Innholdsfortegnelse for February 2023 i NZ Property Investor

It’s February and most of us will have returned from our holiday breaks. The beginning of the year often signifies a reset - so it’s likely many of us have been looking at our portfolios and assessing the best way ahead for 2023. Long-term buy-and-hold strategies are bread and butter for most investors but occasionally we need to sell; if your new year’s resolution involved freeing up some money tied up in property, we have a great story for you. Sally Lindsay has been talking to real estate people up and down the country to get their take on the best way to sell property in 2023. When the market was hot last year, auction rooms were packed. The latest REINZ data shows 14.7 per cent of properties (812) were…

Q My neighbour is planning on building a new garage on their property and has approached me with the plans and asked me to sign permission. Do I need to give permission if I believe it could affect my property? A If your neighbour has approached you for permission for a new building, this is likely because the project breaches a rule in the district plan which may have negative effects on your property. This is called written approval. For example, the new building may be too high, or it may be located too close to the boundary fence. In these situations it is likely the project will require a resource consent under the Resource Management Act 1991 to breach rules in the district plan (this is different to a building…

YOUR RATES krispedersen MORTGAGES By the time you read this we will know if the Reserve Bank has been correct in picking a 32-year inflation high of 7.5 per cent for the December quarter. If this is the case, or close to it, expect the RBNZ to bring out the bazooka and hit the market with a 75-basis-point (0.75 per cent) increase at February’s next official cash rate review. And this won’t be the end of things: in all likelihood if it happens they will follow up with a further 50-point increase in April. If this is how things play out we will have experienced a whopping 525-point increase off admittedly the lowest ever cash rate base over a 20-month period. There is debate, however, over whether inflation will be…

YOUR LAWYER The Resource Management Act 1991 (RMA) is often cited as a reason for New Zealand’s housing affordability issues. It’s described by many as slow, complex and expensive. Many will therefore welcome the introduction of the the Natural and Built Environment Bill (NBE) and the Spatial Planning Bill (SPB). The bills will repeal the RMA and aim to address growing concerns in relation to the current svstem. A key objective of the reform package is to improve system efficiency and effectiveness while reducing complexity. The new system will see significantly more attention paid to the planning process which in turn will lead to the new NBE plans. These plans will contain a single planning “rule book” for each region in NZ. The plans will be developed and delivered in…

YOUR DEVELOPER Poor weather tightness in residential construction continues to draw attention to the problem of leaky homes throughout New Zealand. Leaky homes started to gain attention in the mid-1990s. We blame bad design, insufficient training, cladding selection and inadequate project documentation for this problem’s persistence. All of these elements contribute to poor weather tightness in a building, but what about the root of the issue? Build materials and systems are critical and may hold the key to fixing leaky homes. CONSTRUCTION A building's ability to keep water from penetrating through the external envelope is known as weather tightness The wet and windy weather in NZ necessitates the use of appropriate building materials and techniques to prevent water damage. In order to design and build suitable solutions within context, site…

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 The rental market in Central Christchurch is dominated by houses, but with a reasonable spread of apartments and flats. Of the 1014 properties recently available for rent, 672 have been houses (66…

These looks at all transactions across the market and groups them based on who the buyer was. The overall number of property sales has stayed very low in recent months, but first home buyers have remained a key presence - their market share of purchases was 26% in December (a record high), and for Q4 as a whole it was 25%. Lower prices and reduced competition from other buyer groups seem to be playing into the hands of FHBs. By contrast, mortgaged multiple property owners (including investors) continue to battle, with a market share of just 20% in December, and 21% across Q4, which are record lows. Relocating owner-occupiers ('movers') are also relatively quiet, only moving house if they really need to, perhaps put off by uncertainty about the length…

The removal of mortgage interest as a tax deductible expense for property investors with older existing property is already starting to affect rental property. Property Investors Federation executive committee member Tim Horsbrugh told parliament’s Finance and Expenditure Committee at the end of last year that although the government’s objective of removing interest deductibility was to improve affordability for first home buyers by knocking back investor demand for existing housing, this has not happened. “Instead, the shortage of rental property has been made worse, leading to higher levels of homelessness, reduced availability of rental property and higher rents.” He said by allowing large build-to-rent developers, investors and operators to claim mortgage interest as a deductible expense if they allow tenancies of 10 years flies in the face of private investors being…

About a decade ago I wrote an article predicting that the housing market had peaked. I just couldn't see how it could keep growing as it had, compared to underlying income growth. We all know how that one panned out. Our housing market’s stellar performance over the last 30 years has lulled a lot of Kiwis into a bit of a false sense of security that, as an investment, that’s just how property will always go. I’m thinking specifically of the widelyused rule of thumb that property doubles in value every seven years. But there are some major economic forces at play right now that (even once we’re through the current period of higher rates) will make it dangerous for investors to rely on those same lucrative returns moving forward.…

