Innholdsfortegnelse for April 2019 i NZ Property Investor

Sitting down to write this editorial just a few days after the Christchurch mosque terror attacks it feels wrong not to address what happened. Here at NZ Property Investor magazine, our hearts go out to all the people affected by the tragic events of March 15. We send our deepest condolences to the families of the victims, and a message of support to the wider community. For me, alongside an overwhelming sadness, it is shock that is the dominant emotion. The violence perpetrated on innocent people does not represent the New Zealand that we know. Now, much needed dialogue about how the attacks happened, as well as the role of social media, gun access, and security agency oversights are already starting to take place. These are all critical discussions the…

REINZ HOUSE SALES: DOWN Sales volumes both nationwide and in Auckland were down dramatically year-on-year in February. Once seasonally adjusted, they were also down on January. INTEREST RATES: DOWN The mortgage rate war is back on, with banks offering sub-4% rates again. But, while commentators say rates will hover around historic lows, they do expect them to start inching up eventually. OCR: DOWN The Reserve Bank left the OCR on hold at the record low of 1.75% in February and Reserve Bank Governor Adrian Orr says they expect it to stay on hold through 2019 and 2020. IMMIGRATION: UP Migration estimates are still volatile after the introduction of a new measuring system. But the latest data suggests that net immigration inflows are on a strengthening trajectory, rather than plateauing. BUILDING CONSENTS: UP Building consents…

SHORT-TERM INTEREST RATES After extending its special one-year fixed rate last month, Westpac has withdrawn it from the market. Westpac moved its one-year rate up from 3.99% to 4.05%, on par with the other main banks. HSBC has been active in changing interest rate pricing during the month of March. HSBC moved the premier fixed rates up so that now the one-year, 18 months, and two-year rates sit at 3.99% — still sub 4%. In addition, HSBC introduced a two-year Premier special of 3.69% and takes the slot of the lowest fixed loan rate from any bank. In fact, HSBC’s 3.69% represents the lowest fixed home loan rate offered in New Zealand for over 50 years. The “special” two-year fixed home loan rate of 3.69% is for a limited time…

1 Going through divorce “absolutely crushed me – but what doesn’t kill you makes you stronger”. 2 It’s never too late to start planning for retirement and the sooner you start the better. “To find myself single in my late-40s and I was soon going to be staring down the barrel of my 60s – [I think] the sooner you can do it the better.” 3 There’s been so many changes since Rishworth started investing in property: LVR rules, financing difficulties, Healthy Homes. “It’s constantly changing – still, don’t let that put you off.” 4 Rishworth uses property managers but advises that you need to actively manage them and move if you’re not happy with the service. 5 Using a property finder takes the hard work out of property investment.…

The long awaited Tax Working Group (TWG) report has finally been released and as predicted, has recommended the introduction of a comprehensive capital gains tax (CGT). But the TWG was far from unanimous in their recommendation, with a quarter of the panel refusing to support the recommendations in their current form. Dissenters included many of the most respected authorities on tax in New Zealand including policy official Robin Oliver, tax lawyer Joanne Hodge and Business NZ leader Kirk Hope. What wasn’t predicted, and what may account for the dissension in the working group, is that the proposed CGT would be one of the world’s harshest regimes of its kind with the rate set at the high marginal income tax rate, that for most will mean 33%. By contrast, in Australia,…

At The Relocatable House Co we believe that house relocation should be simple. Making a profit or increasing your equity relocating a house is no different from baking a cake; you need a proven recipe, a simple step-by-step process to guarantee you get the result you are after. Without a recipe or formula, the process can be tricky which is why we encourage all our clients to follow this simple five-step process. Steph Dowling, who heads up our sales hub team explains this in more detail. STEP 1: READ THE DEFINITIVE GUIDE TO RELOCATING A HOUSE The Definitive Guide to Relocating a House is a free resource that will help you avoid common pitfalls when relocating a house. It will explain the process of house relocation, covering topics you…

The Wellington Property Investors’ Association (WPIA) also covers Upper Hutt. It holds meetings in the last week of every month from February to November. The WPIA meets at different venues around Wellington. Meetings are free to members, but non-members must pay a $30 door charge. For more information go to https://wellington.nzpif.org.nz/ or email wellington@nzpif.org.nz. The Capital Property Investors Association (CPIA) operates in Upper Hutt too. For more information on the CPIA and its events go to https://capitalpia.org.nz/ or email capital@nzpif.org.nz.…

The Tax Working Group (TWG) has released their report and as expected it is a comprehensive (except for the family home) capital gains tax (CGT). The group recommended taxing capital growth as income at the taxpayer’s marginal tax rate, likely to be the top tax rate. There was also no allowance for the inflation component of any capital gains. The report was greeted with howls of opposition from most industries, including farmers, business groups, financial markets and of course us, the rental property industry. There was always a sense that the report was going to be extreme, so that the Government could water it down to some degree and be seen to compromise. The Government did indeed signal pretty quickly that this would be the case. Three of the TWG…

Prospects.app is a subscription based analysis package that allows users to run scenarios for different rent amounts, purchase prices and proposed renovations on properties they are interested in. It also enables investors with multiple properties to manage their portfolio and review its performance, as well as compare potential new purchases against their existing portfolio. Al and Tanya Check developed the tool which is accessible on any type of device through a web browser, removes the need for calculations and paper files when assessing a new purchase. “It collates all the necessary information in an easy to use, accessible place with links to rates, rents and national sales data, and takes the stress and complexity away from the analysis process.” Al and Tanya, who are investors themselves, initially built their product…

