Innholdsfortegnelse for August 2023 i NZ Property Investor

It's been nearly 20 years since the use of treated timber was made compulsory for all home building in New Zealand. But leaky homes remain a nightmare for many Kiwis – with PwC estimating up to 89,000 homes still contain the rotting wood and monolithic cladding that causes the issue. Our lead this month looks at the problems still surrounding leaky homes, and what homeowners and property investors can do to help remedy this. It's estimated that $43 billion may have already been spent on repairs and remediation of leaky homes. As Sally Lindsay reports, the Weathertight Homes Resolution Service, which cut off at the end of last year, put up a 10-year time bar on civil legal claims. And if people did not report a problem within 10 years…

UP FRONT NEWS The ANZ Bank expects tightening housing data to mean a 3 per cent-plus pick-up in house prices and higher rents through the rest of this year, eventually petering out. While there are still plenty of headwinds facing the housing market, the bank says tailwinds will blow a little more strongly across the second half of the year. Mortgage rates are higher, but household incomes are looking resilient, and net migration, while easing, is still startling, says Sharon Zollner, ANZ's chief economist. “A quick look over the neighbour's (Australia's) fence suggests upward pressure on rents could result from the migration surge.” While higher rents will boost property yields, investors are likely to remain on the sidelines until the future of the tax deductibility policy and bright-line tests is…

RENOVATION ‘Cheap, fast or quality: pick two” is many trade professionals' favourite saying. In project management it has the drier title of triple constraint theory. The basic idea is you can't have everything. When it comes to property maintenance and improvement, getting this mix right is key to growing rental returns and equity without over-capitalising. Every informed investor will have their own strategy, from just keeping on top of basic maintenance to developing properties for rental and/or capital gains. Developing your strategy is the first critical step, the second is less clear: how to build your A-team of professionals to help you execute. To realise your goals, work on investment properties needs to be carefully managed, especially navigating the tight margins created by our current economic climate. Reducing outgoings can…

YOUR DEVELOPER Streamlining the project management process to simplify and de-risk the process for all involved is the ideal outcome for any developer in the construction space. To optimise the construction timeline and to ensure the process is transparent and using good-faith practices, industry professionals are turning to a progressive approach of open book, at cost and no added margins project management. This system offers several benefits to streamline the project, providing investors with greater control, cost transparency, and improved outcomes. While closed book project management does not allow for influence from others, open book invites interaction and encourages feedback to improve operations. TRANSPARENCY, CONTROL An advantage of managing construction projects open book and at cost is the unparalleled level of transparency it provides to the investor. Under this system,…

PROPERTY INSIGHTS The rather lengthily worded Resource Management (Enabling Housing Supply and Other Matters) Amendment Act passed into law on December 20, 2021, with mixed thoughts on reception. This act amended the Resource Management Act 1991 by bringing forward and strengthening the National Policy Statement on Urban Development, with the basic idea of increasing housing supply in our urban areas where it is needed most. New Zealand has a shortage of affordable housing, especially in our main urban areas. Most residential zones currently allow only a single dwelling per site and have two-storey height restrictions in urban residential areas. These new standards will enable people to develop up to three dwellings on each site, each being up to three storeys, without needing to apply for resource consent. This is provided…

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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 latest month. Gross Yield: Annualised median rent as a percentage of median property value for specified time period.…

HOUSE PRICES: DOWN The latest REINZ data show the median price dropped 8.2 per cent year-on-year to $780,000 from $850,000. The West Coast and Tasman regions bucked the trend with an annual increase, up 8.1 per cent to $400,000 and 7.4 per cent to $800,000. The House Price Index shows a fall of 9 per cent across the country. Days to sell have risen to 49, up four days compared to June last year. OCR: STATIC The Reserve Bank's official cash rate stays at 5.5 per cent after July's Monetary Policy Committee meeting. The RBNZ says it is at the end of its tightening cycle. INTEREST RATES: UP All major banks – ANZ, Westpac, ASB, Kiwibank and BNZ – have lifted their short-term mortgage interest rates. BNZ was the last…

NEW BUILDS SPONSORED BY G.J. GARDNER Minor dwellings have been growing as a popular investment opportunity to maximise property value, provide family members with a home in a busy market, or provide rental income. If you're looking for extra space for family, a home office, or a rental investment, you might have thought of building a minor dwelling on your property, so where do you start and what should you know? We asked the team at G.J. Gardner. Q: CAN I BUILD A MINOR DWELLING ON MY PROPERTY? A: This is largely dependent on council rules around zoning for your specific area and whether it is going to be a separate building or integrated under the same roofline as the main house. Q: WHAT SIZE CAN A MINOR DWELLING BE?…

YOUR ACCOUNTANT While there are specific tax provisions dealing with real property, land and buildings, there are also nonspecific provisions that can impact personal property. IRD's focus has been on enforcing property-specific provisions, but it's timely to consider provisions that can tax personal property transactions and how they sit alongside property taxing provisions. The taxation of personal property, which includes things like shares, crypto, gold, and even art and classic cars, is dealt with in three nonspecific sections. 1. CB3 – Profit-making undertakings or schemes. 2. CB4 – Property acquired for the purpose of disposal. 3. CB5 – Amounts derived from disposing of personal property where their business is dealing in it. PROFIT-MAKING OR SCHEMES “An amount a taxpayer derives from carrying out or carrying on a scheme entered into…

