Innholdsfortegnelse for Nov 18 i NZ Property Investor

Here at NZ Property Investor, we’ve long heard that the slew of government housing and tax policy changes, along with an anti-landlord climate, will lead to both rent rises and landlords selling up and getting out. Putting anecdotal and social media “evidence” aside, it’s hard to tell whether an exodus of landlords is getting underway. There was a healthy turn out at last month’s NZ Property Investors Federation conference – as can be seen in this issue’s conference round up. And recent CoreLogic data shows multiple property owners maintained their 24% share of the buying market in the last quarter. But many landlord advocates believe growing numbers of landlords are reassessing their options and don’t plan to buy more rental properties. That means rental stock won’t be replenished to the…

After a 2013 High Court judgment was cited as authority in the now-notorious Vic Inglis case last year, landlords have had to face the prospect of full rent refunds to tenants. The Anderson v FM Custodians case determined that unconsented premises don’t meet the definition of “residential premises” under the Residential Tenancies Act (RTA). That meant they were regarded as “unlawful tenancies” and not within the jurisdiction of the Tribunal. This highlighted the uncertainty created by the FM Custodians ruling which has, reportedly, led to a number of full rent refunds to tenants in “unlawful tenancy” situations. But NZ Property Investors’ Federation executive officer Andrew King told NZPIF conference delegates that a new High Court ruling, which disagrees with the FM Custodians decision, means the situation is changing. “The judge…

REINZ HOUSE SALES: DOWN Sales volumes nationwide were down in September. Not only were sales at the lowest level since January, but it was the lowest sales volume for the month of September since September 2011. 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 September and Reserve Bank Governor Adrian Orr says it is now likely to stay on hold until 2020. IMMIGRATION: DOWN Monthly net migration was down in September as compared to August. Annual net migration was down in September for the eighth month…

Bank of New Zealand recently announced that it will be differentiating between “Residential Owner Occupied” and “Residential Investor” when it comes to setting interest rates. Changes made by the Reserve Bank of New Zealand requiring banks to hold more capital for “investor” loans are quoted as one of the main reasons for the change. The bank’s view is that lending for residential investment properties carries higher risk than that of owner occupied properties, and therefore should incur a higher interest rate. Australia has had differential interest rates in place for a while now, and we expect to see other banks roll out a similar policy here in the near future; keep an eye on lending across the ditch for insight into potential movements in the New Zealand market. The Australian…

It’s important to realise that many factors are assessed when an underwriter calculates the premium to charge, warns Crombie Lockwood learning and development specialist Alan Race. Properties of a similar value will not necessarily have the same premium charge. The factors considered when calculating premiums are: Theageofthebuilding Location and region Construction type Land geotechnical details Occupation of the tenants and/or neighbouring tenancies The activities undertaken in the premises The value to be insured The condition and state of maintenance of the building. Further, older buildings do pose challenges – particularly if they are unable to meet minimum earthquake standards. Mixed use properties (for example, retail and residential) can also complicate policy considerations for a number of reasons (including EQC and fire levies). Tenants can also impact on premiums and…

It seems that the discussion regarding New Zealand having a capital gains tax (CGT) is one that will last the test of time. Every election, every housing crisis, and of course every time a tax working group is formed, CGT is the hot topic. The question we have to ask is why? WHAT WOULD A CGT LOOK LIKE? For the purposes of this article we will look at what the Tax Working Group’s interim report has suggested as their vision of a CGT. • What could be subject to CGT? Business assets including farms, land and buildings: both residential and commercial property, shares and other forms of investments. • What is unlikely to be subject to CGT? Family home, with strict guidelines on what constitutes the family home, and personal…

When investing in a rental property, it is unlikely you would purchase without getting an expert to investigate the integrity of the house. The same due diligence should be applied for a bare section. Why would you invest in a section with the vision of relocating a house onto it without finding out first what the rules, regulations and any potential issues were? The team at The Relocatable House Co. understand the importance of sound due diligence when it comes to property purchases. A Site Audit Report completed by one of our qualified architectural designers may just be the ticket. This covers: • a plan of your site, including potential places for positioning of the house and access; • council requirements and fees for your project; • rules regarding relocated…

