, with the funding supporting infrastructure for 60,000 new dwellings. Just a few weeks later, the Government announced it will be re-purposing its ultrafast broadband company into an agency which will work to co-invest up to $600 million alongside local councils and private investors in network infrastructure for new housing developments. Joyce says the new agency, Crown Infrastructure Partners, will set…

The Tribunal looks at the accuracy and soundness of the information presented to it when determining outcomes. With this in mind, Andrew King outlines some key tips investors can take to enhance having the Tribunal accept their self-test kit as evidence, before the self-test guidelines are in place. • Name and describe the test kit you have used. Provide all evidence you have of the kit’s efficiency and accuracy, preferably evidence independent from the manufacturer. • State the resources that you used to conduct the test. • State how you have minimised the potential to introduce meth into your sample by wearing protective gear such as rubber gloves. • State what rooms you tested. • State exactly where in the room you took your sample. If you were able to…

With September’s election drawing ever closer, housing remains a dominant concern for both politicians and voters. This has contributed to an even greater focus on market data – and, in recent weeks, a growing public emphasis on the market slowdown, particularly in Auckland. It is, of course, not that simple. The national market results are hugely influenced by Auckland’s results. This means that once Auckland is excluded from the data it is very clear that different markets continue to move at different rates. For this reason, it seems worthwhile to take a look at how this is playing out in New Zealand’s three main centres, and what the results mean when it comes to the future outlook for the market. AUCKLAND HALTS It may have seemed like the Super City…

KRIS PEDERSEN Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. Phone 09 486 4719, www.krispedersenmortgages.co.nz NICK ASHFORD Nick and his team specialise in advising on property-related transactions, valuation and restructure services, and tax planning. Withers Tsang & Co Phone 09 376 8860, www.wt.co.nz BERNARD PARKER Bernard is principal of Quinovic – Kapiti-Mana. Quinovic’s outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 26 years.www.quinovic.co.nz ALLAN GALLOWAY National Manager Case Management at Ministry of Business, Innovation and Employment Q I am holding two rental properties (through a LTC) and I own a residential house (outside the LTC). All the properties are mortgaged on cross-collateral security to the same bank,…

❝ Knowing what stage you are at in your plan is important in deciding what you ❞ want to do In my previous articles I outlined two of the most commonly asked questions we get from our property investor clients; 1 WHAT TYPE OF ENTITY SHOULD OWN MY PROPERTY? AND, 2 HOW SHOULD I STRUCTURE MY PROPERTY DEBT? We are in fairly certain accounting realms when answering the above questions. However, inevitably we do get put in a difficult situation when answering the following question:; 3 SHOULD I BUY/SELL A PROPERTY? As a firm of many property enthusiasts this question is exciting, however as Chartered Accountants we are keenly aware that we cannot actually provide investment advice. For example, should I buy or sell an investment such as shares, property…

❝ Most people massively overestimate what can be achieved in five years and massively underestimate what can be achieved in 15 years ❞ In real estate there is no such thing as a ‘get rich quick’ scheme – it just doesn’t exist. Anyone telling you this is probably just trying to take your money. Between our team of experts, we have probably tried everything there is to try in property investing. We’ve looked under every rock, under every bush, behind every tree… I’m telling you, it’s just not there. Yes, some ways are faster than others, and some people luck out buying a great deal in a market experiencing rapid growth. But, in general, most people massively overestimate what can be achieved in five years and massively underestimate what can…

NORTHLAND NEXT MEETING: Wednesday August 30, 7.00pm – 9.00pm at the A’fare Event Centre, Whangarei. TOPIC: Ministry of Business, Innovation and Employment presents the Renting and You seminar for landlords, tenants and community groups. It is a great opportunity to hear from MBIE directly. All welcome. MEMBERSHIP: $180 single or $210 couple; includes subscription to the NZ Property Investor and NZPIF discount card, plus local trade discounts. Please email npiacontact@gmail.com for more information. PO Box 1640, Whangarei. AUCKLAND NEXT MEETING: Tuesday August 1, Dorothy Winstone Centre, Auckland Girls Grammar School, 14 Howe Street, Freemans Bay. Admission from 18:30 to 19:30. Free for APIA members and $75 for non-members with prior registration. TOPIC: Details of this meeting will be posted on www.apia.org.nz. APIA hosts 100+ informative property events throughout the year…

 How did you get started in property investing? “Never underestimate the value of a ‘gut feeling’ if you think something right or wrong” Stephen East: I was always interested in earning passive income and saw property investing as a way of achieving that. We started with a two-bedroom flat, one of four units in 2000 and continued buying from then. What are you doing in your portfolio at the moment? We have been busy with a couple of major renovations recently that have taken a lot of time. Favourite book that's helped you on your investment journey? Any book by Dolf de Roos and Robert Kiyosaki were of great interest and value. Recently I bought Lisa Dudson’s new book The NZ Property Guide to give to my children and…