Innholdsfortegnelse for October 2024 i NZ Property Investor

Investing in property created by developers can be a path to financial success. New-build apartments and townhouses undertaken by reputable developers can be a safe investment, providing tenants with clean, warm, dry and lowmaintenance homes. The dramas surrounding the Du Val Group, however, may have caused some wannabe investors to take a sharp intake of breath. Du Val director Kenyon Clarke positioned himself as a hard-working entrepreneur who built a property empire after bankruptcy in 2009. He and his wife, Charlotte, lived a life of luxury – Rolls-Royces, helicopters to private islands – and promised investors 10 per cent returns. But there were murmurs of discontent. The murmurs became a roar. Subcontractors weren't being paid; cleaners struggled to get what they were owed. In February, work stopped on a Du…

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. www.gra.co.nz 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 Withers and his team specialise in advising on property-related transactions, valuation and restructure services, and tax planning. Withers Tsang, phone 09 376 8860, www.pfkwt.co.nz RYAN WEIR Ryan Weir 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. www.propertyscouts.nz SHANE CAMPBELL A partner in Wynn Williams' Dispute Resolution Team, Shane…

HOUSE PRICES: DOWN REINZ data shows the national median sale price dropped $5,000 in August from $770,000 to $765,000 year-on-year, but prices are holding steady with a 1.3 per cent increase month-on-month. Six of the sixteen regions REINZ monitors had a median price increase year-on-year. Otago led the way with a 6.7 per cent increase to $640,000, followed closely by the West Coast with a 6.6 per cent increase to $357,000. Eight regions increased month-on-month, with the most notable changes in Marlborough at +7.8 per cent to $625,000, and Gisborne up 6 per cent to $620,000. Compared to August last year, the total number of properties sold nationally declined 0.7 per cent, or just 40 properties, from 5,725 to 5,685, and dropped 5.1 per cent month-onmonth, from 5,992 to 5,685.…

YOUR DEVELOPER New Zealand's larger and more densely populated cities continue to grow, and with this growth the demand for developers to utilise mixed-use land increases. Land zoned as mixed-use allows for developments that include residential living, recreational facilities and commercial spaces, all in one place. Mixed-use developments effectively maximise space and connect people together, offering the opportunity to live, work, and play, all under one roof. WHAT CAN BE BUILT Let's look at what we can build in a mixed-use zone. Residential spaces are usually the main feature, ranging from studios and apartments to luxury penthouse suites. With New Zealand's population increasing, there is a greater need to build up rather than out, which has been a driving factor for more apartment construction. Next, we can build recreational facilities…

NZPIF ADVOCACY CORNER It's been a busy time on the advocacy front, with a Wellington visit and a couple of Auckland MP meetings. Wellington visits are a key part of our advocacy work. They're about building relationships, informing stakeholders, promoting our agenda and getting informed in return. Our visit in August was built around a meeting with Housing Minister Chris Bishop, but we also met several other MPs and officials. We met Southland MP Joseph Mooney, who chairs the select committee considering the changes to the Residential Tenancies Act (RTA), and list MP Cameron Luxton, ACT's housing spokesperson. We had discussions with both about our priorities, especially in relation to the RTA changes and speeding up Tenancy Tribunal issues. We had two meetings with Ministry of Housing and Urban Development…

NZPIF has asked the Ministry of Housing and Urban Development (HUD) for clarity around new pet rules. Pet provisions in the bill currently before parliament were developed to be mindful of this concern. For example, the bill provides that tenants are liable for all damage caused by pets beyond fair wear and tear, regardless of whether it's careless or intentional. This is different from a tenant's liability for damage caused by humans. In the case of careless damage, a tenant is liable for up to four weeks' rent or the landlord's insurance excess, whichever is lower. Where damage is intentional, the tenant is liable for the full cost. The pet bond is intended to be set at two weeks' rent. This amount was chosen because it's considered likely to be…

Q Our current mortgage is $600,000 fixed at 6.99 per cent for a year. We have 20 per cent equity in the property and are due to refix. Now we have $100,000 in savings, a $200,000 gift from family. We will offset this amount. Every month $8,000 in salaries go into our account. Can we offset this amount as well? What are the options for monthly savings after refixing? A You want to start by understanding what fixed-rate term you will fix the majority of your debt on (in most cases we recommend either the six or 12-month rates, as rates are expected to drop quickly and significantly across the next 12 months). You then may want to leave some additional debt on either the revolving credit or offset facility…

YOUR RATES At the time of writing in mid-September, the Federal Reserve (which is the US Bank) hadn't yet made the call on their cash rate. The expectation was that they would deliver their first cut in four years, with predictions being evenly split as to whether they would cut by a quarter or half a per cent. Our longer-term rates tend to be more affected by what is happening overseas, so we may see a drop in these depending on the Federal Reserve's decision, but be wary of fixing too long. There is a chance that while attractive now, it may look expensive in a year or so, and the resulting break fee will not be as enticing. Domestically, New Zealand GDP numbers for the June quarter were about…

YOUR COMMERCIAL PROPERTY While residential assets may be the more familiar property investment option in New Zealand, unlisted commercial property funds offer an alternative to real estate ownership in a sector that's presenting exciting growth opportunities as the country's commercial environment evolves. Oyster Property Group is one of New Zealand's leading unlisted property fund managers and for more than 20 years has provide Kiwis with easy access to commercial property investment opportunities. With $1.8 billion in assets under management, Oyster purchases quality properties of significant scale in the office, industrial, and large-format retail sectors, then executes strategies on behalf of its investors to deliver monthly income and potential for long-term capital growth. Oyster Property Group's general manager – property, Fabio Pagano, says it's Oyster's robust in-house management capabilities and value-add…

