Innholdsfortegnelse for May 2019 i NZ Property Investor

Well, what a turnaround! After months of heated speculation about the looming spectre of a capital gains tax, suddenly the prospect was no more. In delivering the Government’s much anticipated response to the Tax Working Group’s recommendations, Prime Minister Jacinda Ardern definitively ruled out the introduction of a capital gains tax. And not just now, but while she is Prime Minister. That means New Zealand is not likely to see an attempt to levy taxes on capital gains for many years. Given the Labour Party’s past commitment to a capital gains tax as well as the extent of the TWG’s recommendation, the announcement came as a big surprise to many. There was widespread concern among investors that the Government might play to the anti-landlord mob and opt to simply introduce…

Following the release of the Tax Working Group’s (TWG) sweeping recommendations earlier this year, many investors feared a capital gains tax in some form was a given. But when the Government finally released its response to the TWG’s report it shocked everyone by ditching the controversial capital gains tax proposal entirely. According to Prime Minister Jacinda Ardern, after significant discussion the parties in the Coalition Government were unable to reach a consensus. She still believes there are inequities in our tax system that a capital gains tax in some form could have helped to resolve. “But while I have believed in a capital gains tax, it’s clear many New Zealanders do not. That is why I am also ruling out a capital gains tax under my leadership in the future.”…

You’d be hard pressed to come up with a ruling made by the New Zealand court system that is more universally loathed by landlords than the infamous Osaki decision. Back in 2016, the Court of Appeal handed down a decision on the drawn-out out proceedings of Holler & Rouse v Osaki, which left residential landlords liable for accidental damage caused by tenants. The aftermath of the ruling, which included an equally controversial Tenancy Tribunal practice note on tenant liability of damage, served to tilt the scales further against landlords. This means the issue of tenant responsibility for damage to rental properties remains a fraught one. And the spectre of Airbnb holds the potential to complicate things further. That’s why a recent Tenancy Tribunal decision that involves both tenant damage and…

As any developer will know, banks across New Zealand have dropped a couple of belt sizes in recent years. They’ve moved rapidly from the binge-eating of the five or so years between 2011 and 2016, and straight onto a no-sugar diet. Let’s just hope it doesn’t lead to a sugar-binge crash. On top of that we have also seen lending standards tighten across the board, mostly for good reason, but not without an impact on developers. Speaking to property finance bankers at the moment, every single one highlights pre-sales as the road block to them providing development finance. A lot of developers have good projects, top consultants and a steady head contractor in a great location, but just can’t achieve the pre-sale requirements of the banks. Without the pre-sales they…

Our last communication to you on the subject suggested it was not worth speculating on a Capital Gains Tax (CGT) until Winston Peters had made his position clear. And so it has been proven. Winston has not been willing to offer NZ First’s support to Labour and the Greens for their CGT proposal and with that, the matter has died a political death. Many of our clients hold firm views on CGT, both for and against, but something we believe most people agree on is that to be truly effective in its goal of addressing fairness in our tax system, CGT had to be comprehensive. There has been much speculation that CGT would be watered down, many picking that it would only be applied to residential property, but to be…

This article follows on from last month’s discussion about why it is crucial to ensure your solicitor or mortgage broker works for you 100% in any property investment dealings. They must understand what you are trying to achieve and what your goals are in the next five to 10 years. As I mentioned in the previous article, we often see many amazing deals fall over due to a solicitor’s lack of property investment knowledge, but that aside, another of the big reasons why property transactions don’t go unconditional is finance issues. I want to discuss the topic of finance issues and how you can avoid them further in this article. NOT ENOUGH EQUITY OR CASHFLOW You may not actually have enough equity or cash flow to service debt, which means…

1 AVENUES Avenues is a popular central location for people that like to be within flat walking distance to Central Whangarei shops and business. Leave your car at home and walk to work. Over recent years a lot of investors have built town houses and units which makes for affordable living. 2 RAUMANGA Raumanga is a great location for those looking for affordable housing for families. The local polytechnic is situated in Raumanga so is within walking distance for students and also this suburb is not far from the Whangarei Hospital therefore attracting hospital staff and those who need to be close to the hospital for health reasons. 3 RIVERSIDE Riverside is a great location for those who enjoy fitness. Riverside is situated amongst many popular Whangarei walking tracks, the…

Over the past year, there have been growing calls for the property management sector to be subject to a compulsory regulatory regime. Currently, property managers require no government mandated training, qualifications, or licence to operate and many people say this allows for rogue operators who cause harm to consumers. But Housing Minister Phil Twyford has said he will only act after the Government has finished introducing its current programme of tenancy reforms. This has prompted two organisations who work with property managers to make moves to boost professionalism in the sector themselves. REINZ chief executive Bindi Norwell says an unregulated property management market jeopardises the reputation of all property managers – so they’ve partnered up with The Skills Organisation to offer an NZQA recognised property management qualification. “This is about…

MAY PROPERTY NIGHT May 6, Christchurch; May 20, Napier; May 20, Auckland; May 21, Wellington; May 21, Dunedin; May 22, Tauranga; May 27; Hamilton, May 29, Auckland. Free seminar on how to succeed through property investing. Book at www.positiverealestate.co.nz/nzpi INVESTING IN APARTMENTS FOR CASH FLOW May 19 Amora Hotel, 100 Greys Avenue, Auckland. 9am – 5pm. Tickets $47. Book through www.granthoey.co.nz RONOVATIONS INVESTMENT SEMINAR May 21 Tickets free, includes complimentary lunch. The Common, 1 Faraday Street, Parnell, Auckland. Register at www.ronovationz.com PROPERTY LEADERS ONE-DAY EVENT May 26 How to thrive in the downturn. From 9:30am at Ellerslie Event Centre, Auckland. Hosted by Gilligan Rowe & Associates. Cost $55. For more information and to register: https://www.gra.co.nz/property-leaders-one-day-event For more information about listing your event, please contact Lisa Wise: lisa@tarawera.co.nz.…

