2019 has been a busy year for landlords with a lot of changes to the tenancy legislation.
The Healthy Homes Standards became law on 1 July this year. The standards set the minimum level expected of a rental property regarding heating, insulation, ventilation, moisture ingress and drainage, and draught stopping in rental properties. Landlords are obliged to meet these standards.
These standards will help ensure rental homes in New Zealand are warm and dry, and will improve the health of tenants by improving the standard of housing. The standards will also decrease maintenance costs for landlords and add value to your investment property.
Other obligations include make sure the property is in a reasonable condition, let the tenant have quiet enjoyment of the property, have an agent if they are out of New Zealand for more than 21 days. among other responsibilities.
You may think all legal professionals, accountants, and property managers are the same and decide to go with the cheapest one. But you would be wrong.
First, a word of caution. Property is a specialist area and legal professionals can specialize in a wide range of areas from commercial law, relationship property settlements, to trade and intellectual property. Similarly, you are best advised not to save money and just use a conveyancer. A conveyancer services might save you a few hundred dollars but if you are new to investment property, you are best to go with a lawyer who is experienced in real estate.
The majority of investors put little thought into the ownership structure of their investment.
For most investors, this is an afterthought and much more effort is put into finding the best interest rate on a mortgage and looking for a property.
However, on a 0.1% saving in interest rate on a $500,000 mortgage is only worth $500. But structured incorrectly, and your property investment could cause you a financial headache.
In this series, we look at the trust structure and how you can benefit from it. Read more
This is the first in a ten part series to help update your knowledge in property investing.
This series will look at leaky buildings, something that is a taboo topic because although we hear a lot of war stories, NZ hasn’t got a solution to combat leaky buildings.
What is a leaky building? A leaky building is one where moisture gets between the outside of the house (the cladding) and the inside walls. Generally, they are associated with plaster cladding. If water seeps in through a crack and there is no place for the water to drain out, the water becomes trapped. The walls can potentially rot and dangerous fungus can grow, causing structural problems for the building and health problems for those who live there. Buildings that have a high risk of leaking were mostly built between the late 1980s and the mid-2000s, using plaster-style monolithic cladding systems. Read more
Landlords must make sure enough water is available at their rental properties. If there is no piped water supply, the landlord must make sure enough water can be collected and stored.
A question was asked by one of the readers as to Who pays Water and wastewater charges?
Well first things first, There are three components to the water bill; Fixed charges, Volumetric Water Usage & Volumetric Wastewater usage.
So who is responsible for paying for? The fixed charges are the responsibility of the landlord. As for the volumetric charges, the tenant will be responsible provided these three criteria are met. Read this post to find out the criteria that determines whether the tenant is responsible for the volumetric water usage bill.
What is the new policy to Ring fencing Rental Losses?
Previously, negatively geared investors (investors where the rental income was less than the deductions including interest, rates, body corporate levies) enjoyed a tax benefit that allowed them to offset the rental loss against their other income.
Inland Revenue estimates that approximately 40 percent of taxpayers with rentals record rental losses at any given time, with an average estimated annual tax benefit of $2,000
Look Through Companies where the losses flowed through to the owners became a popular investment vehicle.
The ring-fencing rules received Royal Assent on 26 June 2019, and will apply from the start of a person’s 2019/20 income year which is from 1 April 2019 for standard 31 March balance date taxpayers.
Ring-fencing means residential property deductions can only be used to offset income from residential property. You cannot use rental losses to offset other income like salary and wages.
A new prefab house-building factory has opened in Wiri this week. The factory, which was opened by Housing Minister Megan Woods, produces wall, floor and roof components. It is run by NZX listed company Fletcher Building and is expected to transform the construction industry by significantly reducing lead times and making the building process more efficient.
Auckland has voted and Phil Goff managed to keep his job securing over 150,000 votes which almost double that of his rivals. Phil ran a low profile campaign without making any new election promises. He pledged to continue working on the city rail project which will continue to disrupt business in the city. But when the project is finished the house values around the inner city suburb like Mt Eden would likely reflect the increased convenience of catching light rail into the city. Read more.
Simplicity Kiwisaver will become the first Kiwisaver fund to make mortgages available to first home buyers who are also members of Simplicity Kiwisaver. Mortgage rates are expected to start as low as 2.95% offering a competitive rate compared to the Big banks. Read more.
The Reserve Bank of New Zealand has kept the OCR on hold at 1%.