YOUR REVIEW An unexpected divorce inspired sisters Christine and Miriam to start investing together. But things soon got complicated. Christine's husband and Miriam's new partner also joined the investment portfolio. Here's how the sisters relied on each other to grow their wealth, and some ways they negotiated the logistics of it. THE INVESTORS Miriam, 30, bought her first investment property at 21 with her parents for $217,000. To her, getting on the ladder early was important. This was because property seemed to be the most reliable fail-safe for other options in life. But when her parents divorced in 2016, Miriam faced a dilemma. Her parents needed to sell up to go their separate ways … but she didn't want to give up her investment. So, sister Christine, 40, and her…

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 across Wellington Central has a high proportion of apartments, with a reasonable presence for houses too, and a smaller market for flats. Of the 1,398 properties recently on the…

NZPIF SPOTLIGHT – SOUTH CANTERBURY Kerry Beveridge proudly calls himself a boarding house specialist. He is the owner of two boarding establishments, of 35 tenancies/rooms, which he is looking to expand to 50; and 15 rooms expanding to 25. Converting into a boarding house is a viable option for investors, but requires more hands-on management and is subject to different legal and financial requirements. Boarding houses have come under the spotlight recently after the tragic fire at Loafers Lodge in Wellington. Why did you get into this type of investment business? We had a speaker at a South Canterbury PIA event, Liz Harris, who owned several boarding houses in Christchurch and Nelson. I was fascinated by the opportunities and the business model and at the time was looking at buying…

Changing New Zealand's draconian interest deductibility rules for rental properties must be a priority for any party that wins the October election for tenants' sake, says Sue Harrison of the New Zealand Property Investors' Federation. “It is essential to ensure that more private rental owners are not forced to sell their properties leaving more tenants without homes,” she says. “There are far fewer landlords than tenants and losing any rental homes breaks down the system. Once rental homes are sold they are hard to replace, crippling supply.” Harrison says any increase in a business's costs are eventually funded by the end user, in this case the tenant, and therefore the phasing out of interest deductibility ends up as a “tenant tax”. “Is this what the government wants, at a time…

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 propertyrelated transactions, valuation and restructure services, and tax planning. Withers Tsang phone 09 376 8860, www.wt.co.nz RYAN WEIR Ryan is managing director and franchisor of Propertyscouts NZ. He's deputy chairman of the RPMA and is passionate about the property management industry, particularly, raising industry standards. SHANE CAMPBELL A partner in Wynn Williams' Dispute Resolution Team, Shane specialises in complex commercial…

YOUR RATES July was an important month for interest rates as the OCR review and inflation data occurred within a week of each other. For the first time since August 2021, the RBNZ decided to halt increasing the OCR and leave it at 5.50 per cent as they had said they were going to. Hopefully we've reached the peak of our interest rate cycle, and the next move to the OCR (eventually) will be a downward one. The rapidly rising interest rate market which occurred over the last 18-24 months has certainly (along with other factors such as tightening lending criteria) had an effect on property prices which has been felt throughout the country, particularly in areas with higher cost-bases where larger mortgages were taken on to purchase properties. INFLATION…

Creating a strong property investment portfolio offering financial stability and the opportunity to grow your wealth, goes far beyond owning properties and collecting rent. Successful landlords are using their skills and habits combined with AIpowered technology that focuses on efficiency, happy tenants, and long-term profitability. This results in a win-win situation for all involved. We asked our Keyhook landlords to share their habits and tips. Whether you are a seasoned property investor or just starting out, we're confident these essential habits will elevate you to the top tier of successful landlords. ONE CHANNEL Communicating with your tenants is the single most underrated skill for landlords to master. Sarah, a Keyhook user, swears by a single channel of communication. “Pick one way to message your tenant. Having one channel means requests…

YOUR SHORT-TERM RENTAL Professional short-term rental companies like The Stay Hub utilise a hands-on approach to revenue management with industry-leading technologies. On a daily basis, experts work in tandem with advanced technology to determine the price point of each property around factors such as geography, market insights and competitive sets. This can be managed up to 18 months into the future, with the right systems capable of calibrating a forecast of demand based on a myriad of components, including historical data, future events, seasonal changes, holidays and booking trends. MAJOR DRIVERS When it comes to short-term rentals, events are major drivers for bookings. While there may be core demographics that favour this accommodation type over others, unless an event is wellknown it can easily go unnoticed for a long time.…

NZPIF FROM THE PRESIDENT'S DESK SUE HARRISON Private investors play the highest and most valuable role in the New Zealand housing system. Around 86 per cent of rental homes are supplied by private owners and this is one of the best examples of a public/private housing system in the world. “Landlord” has been an inexact and overused term by media and politicians to refer to what are actually property investors, most of whom are not directly “landlords” in the way the word is used. The Residential Tenancies Act defines the term as “landlord, in relation to any residential premises that are the subject of a tenancy agreement, means the grantor of a tenancy of the premises under the agreement”. So, as investors we have a choice of what use is…

NZPIF SPOTLIGHT – TAURANGA Kyron Gosse entertained a packed house at the Tauranga Property Investors' July monthly meeting. A self-described real estate futurist, Gosse covered a wide range of topics from emerging real estate trends and technology to his real area of expertise and passion, tiny homes. One of the points made in his presentation was that tiny homes are actually about design and not space. He gave members a thorough rundown of his own tiny home on the North Shore. This included details of how it was badly damaged during the Auckland floods in January, and he cautioned members on keeping insurances up to date. THE NUMBERS Gosse was able to show several examples of tiny home projects, including the numbers behind each deal. This information was well received…