Innholdsfortegnelse for Oct 18 i NZ Property Investor

It’s a time of great change for investors. Nearly a year after the Labour-led Government took office, promising transformation, a flood of reforms are shaking up the housing market. And right now it’s the Government’s proposed tenancy law changes that are in the spotlight. In a bid to redress what it sees as the imbalance between landlords and tenants, the Government has suggested an extensive overhaul of tenancy laws. Following on as they do from Renters United’s radical manifesto to “fix” the rental system, the proposals have left many investors worried. The reforms themselves, particularly in tandem with the soon-to-be-introduced Healthy Homes minimum standards, will increase both the costs and work involved in providing rental properties. But it seems to me that it’s the adversarial approach of tenant advocates, and…

Green Party co-leader Marama Davidson wants to see the introduction of a mandatory national WoF for rental properties to ensure better enforcement of housing standards. “The WoF would be a regular check on rented homes by independent approved inspectors to make sure they meet the healthy home regulations for warmth, dryness and ventilation.” Davidson says any rental property that didn’t pass the standards set would then not be able to be rented out. Having a WoF system for rental properties is not a new idea. Different rental WoF systems have been proposed regularly over the last 20 years. Successive governments under both Labour and National have rejected the idea, but Wellington City Council instituted a voluntary rental WoF system last year. To date, Wellington’s scheme has seen less than 20…

REINZ HOUSE SALES: UP Once seasonally adjusted, sales volumes were marginally up nationally in August as compared to July. They were also up slightly year-on-year. Sales activity was down in Auckland and flat in Wellington. INTEREST RATES: DOWN Interest rates remain low and banks are still battling it out with cuts to short-term rates. But commentators are now speculating that lower interest rates are set to stay around for longer than previously thought. OCR: DOWN The Reserve Bank left the OCR on hold at the record low of 1.75% in August and Reserve Bank Governor Adrian Orr says it is now likely to stay on hold until 2020. IMMIGRATION: DOWN Monthly net migration dropped in July as compared to June. Annual net migration was down in July for the sixth month in a…

This month saw some interesting movements in interest rates. Rates continued to move down in New Zealand, while across the ditch borrowers were not so lucky with interest rates going up. NEW ZEALAND RATES All major banks in NZ(1) continued to move their interest rates down this month. As highlighted in last month’s article, these interest rate movements are now not just happening in the short end of the interest rate curve, but we are also seeing interest rate drops in the long-term rates. What started last month as small changes by a few in some of the longterm rates, has now spread to all banks moving the interest rates down across both short and long-term periods. BNZ moved its interest rates down across all terms, right through from six-month…

Take the headache and stress of property management out of investment properties. Knowing what the up to date rent, increasing rents, and managing tenants is not as easy as it sounds to the novice investor. One missed rental increase could be more than the cost of a property management company. Use a dedicated property management company that is available 7 days per week. Successful property investor and mentor Ron Hoy Fong has built an impressive portfolio and has a wealth of investment strategies and wisdom to share with you. For information on his mentoiring programmes call Ron today . Ron Hoy Fong | 021 888 298 | www.ronovationz.com…

‘New investors simply can’t compete with the wealthier ones and are effectively priced out of the game, the rich getting richer thanks to more bad law’ Since the passing of the foreign buyer ban, the media has been vocal in its criticism of a government initiative that many see as doing more harm than good when it comes to making housing more affordable for first home buyers. As we await the real impact of this ban we also await the detail of the bill that the Government is supposedly intending to pass into law on April 1, 2019 to ring-fence tax losses on residential rental properties. It’s been many months since the official’s issues paper closed for submissions and very little has been heard on the fate of the bill…

House relocation is a fantastic opportunity to get instant equity in a property. I was drawn to this intriguing concept when a friend started doing some house relocation projects and wanted to give it a go myself. I had a large sub-dividable site that looked good to develop so there started the journey of house relocation for me. How hard can it be? Find a house, get a permit and shift it on – or so I thought. The following are the key learnings from a very typical “she’ll be right’’ Kiwi woman: 1. IT STARTS FROM THE GROUND UP Geotech reports are a non-negotiable in my book. They are not always a requirement by local council authorities but let me run you through the downside of not getting one.…

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 and around Dunedin is predominantly houses, but there are also some flats spread across the area and two suburbs with…

NORTHLAND NEXT MEETING: Wednesday October 31, 7.00pm at Distinction Hotel, Riverside Drive, Whangarei. TOPIC: Kerry Beveridge, winner of 2017 Landlord of the Year, is the speaker. He is president of the South Canterbury Property Investors’ Association and was also a South Canterbury 2017 Emerging Business Finalist. Kerry is passionate about property and in providing accommodation to his many tenants. He has been investing since 2006 and has employed multiple strategies to maintain profitability. Most recently he has found success with boarding houses. Treat yourself to this opportunity to hear Kerry speak about his journey, his knowledge of the boarding house sector and to be inspired by Kerry’s enthusiasm for property. Come and learn what it takes to be a great landlord. MEMBERSHIP: $180 single or $210 couple; includes subscription to…