Citing employment being at its maximum sustainable level, and inflation staying within our target range, the Reserve Bank Governor said it was justified keeping the rate at 1%.
To help you Stay up to date with the latest developments in tenancy laws, Tenancy Services is holding free seminars for interested people. The topics will cover the healthy homes standards (mainly relating to insulation, ventilation of rental properties) as well as other changes to tenancy laws (the requirement to provide information about insurance upfront to the tenants).
Click here for more information about where the seminars will be held. Locations will be throughout NZ. Plus a link to get in early for Robert Kiyosaki one day workshop in Auckland on 6 November.
Just when you thought mortgage rates couldn’t go lower, This week China Construction Bank came out with a all time low 3.15% rate.
Upcoming Changes to KiwiBuild, the Welcome Home Loan and KiwiSaver HomeStart Grant will take effect from 1 October 2019 to help more households become homeowners.
The key changes include:
- The Welcome Home Loan is now called the First Home Loan and deposit is reduced to 5 percent for new and existing homes
- The KiwiSaver HomeStart Grant is now called the First Home Grant and deposit is reduced to 5 percent for new and existing homes
The latest data shows a pickup in the Auckland’s housing market (more transactions).
You could tell just by visiting the auction houses last week in Shortland Street.
Of the 8 properties available for auction on Tuesday 20 August, 7 were successfully sold (either before the auction day or during the auction).
New tenancy legislation was passed on 30 July 2019 which will affect landlords and tenants in the following ways:
- tenants’ liability for careless damage in rental properties will be limited to the lower of insurance excess and four weeks rent.
- Tenancy Tribunal has full jurisdiction over cases concerning premises that are unlawful for residential purposes, such as garages and sleep-outs, which don’t meet minimum requirements for renting.
- Tenancy Services has the ability to take enforcement action against landlords who rent properties which don’t meet minimum standards.
- landlords can give 48 hours notice in writing to test rental properties for contamination and must provide the results to the tenants.
The RBNZ surprised us when they dropped the OCR by 0.5% last week.
While the team at Property Guide thought that the rates should have been kept on hold ( still didn’t think it was necessary at this point in time to lower the OCR), others thought the rate would be dropped by 0.25%. Few predicted the RBNZ would drop it by 0.5% . Really we thought the only times the OCR has been cut by 50bps or more have been in response to a crisis: after the 9/11 terrorist attack, during the GFC, and after the Christchurch earthquake.
So by cutting the OCR by 0.5% the RBNZ are indirectly telling us that we are already experiencing some sort of financial crisis (trade war perhaps?).
Either that or the RBNZ expects NZ to experience a crisis in the near future. That is why the RBNZ are taking proactive action to lower the OCR to continue supporting employment and growth. If the RBNZ is right in their analysis, then the statistics and government are lying to us when they keep telling us the economy is doing well (look at GDP, look at employment statistics, look at some other pointless statistic).
OCR is likely to remain at 1.5% in August rate review despite the Federal Reserve (US) cutting their official rate by 0.25% to 2%-2.25% in July.
The developer of the site built two six-level towers in Takapuna containing 92 apartments has gone into voluntary administration. This is a major setback for the apartment construction market as another developer gets into financial difficulties. This exhibits how tough the conditions are for apartment developers. The margins are tight and the cash flow can get squeezed by fluctuations in costs.
Luckily for the buyers, the development company had managed to complete building the apartments before going into voluntary administration. The apartments appear to be finished and residents have moved in. Read more
Tenants will now have to take some responsibility for careless damage to rental properties after the Residential Tenancies Amendment Bill (No. 2)passed its final reading in Parliament on Wednesday.
The new legislation is expected to encourage tenants to take better care of the property.
Under the new legislation, tenants will be liable for careless damage of up to four weeks of rent or their landlord’s insurance excess, whichever is lower. Their liability for careless damage will be capped at four weeks of market rent.
Some overseas based people are still buying residential properties classified as sensitive land without getting permission from the OIO. Rules are rules. If the legislation requires you to obtain OIO assent, then the buyer must get approval before buying the property.
Authorities have tracked down the buyers and imposed a penalty on buyers flouting the OIO rules.
The case in point is a overseas based buyer who bought properties at 79-95 Gills Rd in Albany for $12.95 million in 2013. The authorities ordered the foreign buyer to sell the land as soon as practically as possible without the sale affecting the sale prices of other buyer in the project..
