Innholdsfortegnelse for March 2024 i NZ Property Investor

This year will see a significant shift in the rules and regulations around property investment. The restored mortgage interest deductibility, with 60 per cent interest tax deductable this year, raising incrementally to 100 per cent in 2025, is one of the most lauded changes, but there's plenty of other market shifts investors need to watch. Sally Lindsay outlines the key changes for investors in this month's lead story. The prescriptive requirements for low-risk lending introduced by the CCCFA look likely to be removed by Consumer Affairs Minister Andrew Bayly (“about time” I hear you say); bright-line is being pulled back to two years, and no cause 90-day tenancy terminations reinstated. Outside these rewinds of Labour policies, there are new initiatives. The buildfor-growth fund aims to speed up council processes via…

Landlords are being urged to provide tenants with a clear process if they have a burst pipe or other property emergencies out of hours. Too often tenants are left to deal with the emergency themselves without instructions on who to call or contact. For tenants living in managed properties, many have access to an out-of-hours duty manager who can be contacted and arrange emergency repairs, but private landlords can sometimes be lax or uncontactable. Some private landlords do give tenants contact numbers for their local plumber or electrician, but many don't communicate this at all. The key point is most landlords will have these numbers but don't give them to their tenants and tenants flounder around in the early hours of the morning wondering what to do, while the property…

HOUSE PRICES: DOWN REINZ data show January's national median sale price dropped slightly from December 2023, down 2.5 per cent from $779,830 to $760,000. Year-on-year, there is a slight decline in the national median price by 0.7 per cent from $765,000 to $760,000, while New Zealand, excluding Auckland, is down by 2.1 per cent month-on-month, from $700,000 to $685,000 and up year-on-year by 0.8 per cent, from $680,000 to $685,000. 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. It is not expecting to make changes until next year. INTEREST RATES: DOWN Despite a rise in wholesale rates, Westpac has become the first major bank to cut…

DIY PROJECT CALEB AND ALICE PEARSON One of the great things about older homes in New Zealand is there is a good chance there will be native timber flooring in your house. Especially prior to the 1970s, tongue and groove native timber was the go-to flooring. While valued now by many, at the time these timber floors were normally covered by vinyl or carpet. Now property owners have the chance to uncover and restore this native wood back to its potential. We are no strangers to timber flooring. Having renovated many older homes, when provided the opportunity we always like to take advantage of restoring wooden floors. Often there's a quality flooring that has been preserved for many years, ready for you to uncover and bring to life. If it's…

YOUR DEVELOPER There are many fundamentals to consider when proceeding with the design process of property development and a few features that would fall under optional considerations. But although optional, they are attractive features that directly contribute to living enhancement, meet new and growing market demands, increase funder appeal, and the final build helps develop modern urban spaces. It's necessary as a developer to recognise the needs of the individuals, couples and families who will buy new homes. CARPARKS As of February 2022, the National Policy Statement on Urban Development (NPSUD) directed all New Zealand councils to remove the car parking minimum requirements on residential properties. This meant that all future developments could choose to develop land with zero off-street carparking. While this legislation allows for a greater density of…

YOUR REVIEW The extreme weather events that unfolded in 2023 are no longer just wildcards. They're now an impending reality for everyone - including property owners. Similarly, rising sea levels are a slow, yet very steady, risk to coastal properties. And over the next 15 years, environmental factors will become more pressing on the investor consciousness. Here are three things for property investors to consider. NEW BUILD VS EXISTING Newer properties are built with natural disasters in mind. The Christchurch City District Plan has specific standards for building in a flood-prone area (which is almost the entire city). Properties must be high enough off the ground so they can withstand a one in 200-year rainfall event and a one-metre sea level rise. Existing properties that pre-date revised building standards tend…

NZPIF FROM THE PRESIDENT'S DESK SUE HARRISON The hype of an election in 2023 promised to change some problematic Residential Tenancies Act clauses and restore tax deductibility for landlords. All with the hope that this eases the cost of living, not just for existing investors, halts the sell-down of rental properties, and stalls the upward inflationary pressures on rents for tenants. In order to have a wider understanding by newly minted Members of Parliament regarding housing our nation we have written the following letter: Dear MPs (National, Act, New Zealand First) Congratulations on your recent election to Parliament! As you embark on this crucial journey, we'd like to offer some insights into an important issue facing New Zealand: the state of our rental housing market. We believe your attention and…