AT HOME PROPERTY MANAGEMENT 022 303 3449 www.athomepropertymanagment.co.nz BACHCARE 0800 422 242 www.bachcare.co.nz BARFOOT & THOMPSON 09 307 6300 www.barfoot.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 EDINBURGH REALTY 03 474 0444 www.edinburghrealty.co.nz EL CONTRACTOR 021 0891 7220 www.elcontractor.co.nz GILLIGAN ROWE & ASSOCIATES 09 522 7955 www.gra.co.nz G.J. GARDNER HOMES 0800 424 546 www.gjgardner.co.nz IFIND PROPERTY 021 486 000 www.ifindproperty.co.nz IMPRESSION REAL ESTATE 09 300 5001 www.impression.co.nz KEITH HAY HOMES 0800 KEITH HAY www.keithhayhomes.co.nz KRIS PEDERSEN MORTGAGES 09 476 1199 www.krispedersenmortgages.co.nz LOTUS 03 3888 444 www.3888444.co.nz MARTIN DAVIDSON & ASSOCIATES LTD 09 294 6262 www.martindavidson.co.nz MAX LOANS 0508 MAX LOANS www.maxloans.co.nz MBIE 09 928 2858 www.mbie.govt.nz NZ PROPERTY INVESTORS FEDERATION 03…

Twelve- month interest rates are particularly appealing at the moment. Kiwibank has most recently offered a 12-month fixed rate sub 4% and many banks are moving in the same direction. This is fantastic for the next 12 months, however it pays to think about what you are going to do post the expiry of this rate. With that in mind, we’ll explore the following five key points over two parts: 1. What is the Official Cash Rate (OCR) and how is it applied? 2. What is inflation and why is it important? 3. The connection of interest rates to inflation. 4. Forward interest rates and how they are calculated. 5. Current inflationary drivers in New Zealand. Firstly, what is the (OCR) and how is it applied? The OCR is the…

At the time of writing, Labour’s new foreign buyer ban has just passed through Parliament and while this signals that New Zealand is closing its doors to foreign investment, the same does not necessarily apply in reverse to New Zealanders looking to invest offshore. While doing so can be a logistically challenging exercise, it can also provide great rewards. Like all investment activities though, there are tax implications for New Zealand tax residents investing in offshore property. Firstly, as a New Zealand tax resident you are obligated to account for your worldwide income to the IRD here. This means you approach the tax treatment of property owned offshore as if it were situated here. The calculation of a rental profit or loss is the same for New Zealand tax purposes…

1 It’s never too late to start, the best day to start is today 2 Invest your time and money in education, it is better to learn from education than from your mistakes 3 Join your local Property Investors’ Association, it not only puts you in touch with similar minded people, but also gives you access to discounts from major retail chains 4 Find experts in the market; real estate agents, mortgage brokers, accountants, lawyers and mentors to help you succeed 5 Do your numbers and stick to them; don’t let your emotions take over…

The reform proposal relating to pets in rental properties is of particular concern to many landlords. That’s because many feel pets pose undue risks – especially in the wake of the damage liability precedent set by the Osaki case. But the proposal is not that landlords have to allow pets. Rather it seeks to define when it is reasonable for a landlord to turn down a request to keep a pet. It also looks at what legal changes – like the introduction of pet bonds or carpet cleaning requirements - could be made to reduce risks posed by pets. King says the NZPIF’s advice is that landlords should consider pet requests seriously. “If it is possible to allow a pet and the property is safe for pets, don’t just say…

‘While I agree that we make our money when we buy well, a good purchase need not be limited exclusively to an immediate financial win’ I’m intrigued by what investors call a “good deal” and nine times out of 10 the stock standard description from investors is that it means a property must be purchased “below value”. While I agree that we make our money when we buy well, a good purchase need not be limited exclusively to an immediate financial win. Let me explain… As we move into a flat market, also known as a “buyer’s market”, it’s an opportune time as investors to be creative in our negotiations. In a hot market you have to move fast, compete against more people and often be left out of pocket…

‘Before starting to look for your next property investment, you should ask yourself what you’re wanting to achieve’ Last month I wrote about different strategies to use for getting into the property market without significant capital. Following this subject, I also often get asked about what the best property investment would be to buy right now. I’m not a financial adviser, however I know a bit about the industry and can certainly share my point of view. Before starting to look for your next property investment, you should ask yourself what you’re wanting to achieve and what your goal is with this property. These are definitely the two questions to keep in mind before starting anything, as the direction to take becomes very clear once you’ve answered them. Besides this…