Normally, the buyers will be imposed a penalty equivalent to the gain the buyer made. However, if the buyer didn’t make a profit after selling, the court imposed the maximum statutory penalty of $300,000.
Similarly, owners of two Warkworth properties were fined $2.95 million after OIO enquiry discovered the land was bought illegally.
So especially if you are not sure if you require OIO consent, check with your lawyer first.
Although some suburbs in Auckland have seen house prices continue to fall, there are some exceptions.
Houses in the Epsom’s double grammar zone continue to attract buyers’ interest.
Even a two bedroom & one bathroom unit with a half share of a 607 square meter piece of land sold over $1million. Yes it was brick and tile but nothing compared to the new Kiwibuild homes that are selling for around $650,000 in south Auckland. Read more in this post.
Currently, the IRD number of the seller is not required if the property is the seller’s main home.
However, Stuart Nash announced that all homesellers including owner occupiers have to provide an IRD number when they sell their house. This will make it easier for IRD to keep track of owner-occupier speculators such as habitual renovators who live in house, do it up, sell it for a profit and move on to the next house to repeat the process again.
When the previous government introduced the bright line test (previously two years bright line rule and has now been extended to five years bright line rule) in 2015, it made it clear that owner-occupiers with a regular pattern of buying and selling residential properties had to comply with the bright line rule in certain circumstances.
However, because owner occupiers did not have to report their IRD number, it required more effort from IRD to keep track of owner occupiers who had a continuous habitual pattern of buying and selling homes.
The only sellers who would not have to provide an IRD number on land transfer sale will be those made by a local authority or under a Treaty of Waitangi settlement.
RBNZ announces The Official Cash Rate (OCR) will remain at 1.5 percent.
Believe it or not, the banks still offer interest only loans but only to specific borrowers who have good credit ratings.
This means the borrower only pays the interest portion of the mortgage and no principal repayment is required. Borrowers typically use this for investment properties because it helps with the cash flow and may even be positive cash flow. Interest only borrowing is more widely used by borrowers that are able to claim interest costs as a deductible expense for taxation purposes, especially property investors.
Westpac NZ used to allow interest only loan for 15 years but has since reduced to it 5 years. In fact, most banks generally offer interest only loans for 5 years. Not every borrower qualifies and the bank will determine on a case by case basis. The bank will need to assess the ability of the borrower to make repayments and also assess the risk profile of the borrower before allowing a borrower an interest only period. In some cases, you may get the interest only period extended to 10 years.
It’s just over 18 days before all rental houses must have compliant insulation, and the Tenancy Services Compliance and Investigations team says there will be no extensions.
From 1 July 2019, a landlord who has not installed ceiling and floor insulation where reasonably practicable will be in breach of the Residential Tenancies Act (RTA) and may face exemplary damages of up to $4,000 at the Tenancy Tribunal. Insulating a property can be complicated work, and landlords need to get in quick to ensure their rentals are done in time as some insulation installers may already be booked up. Having a plan in place will not be enough to protect a landlord from financial penalties. The Tenancy Compliance and Investigation Team will continue to focus on landlords who systematically breach the Residential Tenancies Act by failing to properly install mandatory smoke alarms, provide insulation statements, and – following the 1 July 2019 deadline – install insulation.
According to latest REINZ data, generally New Zealand house prices are still growing strongly unless you are in Auckland or Christchurch.
Property has attracted a lot of interest among New Zealanders. The main headlines are always talking about the movement of house prices: whether it is rising or how fast they are falling.
However, the real value of a house lies in its land value.
If you don’t believe it, pick a residential address (leaving out apartments) and search it on the Auckland’s Council webiste.
The majority of the CV is attributed to the land value.
According to one source, Since 1993, the price of an Auckland section has increased by at least three or four times.
As a landlord, you want tenants who will care for your property and fulfil their obligations. The pre-tenancy stage is an opportunity to gather information that will help you make your decision. As a general principle, the Privacy Commissioner said “Landlords should only collect the minimum amount of personal information necessary to make that decision.” For instance, if a credit report shows that an applicant is creditworthy, there’s no need to collect their bank statements.
Some property managers ask to see the prospect’s bank statement before making a decision as to who to let out the property to.
However, prospect tenants have a right to refuse to show you.
Recently, the Privacy Commissioner released a guideline as what personal information landlords can request from a prospective tenant.
Recently, the Privacy Commissioner released a guideline as what personal information landlords can request from a prospective tenant.
