Innholdsfortegnelse for January 2020 i NZ Property Investor

You can just never tell how a year will pan out … At the start of 2019, investors were primed for a year of change and challenges. There were genuine concerns about what might happen with the market, given the trajectory the Australian market was then on, along with the bedding in of new government policies. But 2019 didn’t unfold quite as expected or feared. First up, after months of anticipation, the Government decided to ditch the proposal to introduce a capital gains tax. This development appears to have eased some of the concerns around investing in property going forward. As the year progressed, mortgage rates just kept being lowered and they have now been sitting at a historically low level for some time. Serviceability criteria was also eased by…

A bold new Waikato property management company aims to help landlords and students take advantage of the changing rental landscape. The team at Hatch Property Management, based in central Hamilton, is dedicated to changing what both landlords and students think about accommodation and the relationships needed to manage it. General Manager Martin Thomas says it is focused on helping landlords understand students’ growing needs, so the letting process is much smoother. “We want to help move people away from the traditional notion of what students are like and student housing is like.” “Students’ needs have changed rapidly… it’s really moved further upmarket. The international student market has helped but as it’s changed, domestic students are also looking for better accommodation. As the accommodation continues to improve, so do student expectations.”…

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 over30 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 planning.…

If you’re considering subdividing or developing land, you’ll will need to become familiar with section CB12. This taxing provision applies to taxation of a gain on disposing of land when the land has been developed or divided within 10 years of acquisition, and the work involved is more than minor. Unfortunately, the courts have set the bar very low on the question of what work is minor, meaning that the argument that your work is only minor is typically weak. There are exemptions when the land being divided is the taxpayer’s residence, or business premises, or a farm where the divided lots are still economic farms, or if the work is designed to enable the taxpayer to derive more rental income from new investment houses. If however, the purpose of…

I’m often asked to sell properties that have had unconsented work done. In fact, I estimate maybe one in four properties on the market right now have unconsented work of some kind, ranging from minor through to significant unconsented changes. One thing’s for sure, big or small, it will be problematic and costly when it comes time to sell. Unconsented works can include a garage converted into a sleepout; the installation of a second bathroom; or removal of that load-bearing wall – to name a few. All of these require council sign-off, even if the work was done to a high standard by qualified professionals. Most of us are aware of our disclosure obligations as sellers. Our obligations include disclosing unconsented works to potential buyers. A diligent agent who intends…

1 Changes to RTA announced The Government announced its long awaited tenancy law reforms on Sunday and they mean that landlords will no longer be able to get rid of tenants without reason. 2 Commercial disrupter proves popular New commercial property disrupter, Jasper, has hit the ground running with their first investment offering achieving full subscription in just 36 hours. 3 SFO deception charges for investors Four Auckland property investors have been charged with fraudulently obtaining millions of dollars in home loans. 4 Key reform will only protect bad tenants Getting rid of “no cause” termination notices only serves to protect bad tenants and will have a negative impact on the broader community, not just landlords, according to landlord advocates. 5 Pre-summer pick up for rental market The rental market…

Reserve Bank governor Adrian Orr says the LVRs have been successful in reducing the more excessive household mortgage lending and improving the resilience of banks. Yet fears of excessive high LVR lending led the Reserve Bank to decide not to ease the current settings. Orr says financial system vulnerabilities remain “elevated” and international risks have increased. He sounded a caution about the low rate environment leading to increased debt and inflated asset prices. It means low rates are necessary and have helped to cushion the New Zealand economy and borrowers from the effects of weaker global growth. But, over the longer term, prolonged low interest rates could lead to some borrowers taking on too much debt and asset prices becoming overheated, Orr says. “This could increase the vulnerability of the…

REINZ HOUSE SALES: UP Sales volumes nationwide were down year-on-year in October, but up from September. In Auckland, sales were slightly down year-on-year but up on September. INTEREST RATES: DOWN The Reserve Bank’s decision to hold the OCR in November means rates remain low but there’s speculation they may inch up. Commentators say a long-term low rate environment is still at play. OCR: DOWN The Reserve Bank kept the OCR unchanged at its record low of 1.0% in November. But economists believe that at least one more cut is likely to come in this cycle and it’s likely to be in February 2020. IMMIGRATION: DOWN Migration data remains volatile and, although high annual net migration remains high, commentators say it appears to be trending lower. BUILDING CONSENTS: UP Consents nationwide were down slightly in…

