Innholdsfortegnelse for August 2021 i NZ Property Investor

That’s why our profile this month is so interesting. A young couple (both 30 years old) have used a mixture of strategies (including selling dogs, partnering with family members, and using small inheritances) to enter the market. It’s yielded Jeremy Lawson and Katie Nimon some great results, and though they didn’t buy for capital gains, they’ve been rewarded by hefty property price rises since the market took off mid last year. Thinking outside the box was the motivation behind our lead story as well. Subdivision of existing properties can be a long and expensive process; but it can also be highly lucrative. Our writer Sally Lindsay has been talking with the experts to understand the process in key markets; we also have a case study from Gisborne who explains how…

Chief executive Leonie Freeman says that while the council supports the Government using its whole toolbox to build more houses, the proposed changes make it less likely investors, developers and owners are going to help the Government build more houses. “While exempting new builds is encouraging, the Government has an array of levers it can pull to incentivise more housing to be built that don’t pull the rug out from under the feet of investors and developments,” she says. The Property Council is supporting build-to-rent (BTR) as the best option for increasing housing supply at pace. It is lobbying the Government to carve out BTR as a new asset class that aims to provide long-term rentals where tenants are treated as customers. “To amplify the potential of BTR, the Government…

As little as a month ago many economists were predicting that it would be mid to late next year before we saw the Reserve Bank raise the official cash rate (OCR). This situation has rapidly changed with the market now pricing in a 90% chance that the rate will increase at the next review date, which is August 18. If this happens it will be the first increase the market has seen since 2014. Inflation has jumped to a much higher level than had been expected and is now the highest it has been for 10 years with new house building cost inflation the highest since 1987. Banks have quickly moved as per the table on this page with interest rate rises across the board. While the longer-term rates had…

‘If experienced managers are looking for greater support by joining REINZ, how on earth are private owners navigating the minefield that is property management in 2021?’ In November 2020, professional agencies managed 42% of the bonds lodged within the bond centre. Based on that statistic, it shows us that 58% of rental properties are still managed privately by landlords in New Zealand. Although it is not a legal requirement to lodge a bond, this statistic provides excellent insight into the industry’s current state. REINZ has recorded the most significant increase in membership enquiries and general council than ever before in history. The membership base is proliferating, and this is from professional agencies only. Private owners cannot join REINZ. It begs the question; if experienced managers are looking for greater support…

‘Many, many investors have followed this system to both build a portfolio and enjoy a good income’ The Holy Grail in property investing is to build a portfolio without running out of buying power. That is why the 40% LVRs make things difficult; all of a sudden, your buying power takes a massive hit. New builds are great investments, but looking to new builds solely because of the 20% deposit does not help as much as it seems; the second you go back to the bank to refinance the deal (or deals) and invest again, you first need to top up to 40% equity on the existing purchase and then come up with the deposit for your next one. Before I go any further, if your goal from property investment…

1 HARBOURSIDE The Viaduct area appeals to a wide range of corporate and professional tenants and offers high quality apartments for short or long term accommodation. The apartments, which often have brilliant sea views, carparks and are in some cases fully serviced, are located within walking distance of restaurants, bars and the Queen Street shopping district. Quinovic Viaduct 2 DOWNTOWN/ BRITOMART The vibrant hub of the city, this area appeals to corporate tenants in a bustling, trendy environment with high end shopping and fantastic restaurants. Rents range from the medium to upper quartiles. Quinovic Apartmentsonline 3 CENTRAL EAST Centred around the heritage suburbs of Parnell, Grafton, Newmarket and Remuera and the seaside suburbs along Tamaki Drive, this part of Auckland offers a huge variety of opportunities for savvy property investors.…

RENTAL RETURNS June 2021 NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of June 2020 and June 2021, 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…

Q If I subdivide the rental property I have had for 20 plus years, so the original house is on its own title and then either build a new house or move a second hand home onto the second title, is the rental affected by the bright-line test if it is sold? Secondly, would the new house be subject to the bright-line test? A For bright-line purposes, land subdivision is on the “purchase of dirt” rule, ie the date the land itself was acquired determines the bright-line rather than any date a new legal title is issued or a new house is built. That said, remember that section CB 12 taxes a gain derived from the subdivision of land where the development or division occurs within 10 years of acquisition…

HOUSE PRICES: UP Median prices for residential property across New Zealand increased by 28.7% from $637,000 to $820,000 in the June 2021 year, REINZ data shows. INTEREST RATES: UP ASB, ANZ, BNZ, Westpac and Kiwibank have all increased rates from record lows. across 18-month to five-year terms. But Kiwibank has cut its two-year rate, which was formerly 2.55%, to 2.49%. OCR: HOLDING The Reserve Bank held the OCR at 0.25% – the rate it has been at for more than a year. Economists are predicting it to rise in November. IMMIGRATION: DOWN In the year ended May there were 42,600 migrant arrivals, down 75% on May last year; 36,800 departures, down 55% on the same time last year and a net migration gain of 5,700, down from 87,500 in May…