To make it easier to read, the Privacy Commissioner’s guidelines is divided into 3 segments:
Questions almost always justified for a landlord/property manager to ask, Questions that are sometimes justified for a landlord/property manager to ask, and Questions that are almost never justified for a landlord/property manager to ask. We’ve summarised it here.
Someone asked whether non-load bearing walls, plumbing fixtures and fittings of their residential rental could be depreciated? Here’s our response.
In short the answer is no, you can’t depreciate non-load bearing walls, plumbing fixtures, and fittings for residential rentals.
Instead IRD has a three step test for residential properties:
- Determine whether the item is in some way attached or connected to the building.
- Determine whether the item is an integral part of the residential rental property such that a residential rental property would be considered incomplete or unable to function without the item.
- Determine whether the item is built-in or attached or connected to the building in such a way that it is part of the “fabric” of the building. Consider factors such as the nature and degree of attachment, the difficulty involved in the item’s removal, and whether there would be any significant damage to the item or the building if the item were removed.
Yes as predicted by many senior economists, the Official Cash Rate has been reduced to 1.5 percent.
Citing uncertainty about the global economic outlook and slowing global economic growth since mid-2018, the Reserve Bank of NZ has dropped the OCR to 1.50%.
Within the next few months, you are likely to see the big 4 banks drop their mortgage interest rates. Some forecasts are that the one year fixed rate will drop to lower than 3.90% . What are your thoughts?
ince December 2018, landlords and their letting agents can no longer charge tenants a letting fee.
However, you can still charge tenants an additional fee in 2 main cases. The first is when there is more than one tenant. If one of the tenants want to request to exit the tenancy, the landlord will need to find a replacement tenant. In that case, the landlord can charge the old tenant an advertising fee to find a new replacement tenant. Read more
Minors are persons under the age of 18 years. Not all contracts are enforceable against persons under 18.
Will the rental contract be enforceable against a tenant less than 18 years old?
The tenancy tribunal had to answer this question this April 2019. In that particular case, the tenant was only 16 years old. So what was the Tenancy Tribunal;s approach? Read more
Prime Minister Arden, today announced that the government won’t be implementing the capital gains tax (for now).
While Sir Michael Cullen (chair of the TWG) sounded disappointed, he was not surprised.
The weeks following his recommendation to introduce a widespread capital gains tax was met with criticism by many and naturally the government wanted the public to know they were listening to feedback from the public.
Naturally implementing another tax would not be popular so it was wise for the Prime Minister to back down on the capital gains tax for the timebeing.
According to Simon Bridges (the National Party leader), “National had been the loudest voice opposing a CGT, and without it, NZ First would have supported the CGT”.
But wait, that doesn’t mean you don’t pay any tax at all if you sell your properties… The 5 year Bright Line Test still applies, and special rules apply if you are a developer, trader, and in the business of erecting buildings. Read more
Recently the news mentioned a few cases of tenants using illegal substances in the house.
In a few cases, the insurance claim was rejected because the landlord had not complied with the 3 monthly inspection Insurance requirement.
For your convenience, we remind you that effective 2017, there is also a new contamination extension required by all insurers – the insurance policy requires unit owners take the following steps:
- An internal and external inspection of the unit must be undertaken at least once every three months and before any new tenants move in.
- A written record of each inspection must be taken and kept. A failure to comply with these requirements may invalidate this extension and cause your insurer(s) to decline an insurance claim.
If you don’t do the above, the insurance company can reject your insurance claim.
Anyway, from a property management perspective, it’s good practice to inspect your property once every three months to identify any maintenance that needs to be done. Regular maintenance can save the hassle of a big maintenance expenditure later: As they say, a stitch in time saves nine!
The number of Auckland homeowners selling their properties for less than they paid for them has increased over the past year. What does this say about the housing market?
Based on new data from Homes.co.nz, it is reported that 7.2 per cent of sales in the first quarter of this year have resulted in a capital loss for Auckland property owners.
This reminds us that all kinds of investment have risk. Generally, shares are riskier than property and property is riskier than putting in the bank. Property has the benefits that you can get a mortgage to buy the property but interestingly, borrowing costs are at a historical low, so why would you sell a property at a loss? Read more to find out.
The Official Cash Rate (OCR) remains at 1.75 percent. Given the weaker global economic outlook and reduced momentum in domestic spending, the more likely direction of our next OCR will be down. This follows on from last week’s article where the Fed (USA’s Federal Reserve) announced it will keep rates the same and no more hikes in 2019.