It has been an interesting few weeks in regards to interest rates. Firstly the Reserve Bank surprised many in mid-November by keeping the official cash rate on hold. With inflation being below target and other factors such as a slowing global economy most economists had predicted a cut. This came after they surprised many back in August by cutting 50 basis points rather than the 0.25% most people had expected. Wholesale rates moved up a bit on the back of the decision as the markets had to an extent priced in the reduction which did not eventuate. They are now back up around levels which they were last at before the August OCR cut referenced above. RBNZ NEW BANK CAPITAL RULES Then we had the news that the Reserve Bank…

Let’s say a property is marketed at a particular price – for argument’s sake we’ll call it $500,000. An inexperienced investor will make the automatic assumption that a “deal” is significantly less than the asking price. But that’s not the case. There are plenty of times I have paid asking or above asking price to secure a great deal as I’ve realised that it’s been marketed low, or I may be aware of something that the listing agent isn’t. For example, the list price for a current rental property may be worked out on the current yield, but if the rent is low the subsequent calculated list price could be way below market too. Most agents have no idea what the rental market is doing, and therein lies the opportunity.…

Everyone’s familiar with the stereotyped views of landlords and tenants. Landlords are lazy, money-hungry liars; tenants are shifty rent-dodgers who kick holes in walls. In reality, as our clients will tell you, most of the time both parties are sensible, reasonable people who want a stress-free relationship. Landlords want a stable return on their investment and tenants want a pleasant place to live. The trick to finding that balance is to get things right from the start. In my experience, tenant selection is the most important part of the whole process. If you get that right, everything else will flow on nicely. If you get it wrong, that’s when bad things happen. KNOW WHO YOU WANT There is a definite correlation between a decent property and a decent tenant. Think…

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 property market across New Plymouth is predominantly made up of houses, with much smaller shares of flats and apartments. Of the 321…

The Christmas period is a wonderful opportunity to take some time to think about longterm goals. Back in December of 2009, I set a 10-year goal of stopping paid work and starting to travel more and take on new experiences. So that goal date was last month and boy has it come around quickly. Some of you may already know that I am standing down as executive officer for the NZ Property Investors’ Federation. I didn’t quite make the December 2019 goal, but the EO position has been advertised and we will be interviewing candidates later this month. I will also be looking for someone to manage my cabin business. It has certainly been a privilege to have been the Federation’s first executive officer. It is a role that has…

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

Your monthly round up of property investment related events around the country. JANUARY PROPERTY INVESTOR NIGHT January 21, Ellerslie, Auckland; January 22, Tauranga; January 27, Dunedin & Wellington; January 28, Hamilton; January 29, South Auckland. 6.30pm. Free to attend. Book at www.positiverealestate.co.nz/NZPI For more information about listing your event, please contact Lisa Wise lisa@tarawera.co.nz. Last date for entries for February 2020 issue, January 11.…

So a new property management company has set out to change the student rental landscape in Hamilton. Hatch Property Management, which launched in December, specialises in student rentals and is set to offer a new approach to the market. The company’s chairman, Tony Begbie, says they will deliver different, and better, value propositions to landlords. “Our propositions are designed to maximise benefits, while mitigating risks. And our services are driven by creating connections and building meaningful partnerships.” Hatch grew out of the Wintec Student Residence Trust, which is primarily focused on purpose-built student accommodation. It is a charitable company and will return all future profits back to the Trust. Its aim is to provide more quality student accommodation around Hamilton. To do this they want to work with landlords open…

Auckland has come back to life after two years of lacklustre house sales and easing house prices. At the same time, the rest of New Zealand is taking a bit of a pause after a strong run of price appreciation. Our view is that property prices will normalise somewhat in 2020. The period of high price growth across the rest of New Zealand was fundamentally driven by low interest rates and there’s still some room to move, but it is mostly priced in now. With this context in mind, let’s dive a little deeper. Here are some of our top-level property predictions for 2020. YIELDS Investors appear content with a gross yield of around 4% in the cities where they get long-term capital appreciation from population growth. Outside of growing…

