Innholdsfortegnelse for No 145 Dec 2015 i NZ Property Investor

WE HIT A SPEED BUMP LAST month in Auckland. The phenomenon of quickly rising sale prices hit a blip in its rapidly elevating trajectory and the reasons for that blip – among which were a raft of regulatory changes for investors – means the soaring juggernaut that is the Auckland property market, might just have gone into coasting mode. Some commentators are certain this is the beginning of a decline, which will in turn lead to a crash (read John Bolton’s view on p11), while others remain steadily optimistic. One thing is for certain: the slowing of Auckland’s pace means the regions are catching up. As is typical in a property cycle, the “trickle down” and the “halo” effects emanating from Auckland mean the surrounding regions are going off. Beyond…

1 LANDLORDS WARNED IRD IS WATCHING Investors were warned not to expect to be able to dodge capital gains tax just by holding on to their properties longer than two years after the "bright-line test" was passed into law. This test requires property investors to pay tax on gains made on properties they have bought and sold within two years. But Revenue Minister Todd McClay says that does not mean investors who hold a property for longer than two years will automatically be in the clear for tax purposes. 2 TOP 5 SPOTS TO LOOK FOR YIELD IN AUCKLAND Investors looking for decent rental yields in the SuperCity still have some options, Miriam Bell writes. Apartments in central suburbs and houses in suburbs to the South make up a new…

GROWING NUMBERS OF New Zealanders favour mixed-use housing developments. The traditional Kiwi preference for a large, stand-alone house on a quarter acre diminishes once people think about the distance from work and amenities, a new survey shows. The University of Otago’s Centre for Sustainable Cities survey looks at 3,080 people’s sentiments about cities, including housing. Not all respondents favoured the quarter-acre dream, University of Otago assistance research fellow Anna Hamer-Adams says. “Many New Zealanders would still like a large, stand-alone house,” Hamer-Adams says. “But that view changes when people are asked to think about distance from the city or town centre.” More respondents (37%) than not (32%) favour a quality, compact city vision, similar to the Auckland Unitary Plan, for their own city. Auckland and Wellington respondents are more comfortable,…

Inaugural winners of The Block in 2012, brother and sister team Ben and Libby Crawford are now living in different cities with their partners, but are co-directors of creative advertising agency libbyandben.co.nz. They are also both working on property projects: Libby and her partner have two properties in Christchurch, their current home plus a villa they lived in and renovated before buying again and renting it out. Ben Crawford and his partner Kylie took on a major project over the past year, creating their dream home on a 1,400m2 Castor Bay (Auckland) site that had been on the market for six years. “It was a site nobody wanted to touch” Ben says. “It had a stream running through the middle and it was overgrown so it didn’t look like there…

CLAIMING GST ON A property purchase may be extremely tempting and in many cases required. However voluntary registration and claiming of GST on a property purchase can often be shortsighted or simply incorrect. If you are carrying out a continuous and regular GST taxable activity, and have, or are expecting to have more than $60,000 of turnover each year, then it is likely you will need to be registered for GST. Where you are required to be GST registered and you are purchasing a property that is or will form part of your GST taxable activity i.e. business premises, commercial leasing, short term accommodation, property development etc., claiming GST may be required. POTENTIAL GAIN If you have the option to register for GST, you really need to ask yourself: is…

HOUSE HUNTING CAN BE A TIME consuming and daunting task, but it doesn’t need to be. Modern technology has transformed the real estate industry, from the way we search for properties, and communicate with agents to the way we process our financial funding. Technology is a powerful tool for the savvy investor and if used correctly it can save an abundance of time and help lead you toward your ideal investment property. So what are some technology tips and tricks for house hunting on the run? PERSONALISED SEARCH Increasingly more property websites now have applications which feature the latest property listings. The applications make for a user-friendly experience when searching on a mobile device. These apps allow you to create a profile where you can save personalised searches based on…

AVONHEAD A well-established area of Christchurch with good-quality 3-4 bedroom family housing. Often sought after due to school zoning. Generally achieving above average rents. FENDALTON/ILAM Properties in these suburbs are at the upper end of the Christchurch market, being close to the University and often on large, well-established sections. These tend to be more substantial properties with at least four bedrooms. RICCARTON This is a very large suburb and therefore has a wide range of rental properties, ranging from luxurious Fendalton-like properties through to student accommodation. There is a gradual replacement of lower-end properties with townhouse complexes. These are often advertised as “room by room” rentals. ROLLESTON Rolleston has a reasonably high proportion of rentals and attracts, in particular, young families. Often rentals in this area are relatively new, four-bedroom,…

Underscoring classic investor downfalls and peppered with personal anecdotes, Ammon Carapi's new online offering highlights some solid advice and is well worth the read says Phil Campbell. In 7 Strategies of Mortgage Mastery, Ammon Acarapi pushes the idea that “knowledge is power” – or if you enter the whirling dervish world of investment -do your homework. In this worthy online edition on property investment, some 27 pithy pages of warmth and wisdom provide ample information to the new buyer and pointers for the established investor. A strong piece of advice from Acarapi is to be judicious on net worth. Banks are not impressed with such assets as motor vehicles, he says. “The bank is seriously keen on looking at two numbers: 1) The loan-to-value ratio of your property/properties and 2)…