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 across Horowhenua and Kapiti Coast is dominated by houses, with only a handful of flats and no apartments. Out of 481…

By the time you read this all submissions on the Residential Tenancies Act Review and the Healthy Homes Guarantee Bill standards will have closed. From speaking to tenant advocates it’s clear we come from two very different viewpoints. It appears that some of the more vocal advocates are extreme and one-sided in their thoughts, with an unrealistic expectation for the outcomes of their proposals. This is a shame as the NZPIF has always tried to form policy by considering the needs of tenants as well as the needs of rental property providers. Other tenant advocates have also approached changes to our industry in a similar manner and I firmly believe that leads to better outcomes. GROUP SHORT-SITED While many of us agree that a rental property should be a tenant’s…

NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of September 2017 and September 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…

The Tribunal’s chief adjudicator, Melissa Poole, told delegates at the NZ Property Investors’ Federation conference that it will use the 15mg level as proposed in the Gluckman report. But that is only as long as the meth test was done after the report was released on May 28 this year. Poole says the Tribunal’s hand was forced by Housing New Zealand’s decision to use 15 as its standard shortly after the Gluckman report was released. “If you have the biggest player in town going with 15 as the standard it becomes very difficult for us to say to you guys you’re not Housing New Zealand so we are going to apply NZS (1.5) to you. It would effectively penalise private landlords.” But Poole says there are some important differences between…

In part one we discussed: the Official Cash Rate (OCR) and how is it applied; inflation and why is it important; and the connection between interest rates and inflation. Here we’ll cover forward interest rates and how they are calculated and current inflationary drivers in NZ. I’ll then pull these five factors together to argue why I wouldn’t fix for 12 months. WHAT DETERMINES FORWARD INTEREST RATES? Forward interest rates can most simply be described as the market sentiment of where interest rates are headed in the future. Interest rates are influenced by the OCR and the OCR is influenced by inflation. Therefore, forward interest rates are reflective of future inflation. If we believe inflation is going to be high (and the OCR and interest rates raised) we would see…

There is no doubt the Tax Working Group’s recently released interim report is the topic du jour. Accordingly, it is only appropriate that I offer my two cents’ worth, particularly in relation to the comments on a possible capital gains tax. • The Tax Working Group (TWG) has ruled out a land tax or an inheritance tax, but appears to me to clearly be pushing towards implementation of capital gains tax (CGT). They have noted that it is premature to form a view without firstly determining exactly how the tax may apply, but I would be highly surprised if their final report did not support implementation of CGT. • The TWG is of the view that CGT should apply across assets broadly, so not restricted solely to real estate. It…

• Consents for new dwellings are the highest they’ve been for 14 years and are approaching the highest ever, which is welcome news against a backdrop of a housing shortage of 46,000 dwellings. • The mix of dwelling type has changed significantly, and the average dwelling size has plummeted, mostly due to budget constraints encouraging a switch from stand-alone houses to townhouses and apartments, but also due to changing patterns in apartment and townhouse size. • Multi-unit dwelling construction requires a skillset that differs somewhat to that required for stand-alone homes, and is more akin to non-residential building. With the recent surge in nonresidential building activity, this suggests we will see non-residential and more complex multi-unit developments competing for workers.…

I was privileged to attend the 2018 NZPIF Conference in Dunedin recently. Conferences are interesting and I usually try to pick up one to two new ideas amongst all the fun. Why only one to two? Property is a game of leverage and you only need a few strong concepts to build on and you will be very successful over time. Discovering 50 new ideas, while it sounds exciting, can very hard to implement. This time the comment that pricked my ears was a gentleman talking about investing in heritage properties. He is a consultant who advises on sites of archaeological significance. He uses that knowledge to invest in old commercial buildings in Dunedin that are in a poor state of repair and he makes them beautiful again. He spoke…