These are some simple prevention methods and additions to protect your property from winter weather. 1 Add door mats: This reduces unsuspecting moisture and mud from entering the house. 2 Relocate hoses or taps: Move them to be directly above drains, or above areas that run water towards the home. 3 Add a door shelter: Build a small shelter over the door or go one step further and have south facing entrance ways enclosed to prevent rain and wind from coming through the doorway. 4 Repair loose roof fixings: A simple check and fix can prevent leaks (especially on older roofs). 5 Install secure window latches: This allows tenants to ventilate the house while they’re not home. 6 Install a powered ventilation system: To reduce mould and mildew in homes.…

‘Try not to “fall in love” with a property. If it’s an investment property, fall in love with the numbers instead’ Let’s face it, demand never actually went away, it just took a brief holiday while everyone tried to wrap their heads around recent changes. It is human nature that when there is uncertainty, especially in the property market, people tend to sit on the sidelines waiting to see what happens. However, people still want to own their own home, people will always want to improve their financial position for retirement, and property investment is still the preferred investment of choice for the majority of New Zealanders. It seems the general public has decided that they have had enough of waiting, and they want to get back into the game…

We at the NZIPIF are constantly looking for the next hurdle to be presented to our sector. This year we've had RTA and LVR changes, implementation of the Healthy Homes standards, and the announcement of the staged removal of interest as a tax deductible expense. What next? Through the media there has been mention of changes to the Accommodation Supplement. No details have been released so it’s a wait and see. But there are other developing policies to be aware of. One is the Government Policy Statement on Housing and Urban Development (GPS HUD). The other is the Significant Natural Areas (SNA) policy. GOVT POLICY STATEMENT This will communicate the longterm vision for housing and urban development and how the Government will work with others to make it happen. It…

Although most investors buy in Keith Hay’s First Choice Range, it will provide an opportunity to see a partly finished three-bedroom, two-bathroom home from another of its series. It is the first time an entire home will be dropped into Aotea Square to be used as the official gateway to all Fashion Week activities. The house will be partly finished and furnished. Some of its rooms will be changed out during the week by interior designers using artwork and new furnishings. It will arrive in the square two days before Fashion Week begins after an early-hours-of-the-morning move by a transporter down Great South Road. Fashion Week runs from 23-29 August.…

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. 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 phone 09 376 8860, www.wt.co.nz RYAN WEIR Propertyscouts Auckland Metro and a half share of Propertyscouts NZ which has 16 franchises around NZ. He’s a member of PROMINZ and passionate about the property management industry and in particular raising industry standards.…

The world has been printing money for several years, in anticipation of inflation and interest rates eventually rising. Neither of those happened. The main reason we didn’t see inflation was due to technology driven deflation. Higher wage costs simply encourage more automation and digitisation. Technology delivers scale and lower costs everywhere, eventually. It also creates greater price transparency and with that comes more competition. BUT THE SHORT-TERM HAS CHANGED The cost of building has jumped up with demand outstripping supply. We are also seeing wage inflation for the first time in a long while as businesses compete for skilled employees. The reality is with the mixture of closed borders, broken supply chains and a global economy disrupted by Covid, these times are anything but normal. If companies weren’t clearing backlogs…

It is said that you become the average of those that surround you. Grow your community around you who are also investing in property. Join a property investing group or networking group that deals in all matters relating to property. If you are in a rural area or overseas then contact a property group that specialises in the areas you want to invest in. 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 mentoring programmes call Ron today. Ron Hoy Fong | 021 888 298 | www.ronovationz.com…

AIRBNB SHORT-TERM LET Whilst the provision of residential accommodation in a dwelling is GST exempt, the letting of a property for short-term stays is a taxable activity for GST. GST registration is not compulsory provided the taxable supplies fall below $60,000 which often means registration is a choice. Whilst claiming GST on a property acquisition may seem like a great option, this means that the subsequent sale of the property will be subject to GST which could be substantially higher than the amount claimed if the property has appreciated. The rents charged to guests will also be subject to GST which in most cases is a cost the owner will need to absorb rather than on-charge to guests. When considering the compulsory GST registration threshold, realise that the $60,000 is…

THE DATA Rental data is sourced from the Ministry of Business, Innovation and Employment based on rental bonds lodged. This 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 property 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 property value calculated using our E-Valuer. MARKET COMPOSITION Central Auckland’s rental market is almost exclusively comprised of apartments, although if you include an area such as Parnell, you start to introduce a few houses and flats. Of the 1,683 properties…