Our fans discussed what their first investment property was. YOUR COMMENTS Lorraine Fraser: 3 bedroom house in Hamilton 15 years ago, and still own. Great rental, everything works out when you can hold on to property that long. Neale Lockhart: Three bedroom property in Papatoetoe in 2000. Sold it in 2008 and bought a block of 4 x 2 bedroom units in Mt Maunganui. Tom Wood: Brick and tile two bedroom in New Lynn. Renovated with plan to hold it long term, sold it because everyone told me interest rates would go through the roof. They were wrong, interest rates declined for the next five years (it would have been positively geared and doubled in price by now). The Auckland market is easing according to new REINZ figures. Our readers…

I’VE BEEN SAYING FOR SOME TIME that we are living in a period of unusually high economic risk. How you plan around this risk will determine how you come out the other side when we go through the next big market correction. Let’s start with the statement that a market correction is inevitable. It is simply a matter of when. We have had recent market collapses in 1987, 1998, 2008 and most punters are guessing the next one will be around 2017. There’s no science around that date. It could be as early as tomorrow. Hopefully not! When the next correction happens, governments and reserve banks around the world will not have the balance sheets to fight it. Money printing and borrowing our way out of trouble won’t work. The…

The other area of finance which is starting to gain prominence is peer-to-peer lending. Under the P2P model providers match up borrowers and investors through their own platforms. They are challenging the traditional banking model and claim they offer investors and borrowers better deals than banks because their costs are lower. So far four P2P licences have been issued. Harmoney was the first to set up shop and has just celebrated a year in business. It plays in the consumer lending space which isn’t relevant to property investors. John Bolton’s Squirrel Money, is now in operation and it too offers personal loans. While it’s early days the bulk of lending is going to debt consolidation and vehicle finance. Lend Me is currently in a “soft-launch” phase and is a genuine…

When Alex and Corban Wells won season three of The Block last year, they used some of their winnings to buy a section in Auckland’s Island Bay. Just recently, they completed their plans to build a home on the tricky 600m2 site, which is situated on top of a ridge. “We went through a couple of designs and one started to look a lot like The Block house” Alex says with a laugh. “But we ended up going for something completely different – something really new. One thing we did in The Block house that we’ll now always do is put in solar hydraulic central heating. The whole house is going to be engineered to be completely off the grid” Alex Corban’s background as a fashion buyer has also helped…

Certain school zones have become something of a golden ticket in Auckland and the success of Brooke and Mitch and Cat and Jeremy's houses owe a lot to their specific location. Their houses (three and four) are in zone for Mt Albert Grammar School, while the remaining two dwellings are zoned for Mt Roskill Grammar School. Listing agents Bayleys had earlier this year found a median price difference of $127,400 between the two enrolment zones. Wolfkamp says he didn’t know about this advantage before the show began, but admits that finding out “allowed house four to feel pretty confident” Although the two couple’s renovation efforts were consistently the most successful during the series, it’s possible the pull of the school zone would have been enough to make even the worst…

PAYING OFF DEBT IS A FORM OF saving and the current low mortgage rates offer an opportunity for property investors to accelerate debt reduction. The faster and more cheaply debt repayment can be made, the more dollars are saved. In real estate investment, saving by cutting debt simultaneously increases equity - which could be used later as security for renewed borrowing to acquire more property. Right now mortgage rates are probably about as low as they will sink in New Zealand before heading back up again, once the interest rate cycle turns. So how should property investors respond to this apparent trough in mortgage rates? Every investor’s case is different, which makes professional lending advice essential for the optimal outcome in debt management. For the sake of illustration, let’s imagine…

ONE OF THE ADVANTAGES of owning an apartment is the way you can carry out a major makeover on a relatively small budget. Yet so few apartment owners make the most of this. Despite what some investors seem to think, there’s a world of difference between ‘low maintenance’ and ‘no maintenance’. If you have an apartment, it’s a fantastic low maintenance property investment. But if you want to do absolutely no maintenance, put your money into a managed fund and ignore it for as long as you like. If you’ve got an apartment that hasn’t been refurbished for several years, you could be missing out on: • Higher rents. A run-down apartment won’t easily command the top-of-the-market rent range. • Better tenants. Even if your refurbishment doesn’t increase the rent,…

• Investing in the actual CBD is a great idea, but it is likely to be a far safer tenancy bet with some secure parking or garaging. Be aware of perceived dangers and buy rentals with light roofing materials like iron. Ensure your place is either close to bus routes or the ever-popular Hagley Park, and has a good bathroom–to-bedroom ratio. • Addington (The Lincoln Road precinct) and Sydenham (South of the CBD). These are boom areas since the quakes, will continue to attract business and are top residential investment options. They are also central enough to remain boom areas into the future. • Wigram, Hornby and Hoon Hay are now considered relatively central and are in higher tenant demand. • Avonhead, Ilam, Burnside, Bryndwr and northwest of the CBD…

