NZ Property Investor May 2023

Relocatable homes have come of age recently. No longer are they just old, formerly unwanted properties shipped to a new location; innovations in technology around construction have seen these morph into attractive, highly liveable portable homes. In our May issue we discover all there is to know about relocatable homes. Interestingly, those of us who were born in New Zealand are far less likely to choose relocatable homes when looking to add value. According to Mike Forde, of Forde Brothers House Removals, 99 per cent of Forde's relocatable homes are sold to Chinese investors. “Most home-grown Kiwi property investors will not look at a relocatable home – moving a house to the back of a section and making room for another one, two or three relocatable homes as rentals,” he…

NZPIF FROM THE PRESIDENT'S DESK SUE HARRISON As the value of properties throughout the country falls dramatically we have survey results that prove the structural damage caused to the rental marketplace. The marketplace relies very heavily on private ownership of around 85 per cent of rental homes. Owning rental homes is a business with a range of expenses beyond the mortgage involved, so there needs to be some rewards as part of the risks of the investment involved. The Reserve Bank only has eyes for bringing down inflation, which has brought a sledgehammer to the property market. As yet nothing is being done to help ease the pain for landlords and therefore tenants, who are the end users of our mostly privately funded rental market place. Instead, the financial burden…

UP FRONT NEWS The government has had a third go at fixing the rules around the Credit Contracts and Consumer Finance Act (CCCFA). The latest changes announced just before Easter weekend by Dr Duncan Webb, Minister of Commerce and Consumer Affairs, include: explicitly excluding discretionary expenses from affordability testing providing more flexibility for lenders about how certain repayments are calculated extending exceptions from full income and expense assessments for refinancing of existing credit contracts. The changes still mean affordability assessments are needed for all loans. Webb says the changes that come into force on May 4 will improve safe access to credit for Kiwis. “Whilst not departing from the original policy aim to ensure borrowers can repay loans without hardship, this tidies up the December 2021 changes to the CCCFA…

Debt-to-income levels will become a reality for mortgage borrowers next March, says Kelvin Davidson, CoreLogic's chief economist. Although the Reserve Bank hasn't said it will introduce DTIs, it has indicated March next year is the date they will become a formal tool along with LVRs to restrict residential mortgage lending. Davidson says the RBNZ will activate DTIs next year, but it won't be to curb lending in this housing cycle but for subsequent cycles so house prices never rise 40 per cent over two years as they did during the Covid pandemic. Davidson says the RBNZ's recent release about the debt-to-income ratios didn't say anything new. “There was no indication of the limit – whether it would be five, six or seven times income – exemptions for new builds, although…

The Healthy Homes Standards and tenancy law changes have been blamed for higher average rents of more than $500 a week. Of 700 landlords answering a recent Kantar survey commissioned by the Housing and Urban Development (HUD) Ministry, 47 per cent had raised rents by more than $20 a week to the end of November. Of those landlords who had not raised rent in the past six months, 23 per cent were considering increasing rent in the next three months. Key reasons for 41 per cent of landlords considering a rent increase include a desire to cover increased costs, for 51 per cent it is matching market rates, and for 57 per cent it was raising rents after a year of no increases. Two out of five, or 39 per…

Q I have a rental owned in a trust. The trust is quite old, and we have been advised by our solicitor to wind it up and disperse the assets. Selling is not practical due to falling house prices and I need the rental income in my financial circumstances. Can the trust deed be updated and is it expensive? A Unfortunately, without reading the trust deed I cannot provide a definitive answer. However, I have a few thoughts that hopefully are of use. First, whether or not you can update the trust deed depends on whether there is a clause in the deed that enables trustees to make changes. If such a clause exists, then you likely will be able to update it. On the other hand, if no such…