1 MAORI HILL/ROSLYN/ BELLEKNOWES Good schools, close to CBD make these suburbs popular with professionals. Not your typical rental area but always desirable with higher capital gains. 2 HELENSBURGH/WAKARI/ KAIKORAI Back further from the city (a 10 minute drive to CBD) very popular with families, with good solid houses built through the 1950-1960s. Houses get good sun, there tend to be less rentals and more privately owned properties. Popular for tenants wanting to be close to town with rents that are more affordable in a family home setting. 3 NORTH DUNEDIN Prominently the student market. A lot of the older houses have been renovated, (some have been demolished) to make way for newly built, as students look for more quality rental accommodation. 4 CITY RISE/CBD Changes to the district plan…

NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of August 2017 and August 2018, based on figures from the Ministry of Business, Innovation & Employment. RENTAL SNAPSHOT Median house rents of the dominant dwelling type for the area EXPLANATION OF STATISTICAL TERMS No. of Properties: Total number of residential properties No. of Bonds: Total number of bonds lodged in last three months Median Rent: Weekly rent based on the bonds lodged in the latest three months Rent Quartile Range: Inter-quartile range of weekly rent based on the bonds lodged in the latest three months Median Value: The median value of properties in the group based on estimating the current market value of each property using our E-Valuer at the end of the…

1 European rental models are often looked to as ones that New Zealand could learn from. That prompted Auckland Property Investors Association vice-president Peter Lewis to take a close look at Sweden’s rental market. 2 Proposed Healthy Homes standards out. Landlords are one step closer to knowing the minimum standards their rental properties will have to meet with the release of the Government’s proposals for them. 3 Storing up value. Storage units may not sound like an exciting proposition but, for investors lucky enough to get in on them, they offer steady cash flow, low risk and easy management. 4 Failure to provide heating costs. Landlords must provide an approved form of heating in their rental properties – and ensuring there are working power points is no longer enough. 5…

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 MARK WITHERS Mark 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 JENNIFER SYKES Manager, Information & Education, Housing & Tenancy Services at Ministry of Business, Innovation and Employment (MBIE). MATTHEW GILLIGAN Matthew Gilligan is a property investor, developer and tax adviser. He is managing director of chartered accounting firm Gilligan Rowe & Associates,…

KITCHEN Kitchen cabinetry by Kitchen Mania $11,710 Kitchen delivery and install by Kitchen Mania $1,760 Benchtop slab by Heritage Hardware and Installation $6,783 Appliances by SMEG $5,700 Sink, tapware, waste and handles by Heritage Hardware $2,625 Plumbing by Steel Plumbing $1,725 Painting (including preparation and spray hire) $1,900 Electrical by Pro-Spec Electrical $1,725 Floor sanding by Active Floor Sanding $550 Splashback tiles from Tile Clearance Centre $250 Total cost: $41,630 EXTERIOR Deck construction, base boards and entrance built by So Renovate $20,000 Deck stain: $145 Exterior paint: $933 Exterior painter $7,500 Driveway $6,500 Roof $10,000 TOTAL COST: $45,078 LIVING ROOM Electrician by Pro-Spec Electrical $1,725 Flooring by Active Floor Sanding $550 Paint (including preparation and spray hire) $1,900 Building Work (including plasterer) by So Renovate $3,450 Blind 50mm wooden Venetian…

‘We desperately need a governing body with some minimum standards, tenants deserve better too - imagine getting a 42-day notice to vacate your home’ When you want to see someone look surprised and slightly horrified, explain to them that anyone can set up shop as a property manager tomorrow. That includes someone with a history of fraud, or someone who’s never heard of the Residential Tenancies Act, or someone who has never been a tenant or owned a house. Just this week I spoke to an owner who said to me, “I cannot believe there isn’t any legal requirement for a property manager to have an audited trust account – and at least some form of basic qualification.” Like most property managers who take pride in their work, I am…

Two critically important reviews on the rental industry are underway simultaneously at present. The Residential Tenancies Act (RTA) Review and the review of standards for the Healthy Homes Guarantee Bill. The RTA Review covers many issues, however the main matters are: • security of tenure for tenants • removing 90-day no cause notice • how a landlord can sell their rental property • allowing tenants to modify their rental • potentially making it compulsory to allow pets. The first three matters are interrelated, all aimed at shifting control of the rental property away from the owner and towards the tenant. If done well it shouldn’t be a problem to improve security of tenure for those tenants that want it, as a greater number of landlords probably want longterm tenancies more…