THE NZPIF RESEARCHED THE PROPERTY insurance market and found some policies are not targeted at rental property and cost over 40% more than others. Our research has uncovered what we believe is the best value policy with features aimed at rental property ownership. We have entered into a business relationship with this provider and can now offer the policy to our members. The product includes the regular cover expected of a policy. It also includes, however, $25,000 malicious damage cover, $20,000 cover for landlord’s contents, $20,000 loss of rent cover and $2 million landlord liability cover. We have been testing out the product and our systems by making it available to PIA committee members around the country. The reports we have had back show savings of between $100 to $250…

PROPERTY DEVELOPER Kerry Christian has pleaded guilty to four fraud charges. He will be sentenced this month in what has been a long-running battle for his victims to get justice. The Queenstown man faced accusations he took money for renovation work that was not done, overstated a purchase price by US$25,000, and misused settlement statements. He advertised his services to Kiwi investors wanting to find deals in the United States. Christian initially denied any wrongdoing but after evidence was produced in court that suggested he had doctored emails that were being used as part of his defence, an agreement was reached under which he would plead guilty to four charges, three to do with theft in a special relationship and one of using a document to gain pecuniary advantage. He…

IT SEEMS REALITY HAS CAUGHT up with the rumours for Auckland’s runaway market. CoreLogic’s Jonno Ingerson made a bold call when he said the market had turned and speculation grew heated as observers waited to see if the latest round of data backed up his statement. Now, this month’s data is all in – and it tells a reasonably consistent story. Quotable Value’s data aside, there seems little doubt the SuperCity’s skyrocketing price growth has started to slow. However, the jury remains divided on what the signs are for the future. The only data to run counter to Ingerson’s call was this month’s Quotable Values (QV) data. It shows Auckland’s values continuing on their upward march in October. VALUES INCREASED The average residential property value in the Auckland region is…

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 property-related transactions, valuation and restructure services, and tax planning. Withers Tsang & Co Phone 09 376 8860, www.wt.co.nz RON HOY FONG As a successful property investor and mentor, Ron has built an impressive portfolio and a wealth of investment strategies and experience. Contact Ron today on 021 888 298 or ronhoyfong@gmail.com BERNARD PARKER Bernard is principal of Quinovic – Kapiti-Mana. Quinovic’s outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 26 years.www.quinovic.co.nz KRISTER SAMUEL Krister specialises in selling high yielding apartments for…

Alice and Caleb Pearson have started a family, established two businesses and renovated several properties since they won season two of The Block in 2013. Their first project, after completing the show, was a two-lot subdivision in Auckland, which the couple enjoyed despite the steep learning curve. That experience led to Caleb and his business partner setting up Diligent Property Services (diligentproperty.co.nz) to advise those who want to subdivide their sections but don’t know where to start. It also offers options for financing a subdivision. The Pearsons have also launched Pearsonandprojects.com, where they blog about their renovations and provide property staging services utilising many of the styling skills they learned on The Block. Perhaps their most impressive renovation to date has been a dilapidated three-bedroom weatherboard house in Auckland’s Mt…

MARKET COMPOSITION The rental market in Christchurch Central is made up of mostly houses, with a good representation of flats, too. Apartments aren’t all that common in the region; however, they are present in five of the 12 areas included and unsurprisingly dominate the Christchurch Central/Hagley area accounting for over 70% of the rental market. The largest areas profiled, which have over 100 bonds lodged, are, in order of size, Linwood/Phillipstown, St Albans East/ Edgeware, Riccarton, Merivale/St Albans West and Sydenham/Waltham. These areas, along with the smaller Addington, have a good mix of rental houses and flats. Merivale/St Albans West, St Albans East/ Edgeware and Linwood/Phillpstown have more flats than houses. Among the remaining areas Bishopdale/Papanui has the greatest percentages of houses (92%) with Richmond/Shirley (88%) and Fendalton/Strowan/Bryndwr (87%) not…

NORTHLAND NEXT MEETING: Wednesday February 24, 2016, 7pm at the Northland Cricket Pavilion, Okara Dr, Whangarei. MEMBERSHIP: $180 single or $210 couple, includes subscription to the NZ Property Investor and NZPIF discount card, plus local trade discounts. Email npiacontact@gmail.com for more information.PO Box 1640, Whangarei. AUCKLAND NEXT MEETING: February 2016. MEMBERSHIP: Sign up for an APIA membership at www.apia.org.nz/register. APIA memberships include a free subscription to the NZ Property Investor, networking opportunities at over 100 events throughout the year, an excellent discount card, free subscription to APIA TV, and massive savings off mortgage interest rates with the ANZ bank. More information visit www.apia.org.nz or email admin@apia.org.nz WAIKATO NEXT MEETING: Wednesday December 9, 6pm. Mystery Creek Event Centre. TOPIC: Christmas social event. Welcome drink and canapés at Mystery Creek's award winning…