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…

When Nick Irons takes on a project, he wants results, and fast. Whether that’s wheeling and dealing car parts or investing in property, he’s not one to sit around waiting patiently for his money to come in. That’s why a buy-and-hold strategy was never going to work for him. The Invercargill born-and-raised investor trained as a joiner following school, but he says he was always entrepreneurial, and a money-maker on the side, either dealing in car parts or building materials. When he was 23, together with his then girlfriend (now wife) Selena Irons, he purchased five rental properties. Two years later and the properties had appreciated enough to pay for the real estate agent’s fee, should they choose to sell them. Irons was frustrated. During that time, the couple had…

All the stars have aligned and there’s never been a better time to build or buy new. There have been so many regulatory changes for investors, both in lending and in compliance in the past year, that some have got cold feet for residential property. But for new builds, not only is lending far more accessible, there is no cost to comply with the new Healthy Homes Standards. On top of that, there are more options for buying new than there has ever been, and renting out a new build means you’ll attract the best tenants. There are so many reasons why now is the right time to investigate the strategy of new builds, and we’ve collated the top five reasons here. 1 MAINTENANCE COSTS A BRANZ study last year…

An unexpected or prolonged vacancy in a commercial property can be a disaster, so Miriam Bell talks to the experts to get their top tips for dealing with vacancies. Vacancy. It’s a small word but one with enough power to strike fear in the heart of a savvy commercial property investor. Vacancies in commercial property come with higher risks than in residential as most commercial properties are suitable for specific types or sizes of businesses. That means they attract far fewer potential tenants than your standard residential property does. Not only is it harder to fill a commercial vacancy, but the value of commercial properties are inextricably tied up with the value of their leases. A vacancy, particularly during a weak leasing market, has the potential to hurt the value…

You’ve been to all the open homes, been outbid a few times, spent the money on inspections and reports, not to mention your own time and petrol costs as you look for a good rental property. You found one. You put in an offer and it gets accepted. Hooray. But put the champagne on hold . . . You’ve still got a lot of due diligence work to do and a very short time to do it in; here’s what your list might include: 1. What structural and cosmetic repair is needed? What will you need to do in the coming years that can be budgeted for now? You’re going to need a building inspection, which means reading through 60 pages of pictures pointing out all the ways in which…

The Government’s announcement that they are not going to introduce a Capital Gains Tax (CGT) was very welcome. It is disappointing, however, that they are being attacked for their sensible decision. The Coalition Government have actually listened to the people as well as groups such as the NZPIF and the Tax Working Group (TWG) themselves. The TWG said that a CGT would not influence property prices but it would increase rental prices. Many disappointed journalists and commentators have criticised Jacinda Ardern for not spending her political capital on pushing a CGT through. Many have said that it should just be applied to rental property as we are the ones causing all the problems. This shows a real lack of understanding, which isn’t really surprising given the amount of misinformation that…

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

REINZ HOUSE SALES: DOWN Sales volumes both nationwide and in Auckland were down year-on-year in March. In Auckland they were the lowest in a March since 2008. But both national and Auckland sales were up on February. INTEREST RATES: DOWN The Reserve Bank’s latest OCR comments mean the mortgage rate war is now running hot, with many banks offering sub-4% rates. Commentators are anticipating a long-term low rate environment. OCR: DOWN The Reserve Bank left the OCR on hold at the record low of 1.75% in March. But the bank’s governor, Adrian Orr, surprised everyone by saying the OCR’s next move is likely to be down. 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…

It is interesting how times can change. This time last year, there was a slight bias to an upward movement in interest rates. Toward the later part of the year, we heard a lot of “sitting on the fence”, with even the Reserve Bank of NZ (RBNZ) outlining that an interest rate movement down is just as likely as an interest rate movement up. In the beginning part of this year we have seen a strong push toward sub 4% rates, but then shortly after a re-adjustment back up to just over 4%. We are now experiencing a strong bias toward a downward pressure on interest rates, with perhaps the sub 4% becoming more of a sustainable downward push. This downward bias can be evidenced through some key supporting factors…

Privacy: Is very important to most people, so if you can find a property that can be made especially private you will be on to a winner. Private, secure properties are in demand by both buyers and tenants and are subsequently worth more 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…

When you sign up with a builder, whether it’s through a house and land package, or through a private arrangement, it’s crucial to understand what your contract means and how that might impact on your investment. Keith Hay Homes national sales and marketing manager Barry Walker, who also invests in new builds, says it’s important not to be afraid of talking it through with your builder, because they ultimately want a good outcome for their customer. Here are a few more things to consider before you sign on the dotted line: • Some investors take a lot of time doing due diligence at the start of a project because they are trying to get prices down, but they end up increasing holding costs, says Walker. “My advice is that if…

Own a cross-lease property? Thinking about purchasing or selling one? Beware. Cross-lease titles have been likened to a “ticking time bomb”. There are specific provisions set out in a cross-lease document that many people are not aware of, which restrict what you can legally do to your house. In many cases, making changes to your property without neighbours’ written consent, is in breach of the conditions of the cross-lease. The reason for this is that a cross-lease is a form of tenure where multiple individuals own an undivided share in the land upon which the structures are sited. The land is being leased from all the other owners, generally on 999-year terms. Cross-leases started in the 1970s as a way of obtaining a separate title, often avoiding the subdivision rules…

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 Whangarei’s rental property market is dominated by houses, with a handful of flats in certain suburbs, but no apartments. Of the 391 properties, 332…