TRISH KEOGH & KAEL BLAKE ‘The plan was to see a bit more of New Zealand by house-sitting. We did it for a couple of months, but in April we found a house up in Taihape and it was just so cheap!’TRISH KEOGH & KAEL BLAKE THE PLAN FOR 2019 was to sit back and take a break for full-time investor couple Trish Keogh and Kael Blake. When we last spoke to the pair a year ago, they had amassed a portfolio with 13 income streams over a period of just four years and were living off their rental income. So with that kind of tenacity and drive, it’s no wonder they haven’t ended up taking a break at all over the past year. It wasn’t for lack of trying…

Most people would never dream of stealing a TV, but every year average “law abiding” citizens add thousands of TVs to burglary insurance claims. Somehow these people disassociate themselves from the fact that what they are doing is a criminal activity. It is often justified as “I’m just getting my excess back” or “I pay my premiums, I’m entitled to get something back” and “Everyone else does it”. They have the belief that the insurance company is some faceless corporate making lots of money off average Kiwis. But the reality is that fraudulent claims cost the New Zealand insurance industry more than half a billion dollars every year, international research suggests that premiums are at least 10% higher because of fraud. WHAT IS INSURANCE FRAUD? Insurance fraud is deceiving your…

New Zealand has an interesting and mixed geological history, which has resulted in a wide variety of soil types throughout the country, with different engineering characteristics. Some of our soils contain “active” clay minerals, which means that they are capable of swelling and shrinking, by taking in water or losing water. In New Zealand these types of soils are defined as “expansive” soils. Expansive soils are not considered to be “good ground, as defined by NZS 3604:2011, New Zealand, Timber Framed Buildings (which is the New Zealand standard code of practice for the design of simple residential structures). Therefore, foundations founded on expansive soils require specific foundation design. Shallow foundations, supported on expansive soils, which are not appropriately designed, can be adversely affected by the seasonal swelling and shrinkage of…

A reader of this magazine emailed me the other day and asked how they should go about building a property portfolio. I thought it would be useful to share the advice I offered them. 1. Start with a basic idea of what you want to achieve After emailing back and forth, I discovered this couple want to become property investors so they can earn a passive income in retirement. 2. Look at the resources you have to make it happen The couple are in a good equity position. They have a home worth $600,000, with an $80,000 mortgage, with five years left on the term. This gives them purchasing power of $2.4 million, even without digging into their savings. They also have time. The couple is 47 and 48, and…

Quinovic New Plymouth Grant Carter, General Manager, Address 163 Courtenay Street, New Plymouth Phone 06 759 0012 Email grantc@quinovic-newplymouth.co.nz 1 BELL BLOCK A great range of homes are offered in this area. From traditional three bedroom houses built in the 1960-70s, offering reasonable rental prices through to new developments where executive houses are available. 2 FITZROY One of New Plymouth’s most desirable residential suburbs. Serviced by a popular suburban shopping centre, easy access to schools and New Plymouth’s premium swimming beach. 3 MERRILANDS Established in the early 1980s with predominantly larger family homes. A popular residential area for families. This is now a well established and desirable location for executive living. 4 VOGELTOWN Centrally located with a mix of older and newer homes, Vogeltown is definitely a desirable area to…

NORTHLAND NEXT MEETING: February 2020. TOPIC: TBA 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: February 2020 TOPIC: TBA MEMBERSHIP: APIA memberships start from $75 and can be purchased on www.apia.org.nz/join. Full memberships include a free subscription to NZ Property Investor, networking opportunities at over 100 events throughout the year, an excellent discount card, free subscription to APIA TV, and much more. For more information visit www.apia.org.nz or email admin@apia.org.nz. WAIKATO NEXT MEETING: Wednesday February 12, at The Pavilion, Hamilton Workingmen’s Club, 45 Commerce Street Hamilton. TOPIC: Nick Gentle. Nick is a fellow property investor and co-owner of the Investment Property Buyer’s Agency iFindProperty. In…

Combining technology, data and smart people, Valocity digitises and innovates so lenders can leverage the latest technology, capture and make data driven decisions, and adopt and deploy solutions,quickly and easily, to transform lending experiences. MORTGAGE TYPE BREAKDOWN MORTGAGE TYPE BREAKDOWN BY LOCATION NATIONWIDE TOTAL OF 6 MONTHS ROLLING BUILDING CONSENTS  27, SUPPLIED BY…