Innholdsfortegnelse for January 2024 i NZ Property Investor

Predicting the year ahead is an imprecise art. But there’s something comforting about experts’ take on what might be; it provides some sort of surety (even if it doesn’t eventuate). Surely an informed guess is better than nothing. Our lead story this month explores what is likely ahead for property investors in 2024. We have a new government that is promising much, but many of the changes they are looking to make will take some time to be realised. Sue Harrison, president of NZPIF, says that while property investors may see the new government as a sign for smoother sailing ahead, interest rates will make it choppy. ANZ’s chief economist Sharon Zollner says house prices are far below their peak and the bank’s position is that it will take years…

A woman who left a rented Manurewa, Auckland property she shared with her partner after discovering he was using methamphetamine is still liable for a half share of Tenancy Tribunal awarded exemplary damages and other debts owed to the landlord. The property was uninhabitable at the end of the tenancy and required extensive restoration after decontamination, costing $40,284. Taurean McLean McKenzie and the woman were in a relationship at the start and during most of the tenancy. However, the woman, who has name suppression, left the property after discovering McKenzie was using meth in the home. He stayed on at the rental after she left. About three months later the woman told Wise Property Management, and landlord Yun Fan, that McKenzie was using meth at the rental. That led to…

Q We have a neighbour who shares a cross-lease with us and three others in Auckland. The neighbour is putting an 8x4 metre unit on the back of their property, which will overlook ours and severely impact our privacy. It is openly opposed by us and the others on the cross-lease. Is there anything we can do to stop the building going ahead? All the materials are on site and the builder is apparently due to start. A The answer to the question will depend on the wording of your cross-lease, which vary. Most cross-lease agreements prohibit lessees from undertaking alterations or additions without the other lessees’ consent. This is usually with the proviso that consent cannot be unreasonably withheld. In deciding whether refusal is unreasonable, judges will normally weigh…

The recent OCR review on November 29 surprised no-one. The cash rate was kept at 5.5 per cent, which was expected, but the hawkish tone adopted by the Reserve Bank suggested they may not be done with increases yet. This went against the tone from most of the market, where over the last month other economists (who had still been predicting we may see an increase early in 2024) started to agree that the massive OCR increases we have seen over the preceding 24 months have been doing their job and the next move is more likely to be a drop. I do suspect there may be some misleading of the market going on by the Reserve Bank, with them knowing that further negative data coming through next year will…

FEATURE TENANCY If you shudder at the mere mention of tenancy mediation, you likely think it a chore, a kangaroo court even, with the odds firmly stacked against landlords. Well, I can’t disagree more. Of all the tribunal’s resolution pathways, mediation is the one that lets you have a say in what an agreeable and enduring resolution looks like. The alternative is to leave everything in the hands of a tribunal adjudicator. And I don’t need to tell you how much of a gamble that can be. Don’t overplay the self-determination aspect of mediation in your head. You are not going to have your way just by showing up. That said, there are some techniques that will help you participate effectively in a tenancy mediation and influence the outcome. Here…

Many investors will have a sense of the matrimonial property rules that can give a spouse or partner a claim for 50 per cent of relationship property assets after a relationship that has run for only three years. This issue is often forefront in parents’ minds when they seek to assist children into property. The potential for money provided to a child being halved because of a relationship split down the line has many worried about the best way to provide this assistance and what the tax consequences of navigating relationship property rules might be. Many people are under the common misconception that the three-year period that must elapse before a partner has a claim begins from the point the couple start living together in a traditional de facto arrangement,…

Lochie didn’t have enough money to buy an investment property by himself, but when he and four friends banded together to create a meaty deposit … they figured they’d go all out. Here’s how five friends in their early 20s worked together to buy their first investment property. WHAT GOT THEM STARTED? The idea of investing as a group had been in the works for years since three of the five friends shared just one room in a Dunedin flat in 2010. Each member of the group wanted a way to get onto the property ladder as early as possible, but obviously it wasn’t possible to go it alone. The initial game plan was to renovate an existing property in Oamaru, but as two more friends joined the group, the…