YOUR LAWYER With approximately 40 per cent of carbon emissions coming from the built environment, the construction and property sectors have a significant role to play in reducing the environmental impacts of property while meeting the demands of consumers, tenants and investors. BUILDING REPORTS In New Zealand, we have the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021. This amended the Financial Markets Conduct Act 2013 (FMCA) and requires climate-related disclosures from certain entities designated “climate reporting entities”. The FMCA captures about 200 of these climate reporting entities such as large banks, insurers, listed issuers, credit unions and building societies. The reporting requirements are significant and carry heavy penalties for non-compliance. We expect to see a flow-on effect from the entities required to report under the FMCA, eg…

It is with deep sadness that we acknowledge the passing of Cliff Seque on August 26, 2024, at the age of 72 in Dunedin, surrounded by family. Cliff was a dedicated and passionate investor, serving on the NZPIF board for many years. As President of the Otago PIA, his leadership and vision were instrumental in supporting property investors across New Zealand and advancing advocacy efforts during his time. Cliff's legacy is one of hard work and enduring commitment to the property investment community. His influence continues to guide the Federation's mission today, and we recognise him as a totara among those who helped build the foundation of our success. Our thoughts are with his beloved wife Roseann, his children Rebecca and Kathryn, and their families during this time. Cliff's contributions…

UP FRONT NEWS The CoreLogic Buyer Classification figures showed that first home buyers (FHBs) retained a strong market share in August, accounting for around 27 per cent of property purchases – the third month in a row at that figure, which is more or less a record high. The number of FHB deals is pretty solid too. On the flipside, relocating owner-occupiers (movers) have remained relatively quiet by past standards, perhaps with insecurity in the labour market keeping them where they are rather than shifting. But perhaps the most interesting mini trend in the past few months has been tentative evidence that's emerged of mortgaged multiple property owners (MPOs, including investors) just starting to become a little more active again. Now, it's nothing to go overboard about just yet, but…

A s a landlord it's important to maximise the potential of the property you are renting. Landlords across the country are finding it's taking longer to rent their property as the rental market takes a U-turn. You might be struggling to drum up interest or your current tenant is coming to the end of their agreement, and you don't want to be left with an empty rental. So, it's a potential renter's first impression of the property that counts just as much as profit margins. Minimising void periods and improving your property's appeal can be achieved through quality photographs. You only get one chance to make a good first impression and in today's property market that boils down to showcasing a home in all its glory. From maximising floor space to…

• TRACK RECORD Inspect other projects they've done and make sure they have a good reputation. · EXPERIENCE IN PROPERTY DEVELOPMENT Understanding a developer's experience can give you insights into their capability and reliability. A higher number of completed projects can indicate a successful track record. · FINANCIAL HISTORY Research whether a developer has run into financial problems on previous projects. A financially stable developer is less likely to face issues that could delay or halt the project. · REPUTATION Look at the developer's reputation through online reviews and feedback from previous buyers. Consistent positive feedback is a good indicator of reliability and quality. • TRIPLE CHECK CONTRACTS First, get good independent legal and accountancy advice. Ask them to objectively find any flaws in what you are being told about…

YOUR ACCOUNTANT For intrepid property investors thinking about making the leap into a property development project there is a lot to learn and understand about how the tax system functions that differs from what you will know about life on the investment side of the fence. In this article we are going to focus on the issues associated with income recognition for property developers. You might ask what is that, and why is it important? Well, income recognition deals with the rules around the timing of recognising income from a property development project. It's important because it will dictate which income year you must actually pay tax on as a development project proceeds, and this in turn drives provisional tax planning decisions and strategies. So, starting with the basics, when…

YOUR REVIEW Sharon Cullwick is a wellknown figure in the New Zealand property investment community. She's spent 22 years involved with various Property Investors' Associations across the country and currently she's president of the Hawke's Bay Property Investors' Association. She now manages a lifestyle block and takes care of 50 baby cows each year, something she could not have imagined doing without the income generated from her property investments. Here's how Sharon used her entrepreneurial spirit to build a portfolio big enough to support her lifestyle dream. HOW DID YOU START? Sharon says her journey into property investment began in an unexpected place … Australia. While watching a television show she was inspired by a forklift driver who owned five properties on a modest salary. Despite earning more than him,…

In Britain, the Labour government is considering bringing in a law preventing so-called “Dutch auctions” or bidding wars over rental properties. Our Labour government did the same thing in 2021, and it seems there's some confusion over how this law applies here. Members have contacted us under the impression that properties must be let at the advertised rental price –but that's not true. While landlords or property managers must state the rent when advertising and aren't allowed to seek higher bids, “prospective tenants or any other person can still voluntarily offer to pay more than the stated amount of rent and a landlord may accept this offer.” So, you can choose the tenant who offers to pay the most … you just can't ask them first. A tip from one…

AUCKLAND NEXT MEETING: Go to www.apia.org.nz/ events for details. APIA hosts 100 events and presentations for its members each year. WAIKATO NEXT MEETING: Wednesday, October 9, at St Andrews Golf Club 46, St Andrews Terrace, Hamilton, 7.30- 9pm. TOPIC: Debt-Free Diva – Becoming debt-free, budgeting and meeting repayments through tough times. TARANAKI NEXT MEETING: October 15, 7pm at Plymouth International Hotel, 220 Courtney Street, New Plymouth. TOPIC: NZPIF Rentskills Supreme Award 2023 Landlord of the Year – Nicki Smith. Hear her story and ask questions on selfmanaging, getting the best out of your rentals and what things you should consider before you start, or as you continue the landlord journey. MANAWATU NEXT MEETING: October 2 at SALT Auditorium, 35 Matipo Street, Palmerston North. TOPIC: Details TBA. WELLINGTON NEXT MEETING: October…