DO YOUR HOMEWORK AND RESEARCH, RESEARCH, RESEARCH Knowledge is power, and it applies to the property investment market. You must know about what the current market is doing, what is happening in the area you would like to buy in and what industry experts might be predicting to happen going forward. Although this is just an indication, it is essential to understand what knowledge is out there. Knowledge will also minimise any risks associated with buying an investment property. The more knowledge you have, the better choices you can make. Make sure to utilise such useful online sources as homes.co.nz, QV.co.nz or local council website for rates and valuations. Some information online is paid, and to my opinion, if you’ve done all your homework and are set on a property…

OVERALL: The Kapiti Coast is currently enjoying steady growth. Upgraded rail connections to Wellington, the new Air Chathams scheduled air service from Paraparaumu to Auckland and roading improvements on SH1 are making the Coast more accessible from outside the area and internally. The district has very well reputed schools, both primary and secondary, enticing families from outside the area. 1 OTAKI The Kapiti Expressway extension to Otaki is due for completion in 2020, as is Transmission Gully motorway. There is already upward movement in rents, caused by increased demand from tenants who foresee the convenience that will come from the four-lane Otaki-Wellington connection. 2 WAIKANAE Since completion of the first stage of the Kapiti Expressway Waikanae Beach has surged ahead in popularity, with steady increases in property prices and rents.…

NORTHLAND NEXT MEETING: Wednesday November 28, 7.00pm at Distinction Hotel, Riverside Drive, Whangarei TOPIC: Mark Holman – Director of FirstBuild Limited – will talk about his company aspirations to step up to the NZ Government’s challenge to the construction industry to build 100,000 KiwiBuild “Affordable homes” in ten years. With a government directive for OSM – Off Site Manufacture – to help bridge the gap between demand and supply, this talk will “frame” the future for residential construction for the next decade in NZ…pun intended! MEMBERSHIP: $180 single or $210 couple; includes subscription to 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 November 13, Dorothy Winstone Centre, Auckland Girls Grammar School, 14 Howe…

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 BRILL MANAGEMENT 021 530 276 www.brillmanagement.co.nz 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 FINAX 027 279 8358 www.finax.co.nz GILLIGAN ROWE & ASSOCIATES 09 522 7955 www.gra.co.nz G.J. GARDNER HOMES 0800 424 546 www.gjgardner.co.nz HARBINSONS 09 585 0324 www.harbinsons.co.nz HOUSE ME 0800 468 736 www.houseme.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…

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,…

We have a Retiring population of One Million Baby Boomers in New Zealand who are now entering into their 70’s over the next 16 years. As they retire we need the equivalent amount of people to replace them in the workforce. Baby-boomers aren’t readily giving up their beds to the new replacement worker and this will result in a growing shortage of accommodation in essential areas for some time creating huge opportunities for today’s active property investors. 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…

Sam Wang and friends used Resene Alabaster as the exterior paint for their renovation. In this picture this paint is used on the trims - it’s a popular choice as a colour for highlights such as this. Karen Warman from Resene says that they have seen a huge shift towards black and grey finishes outside, teamed with white trims, in recent years. “The greys go from the softest whisper of grey through to deep shades, such a Resene Surrender and Resene Bokara Grey,” she explains. She continues by saying that the sun tends to make colours look lighter outside, so often it’s a good idea to choose the darker of your favourite colours so you don’t end up with a glary exterior. “More recently we are seeing this look soften…

You’re probably a buy-and-hold investor, right? You know all the clichés about “time in the market, not timing the market”, and you understand that selling too soon can prevent you from maximising your profits. That’s a perfectly sensible attitude in many cases and I would never suggest that you jump in and out of the market or sell a property that’s got great longterm prospects. It must be said, though, that some Kiwi investors cling to their properties like barnacles to a ship – even if the ship isn’t going anywhere. Just because you’re a buy-and-hold investor, doesn’t mean you should never sell. Contrary to how it can sometimes feel when you’re talking to other investors, you’re not playing Monopoly. It’s not a competition for who has the most houses.…