Over the last 12 months there has been a radical shift in market sentiment across the investor market, particularly towards chasing yield. This has seen a huge influx of investors into the commercial property market, because it historically gives you better bang for your buck than residential property. What I often find is that a lot of investors don’t fully understand commercial property finance and the key things to look out for when looking at properties, so here’s my advice. NOT ALL COMMERCIAL IS CREATED EQUAL Are you purchasing a retail store? A warehouse? An industrial yard? A factory? Office space? It’s vitally important to understand the type of property you are purchasing. Certain types of property will require full fit-outs for new tenants or will incur more wear and…

1 A mixed use property in Otahuhu, which was Mackinven’s first commercial investment in 2015. It cost $1 million and has two tenants, one of which is a restaurant. 2 A 2,795m2 office block in Otara which cost $3,850,000 to purchase. On purchase it had a 40% NBS Seismic Rating but Mackinven was able to bring it up to 70% NBS for $690,000. “It is under-rented so when it’s time for a rent review, I’ll be able to go for a market rent based on 70% NBS which is $210/m2 .” 3 An office building in Otahuhu which he bought for $4.8 million. This one is a 2,400m2 building on a 5,500m2 of land. On purchase, the property returned around 9% yield. “It’s on a big, flat section, has a…

An increasing number of investors across New Zealand are using buyer’s agents (aka property finders) to grow their portfolios quickly, and to take advantage of the guidance of those who have “been there and done that”. Many people ask how we do what we do, so here I share some recent deals made in a typical week. MONDAY I get a text from a friend of a friend saying they would like to sell their home but are too embarrassed to go to open market. The house is in a right state from having 12 cats and a hoarder live there. Would I know of anyone who may be interested in a private sale? Of course I do, and within a few days a client has the property under offer.…

It has been very disappointing to see many deals fall over due to the lack of communication between the purchaser and solicitor, or the fact that the solicitor stops the deal due to their lack of property investment knowledge. It usually happens in the due diligence period when a fantastic deal or at least a deal that suited that client goes to another buyer/investor whose solicitor has more property investment knowledge. In the past couple of years, I’ve noticed that besides “finance” one of the main reasons for property transactions not going unconditional is the lack of communication between the purchaser and their solicitor. I am going to discuss this today and hopefully get you (especially if you are a new investor or buyer) to seriously understand the value of…

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 Upper Hutt City’s rental property market is dominated by houses, also with a decent number of flats, but no apartments. Of 129 properties, 90…

Internal Affairs Minister Tracey Martin says there are a number of flaws in the insurance-based funding of the levies, which were introduced in 2017. These include the fact that property owners who do not insure are able to “freeride”; the levies increase insurance costs and may deter people from getting insurance; and administration is complex for insurers. Martin says she has also heard concerns from large property owners who have faced substantial levy increases under the modernised levy regime. “While the regime would improve equity across levy payers, it appears that it may unnecessarily impact on large property owners.” The Government thinks there may be better ways to fund FENZ and there appears to be a trend away from insurance-based levies in other countries, Martin says. The review will look…

MATTHEW GILLIGAN Matthew Gilligan is a property investor, developer and tax adviser. He is managing director of chartered accounting firm Gilligan Rowe & Associates, where he heads the specialist property and asset planning divisions. 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 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 JENNIFER SYKES Manager, Information & Education, Housing & Tenancy Services at Ministry of Business, Innovation and Employment (MBIE). MARK WITHERS Mark and his team specialise in advising on property-related transactions, valuation and restructure services, and tax…

Research: Research recent comparable sales (within the past six months) to make sure you’re not paying too much. You’ll need to compare properties that are similar to the one you are looking at, particularly in size, location, age and features. qv.com, homes.co.nz, trademe.co.nz and realestate.co.nz are good places to start. 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…

Curtains were the catalyst for this home renovation. Here are some tips from Dawn Rees of Curtain Studio around choosing the right curtains for your rental properties, and how to look after them correctly. • Natural textured tones in greys, shades of white and blues, followed by watermark prints on sheers, are all popular options. • It is important to follow the care instructions on any blinds or curtains purchased to ensure your choice is fit for purpose. If well looked after, your curtains and blinds should last for over three years. In terms of styling the traditional pleat and the easy to hang eyelet header are always firm favourites. • Thermal range curtains are perfect for helping you keep warmth in the home. Another tip for keeping in warmth…

Earthquake-prone buildings form a significant portion of the existing commercial and industrial building stock in New Zealand. Some buildings did not perform well during recent earthquake events (for example, the CCTV building in Christchurch). As such, earthquake resilience of buildings in New Zealand is a hot topic. Building owners and businesses are being reminded of their social responsibility to provide a safe environment to the building users. The New Zealand Building Act 2004 provides regulations relating to the assessment and identification of “earthquake prone buildings”. (More information relating to the Act can be found on the following website: https://www.building.govt.nz/ managing-buildings/managing-earthquake-prone-buildings/how-the-system-works/). The principal objective in the Act is the preservation of life. The Act focuses on the most vulnerable buildings, in terms of public safety, and typically applies to non-residential buildings.…

1 SILVERSTREAM Offers the best of suburban living with excellent train services to Wairarapa and Hutt Valley. Well sought-after rentals commanding above average rents. The village holds various facilities such as: primary school, medical centre, vet, supermarket, restaurant, café, and bar. There are some grand properties and a mixture of 3-5 bedroom houses with a small number of flats. Rents can range anywhere from $495-$785 2 HERETAUNGA Renowned for its location, it is boasting some of Upper Hutt’s most prestigious properties. Contains large executive-style properties to 2-3 bedroom properties. Adjacent to Trentham Memorial Park which offers expansive sport grounds, native bush reserves, recreation clubs and children’s playground and Royal Wellington Golf Club. It is home to highly sought after Hutt International Boys’ School and St Patricks College, Silverstream. Rents can…

NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of February 2018 and February 2019, 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…