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…

YOUR RATES By the time you read this the Reserve Bank will have made its decision on the first Official Cash Rate review of 2024, which I expect will be to keep the rate at 5.50 per cent There has been some dissent with ANZ's Chief Economist Sharon Zollner predicting the bank will increase the cash rate twice so, hopefully, for all mortgage borrowers, I'm right and she's wrong. A key factor making her think along these lines is that the unemployment rate has not increased as expected. It's currently sitting at 3.9 per cent but had been predicted to be 4.3 per cent by now. Another point is that while overall inflation has dropped more than expected, the domestic side of that equation is staying stubbornly high. BETTER CHOICE…

RENOVATION Builderscrack has seen thousands of Healthy Homes-related jobs since the announcement of the new regulations. They range from simple insulation and heat pump installations through to complex renovations to meet regulations and improve yield. Demand peaked across 2021 and 2022 as new and renewed tenancies required the work to be done within 90 or 120 days. Property investors have taken one of two approaches: • engaged tradespeople, addressing standard-by-standard as separate projects • engaged a builder or project manager to manage the completion of multiple standards as one project. About 10 per cent of projects were combined and included additional renovations. The remaining 90 per cent opted to manage separate contractors themselves, on a standard-by-standard basis. The average cost per project for the standard-by-standard approach is $1,330, with the…

YOUR ACCOUNTANT Readers may recall electioneering around the Labour governments “app tax” whereby platform providers like Airbnb are to be required to account for not only GST on their own fees, but also on the supplies of accommodation they are selling on behalf of property owners, some of whom are GST registered and some of whom aren't. National had promised to scrap this proposed app tax but have now opted to allow the new rules to continue, citing the “fiscal hole” and their desire to deliver tax cuts as the reason. So, from April 1, 2024, platform providers like Airbnb must account to IRD for GST on the supply of accommodation on the platforms they operate regardless of whether the person listing their property on the platform is GST registered…

FINAL WORD As the Regulation of Property Managers Bill makes its way through Parliament, having two lobby groups voicing differing views is damaging the integrity of property managers. Recently, I engaged in a discussion with the former chair of the Residential Property Managers Association (RPMA) regarding the assertion that Real Estate Institute of New Zealand (REINZ) Property Managers typically oversee more than 300 properties. Drawing from my 20 years’ experience in the industry, I have yet to encounter any evidence supporting such a claim. The accusation is that real estate companies focus on sales, and property management is a poor cousin. The emphasis is on business development managers who are instructed to load property managers, expecting them to manage over 300 properties. It does not stop there. According to the…

RENOVATION HEATING Landlords must provide one or more fixed heaters that can directly heat the main living room. The heater(s) must be acceptable types and must meet the minimum heating capacity required for the main living room. The heater should be able to heat the main living area to 18 degrees on the coldest days of the year. The most efficient and popular solution to meeting this standard is installing one or more heat pumps. INSULATION Ceiling and underfloor insulation has been compulsory in all rental homes since July 1, 2019. The Healthy Homes insulation standard builds on current regulations, so some existing insulation may need to be topped up or replaced. The country is split into zones, with each zone requiring a different level of insulation, measured in R…

YOUR SHORT-TERM RENTAL The gig economy is comprised of food delivery, accommodation, and ride-sharing services such as Airbnb, Uber and Uber Eats. At the begining of 2023, the National Party campaigned against mandating a Goods and Services Tax (GST) on gig economy platforms, pledging to abolish the upcoming law should they win the election. As National did not receive a majority share of seats, their coalition with ACT and New Zealand First has meant a series of negotiations, including a verbal announcement that the “app tax” would be going forward. This law change will see all platform operators in the gig economy charging GST on provided services regardless of whether the seller is GST-registered or not. APP TAX The good news? Although not ideal, the newly imposed GST rules, set…

THE DATA Rental data is sourced from the Ministry of Business, Innovation and Employment based on rental bonds lodged. This data is supplied 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 Lower Hutt is dominated by houses. Of the 459 properties recently available on the market for rent, 399 have been houses (87 per cent), with 30 flats and 30 apartments,…