AUCKLAND NEXT MEETING: Go to www.apia.org.nz/ events for details of upcoming meetings APIA hosts 100 events and presentations for its members each year. WAIKATO NEXT MEETING: February 2024. TOPIC: Email admin@waikatopia.org.nz for information on this meeting. TARANAKI NEXT MEETING: Tuesday, February 20, doors open 7pm for networking, Plymouth International Hotel, 220 Courtney Street, New Plymouth. TOPIC: Lew Sarten (past president) with an awesome investor journey. MANAWATU NEXT MEETING: Wednesday, February 7, Palmerston North Bridge Club, corner Cook and Cuba streets, Palmerston North. TOPIC: AGM WELLINGTON NEXT MEETING: Thursday, February 8, 7pm at Lifepoint Church, 61 Hopper Street, Mt Cook. TOPIC: Email wellington@nzpif.org.nz for more information. NELSON NEXT MEETING: Tuesday, February 20, 6pm Investor Dinner, 7.30pm presentation at the Honest Lawyer, 1 Point Road, Monaco. TOPIC: Top tips for managing residential…

NZPIF SPOTLIGHT It might be considered unusual to have Paula Bennett as the opening speaker at the recent 2023 Annual Conference of the NZ Property Investors’ Federation. Held in Queenstown at the Rydges Lakeside Hotel overlooking the snowdusted Remarkables, an audience of property investors from across the country gathered to hear about the latest trends in the housing market. But what could Paula offer? For a start she talked about working two jobs to save enough money to purchase her first house. Many property investors in the audience could relate to that as often they have built up their property investment portfolios that way - working hard and sometimes at more than one job at a time. ’Mistakes give you resilience and the strength to push boundaries’ THE RECIPE She…

Although construction work is falling away, the drop for the September quarter is more than expected and socalled resilience in the sector actually reflects a shortage of labour and significant capacity constraints plaguing it over the past few years. The amount of building work put in place fell 2.4 per cent in the quarter, while Westpac had forecast it to fall by only 1.4 per cent. However, Westpac says the result needs to be put in context. While there might have been a sharper fall than expected, estimates of building activity over the past year have been revised higher, says Westpac senior economist Satish Ranchhod. “Taking a longer-term perspective, building activity has effectively been tracking sideways at elevated levels over the past year.” He says the capacity constraints and labour…

TAX UPDATE On November 24, 2023, New Zealand’s coalition government with National, ACT and NZ First was finally announced, and some important decisions around tax and property investment have already been confirmed Note that when I wrote this article many of the details were yet to be revealed (but some may have been clarified by the time you read this). INTEREST RULES The thing that we at GRA are most pleased about is that the coalition parties have agreed to speed up the reversal of the interest non-deductibility rules for property investors. GRA and the Property Investors’ Federation (PIF) both lobbied National and ACT to get these rules repealed, and we are happy and relieved that ACT has negotiated to push through the changes more quickly than National was originally…

When it comes to spending money on your property, most homeowners want confidence that what they invest is adding value to their property. Whether you have a rental portfolio, just moved into your own first home, or are using your current property as a stepping stone, investing in the right locations can result in your property being worth more than you invested. If you are after the magic formula for making a lot of money on your property - sorry, it’s not that simple. However, after renovating our own properties for the past 13 years we have refined the projects we take on to add value. Here are three key areas we focus on to guide our decisions on which projects we prioritise. IMPROVE THE LAYOUT The default response to…

According to Grand View Research, the short-term rental market held an estimated value of US$109.76 billion in 2022. The market’s expected compound annual growth rate has been projected at 11.2 per cent from 2023 to 2030. Key drivers for demand and supply include healthy post-Covid travel recovery and trends such as staycations. While short-term renting has existed for decades, it is still relatively new to Kiwis. Property owners would not be alone in assuming Airbnb was the only notable platform, but this could not be further from the truth. Airbnb does hold one of the largest market shares worldwide, but there are plenty of other online travel agents that should be considered when creating listings. Booking Holdings is particularly popular across European countries, with Hospitality Europe reporting a market share…