Remediating fire damage to a home can range from straightforward to cost prohibitive depending on the extent of damage and materials involved. For any well-involved fire, an important first step is weatherproofing the home as soon as possible after the fire is extinguished to prevent further damage. An assessment by a suitable professional will determine the best approach to remediate the home. This will consider everything from water or extinguisher damage, through to the integrity of the underlying structure. Smoke, soot and odour issues will be assessed, as well as any damage to insulation, surface cladding and coverings. There is no typical clean-up as every case involves different home components, materials, heat and fire spread. Depending on the materials involved, there may be a variety of noxious chemicals released that…

YOUR ACCOUNTANT We are often asked to clarify the compulsory zero rating rules that apply to all land transactions between GST registered people. With tourists flocking back and renewed interest in holiday let properties and serviced apartments, which are generally subject to GST, it’s important to gain an understanding of these rules. The compulsory zero rating rules (CZR) were introduced during the GFC because the government became concerned deals were slipping through the cracks with refunds being issued to buyers where insolvent vendors were unable to make the corresponding GST payment on land transactions. The solution was to apply zero rating to all land transactions between GST registered parties where three criteria were met, and in so doing eliminate the risk of the government being caught in the middle with…

YOUR REVIEW Despite a 10-year age gap, couple Steph (47) and Bayley (37) wanted to retire at the same time to travel the world, although this meant speeding up one of their retirement time lines. Here’s how they did it. HOW MUCH MONEY? To create a property investment plan, you need to figure out: “How much money do you need to make your goal a reality?" With this figured out you can decide how ambitious your plan needs to be. Bayley is a nurse and earns $70,000 a year; Steph is in HR and earns $137,000. Steph and Bayley worked out it would take a passive income of $150,000 to fund their retirement lifestyle. To achieve this they need to build $3.75 million of debt-free assets in the next 17…

NZPIF FROM THE PRESIDENT'S DESK SUE HARRISON Statistics show how much our government relies heavily on private landlords to provide rental accommodation with currently around 85 per cent of rental homes being supplied by private-sector owners. Over recent years various governments have introduced significant residential tenancy legislative changes favouring tenants and alienating landlords. While it may be politically convenient to portray landlords as a cause of many of our social problems, this has inevitably created an unpleasant “us versus them” culture between landlords and tenants. Worse still is this government moving to use targeted levies on private investors as a means to prop up their tax take. Unfortunately this inevitably comes at the expense of the end users, our tenants. BIGGEST EXPENSES If we are smart enough to manage owning…

HOUSE PRICES: DOWN The median sale price has dropped nationally by 12.2 per cent overall to $790,000 and declined 7.9 per cent for New Zealand, excluding Auckland, to $700,000, the latest REINZ data shows. The REINZ House Price Index (HPI) showed an annual drop of 13.7 per cent in the value of residential property nationwide, which is in line with the sale price changes. Regional median house prices have declined across the board except for Northland which had an increase of 3.3 per cent and Taranaki 5.1 per cent. These were the only regions to have a rise in median price compared to December last year. OCR: UP The Reserve Bank's official cash rate sits at 4.25 per cent, with the bank indicating more rises are to come up to…

YOU PROPERTY MANAGER Towards the end of 2022, the government finally announced it would be entrenching into law what levels of methamphetamine contamination would be deemed unacceptable for human habitation. Early indication is the government will adopt the Gluckman report recommendation of under 15 micrograms per 100cm2 before a property can be rented out. However, in a surprise announcement, you will not be able to end a tenancy unless the property is contaminated with levels more than 30 micrograms per 100cm2. It will finally end the madness around meth contamination that has plagued our industry for the past few years. How did it come to this? In March 2016 an adjudicator in Auckland ruled in favour of the tenant who wanted to be released from their fixed-term tenancy. MILLIONS WASTED…

YOUR SURVEYOR Global philanthropist Louis Glickman was renowned as a shrewd property investor. His catchphrase was “The best investment on Earth is earth,” and he always told his friends the best time to start investing in your land is yesterday. I tell our people it’s today, and recently clients and friends have asked me if this is still the case when we are on the brink of a recession, and here’s why it’s still true. Even when land values vary year to year in terms of price, eventually it always goes back up. This makes it a much more stable long-term investment over stocks or other liquid assets, which can change daily. If you are in the market for land as an investor it can be a great time to…