One of the most asked questions is about rent - how to set it and what level should increases be at. The previous Labour government brought in rules around rent increases, allowing only one increase a year for an existing tenant or when a tenant leaves the property. One of the miscalculations landlords make is believing the higher the rent, the better calibre of tenants the property will attract. This is a misnomer and the complete opposite. The only tenants the property will attract will be either two families moving in together who can afford the high rent or people who can’t get any other property. The rent needs to be priced correctly for the location and the market it’s in. It has to be on a par with the…

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.pfkwt.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…

HOUSE PRICES: UP CoreLogic’s House Price Index shows average property values were up 1.1 per cent over the three months to the end of November, and the annual change sits at -4.5 per cent, the softest annual decline since November 2022, when it was -2.9 per cent. OCR: STEADY The Reserve Bank’s official cash rate has been held at 5.5 per cent since July last year after the RBNZ indicated it was at the end of its tightening cycle. However, in its November Monetary Policy Statement it said it could lift the OCR again if inflation fails to drop. INTEREST RATES: DOWN ANZ is predicting the one-year mortgage interest rate should be down to about 6.3-6.6 per cent mid-this year, before dropping to 6 per cent in December. BUILDING CONSENTS:…

Things are rapidly changing on the housing front in New Zealand with higher intensification of residential developments across larger cities to accommodate our quickly growing population. In particular this will become more apparent as planning rules are set to be revisited allowing greater housing intensification with less restriction. Apartments and townhouses are popping up all over the place, with property developers aiming to make the most of the space under land use rules. While these developments help grow and support communities, they also raise new concern from a structural standpoint; noise transmission between shared walls. As New Zealanders find themselves living in closer proximity to their neighbours, the need for effective soundproofing in residential construction becomes very important to ensure residents’ comfort and privacy. SOUND TRANSMISSION When it comes to…

Over my career I’ve been into thousands of homes and filled out a huge number of inspections. Throughout that time there have been trends, lessons learnt and some valuable tips I would like to share with you. When conducting inspections, I often feel like a “duck on the water”. Tenants see me as happy, polite, helpful and calm, much like the serene surface of a duck gliding on water. Meanwhile, beneath the surface, my mind is like the duck’s feet, rapidly processing what I consider the most important aspects of the inspection. In no order, I consider the following: CARE FOR THE HOUSE A general overall summary of the level of care the tenants are taking. I note down and photograph any damage caused by the tenant. Some landlords wait…

NZPIF FROM THE PRESIDENT’S DESK SUE HARRISON This is an exciting year to be part of New Zealand’s rental housing industry. While there are constant challenges investing in “bricks and mortar” rental homes, the importance of our place in the system is crucial. The demand on housing is ever increasing post-Covid, with high levels of immigration and record interest in moving to New Zealand. We know that climate change is going to increase people shifting to cooler climates, and it will be hard to keep the borders closed on refugees. Housing First, a social housing provider in Christchurch, invited me to a breakfast before Christmas with other owners. It was a pleasure to see several Canterbury Property Investors’ Association members also there as we heard about the great work these…

NZPIF SPOTLIGHT It’s been found that people who have gardening spaces report a better quality of life, and by providing spaces where tenants can relax and grow food gives a sense of belonging. The quarter-acre paradise is long gone in New Zealand, but new ways of growing food in small or shared spaces are emerging. The Canterbury Community Gardens Association (CCGA) is leading the way in communal gardening with 60 gardens registered within the organisation. The CCGA is keen to branch out and help develop connections between landlords and tenants in offering common spaces to grow food, interact with others and share gardening skills. They are encouraging more property owners to make spaces available for tenants and residents to grow food, make compost and recycle waste. Communal growing spaces have…

FINAL WORD We anticipate significant changes in 2024 as the new coalition government is set to hit the ground running, particularly in reversing various housing policies. The National Party’s housing plan focuses on boosting supply by promoting build-to-rent as an asset class, reinstating interest deductibility, and reducing the bright-line test to two years. Additionally, they plan to revise tenancy laws to encourage investor participation in the rental market. One change with a lot of support from landlords and many property managers is returning to a 90-day no-cause termination. This was welldocumented in the campaign leading up to the election, allowing landlords to give notice without reason. They argue that vulnerable tenants are being squeezed out of the private rental sector because landlords are no longer willing or able to give…