At the moment, it seems the governor is emphasising the economy and less worried about inflation in making his OCR decisions. Adrian Orr, on behalf of the Reserve Bank of New Zealand believes that ongoing low interest rates, and increased government spending and investment, will help support economic growth over 2019. But is this good news? Read more
The Federal Reserve decided this Wednesday to hold interest rates steady at 2.25% – 2.5% and indicated that no more rate hikes will be coming this year.
Here’s the good news: there is more certainty over the interest rates over the short term. But the bad news is that getting a loan approved will be more difficult as banks apply more stringent credit policies. Read more
Phil Twyford announced the new standards for his healthy homes standards.
Boarding houses must comply with all of the standards by 1 July 2021.
Housing New Zealand and Registered Community Housing Providers have until 1 July 2023 to ensure all their properties comply.
All rental properties in New Zealand must meet the Healthy Homes Standards by 1 July 2024.
The Healthy Homes Standards (HHS) are: Heating, Insulation, Moisture, Ventilation and draught stopping. Read more here.
Companies have been a popular business structure to set up businesses and also invest in properties.
Currently, companies enjoy a standard 28% tax rate and shareholders have limited liability.
However, especially for closely held companies such as a mom and pop investor who set up a property investment company to holds their rental properties, the shareholders and directors are usually the same or have significant overlap.
In New Zealand, directors sometimes have to guarantee the debts of the company so this can open the director (who is usually a shareholder) to various claims from the company’s creditors.
This is how creditors can go around the limited liability of shareholders who also act as directors. Even if you are not a shareholder, there is significant liability with being a director.
A case in point is Mainzeal. The High Court has ruled that Mainzeal traded while insolvent for nine years and upheld claims of reckless trading made against four directors, including former prime minister Dame Jenny Shipley. Read more in this post.
Tax working group recommendations was released on 21 Feb 2019.
Chaired by Sir Michael Cullen, it proposes to tax a lot of things (not just real estate)
There are a number of tax implications: the main purpose of that tax is that it wants to act like a Robin Hood tax. To tax the rich to pay those who are on lower incomes.
The main points are:
All assets (other than the main family home, cars, boats and other household durables) will be subject to the capital gains tax without adjusting for inflation.
It is recommended that capital gains be taxed within the current income tax system and taxed at a person’s marginal rates.
Capital gains will only be taxed after implementation date (called Valuation day). So it will only be applied prospectively. The impact of this is that investors are likely to demand higher rental yields (either increasing rents, or decreasing prices paid for properties, or a combination of both) in the near future. More information can be found in this post.
A fixed-term tenancy is where the landlord and tenant sign a rental agreement that stipulates an end date.
For instance you could sign a tenancy agreement that runs from 15 January 2018 to 15 January 2019. The most common fixed term is for one year.
Sometimes the tenancy agreement says the tenant has the right to renew the fixed-term tenancy. In this case, if the tenant wants to renew they must tell the landlord in writing. They must do this at least 21 days before the end of the fixed term. The tenancy is then renewed for the same length of time as the original fixed term.
If the agreement does not provide the tenant with a right of renewal, and you are the landlord and you don’t want to continue the tenancy after the fixed term agreement ends , you have to give the tenant notice 90 days before the end of the fixed tenancy agreement. If you are the tenant, you only have to give 21 days notice before the end of the fixed tenancy agreement.
At the end of a fixed term tenancy, if the landlord or tenant hasn’t given notice to end the tenancy, the fixed term tenancy will roll over and become a periodic tenancy. A periodic tenancy is basically one where the landlord can give 90 days notice to terminate the agreement or the tenant can give 21 days notice to end the tenancy.
Sometimes when you rent your house out, there will be damages caused beyond general wear and tear. What are the landlord’s rights to compensation in this case?
The standard process the Tenancy’s Tribunal will follow when a landlord wants to claim for damages caused by the tenant was outlined in a court case. First, the Tenancy Tribunal will consider whether the landlord has given convincing evidence that the damage caused by the tenant is more than general wear and tear. Secondly …
Sir Michael Cullen says the potential tax reform he’s suggesting isn’t quite Robin Hood taking from the rich to give to the poor, but it isn’t far off.
It’s not news that Labour is considering a capital gains tax. Originally cited as a way to dampen the rapid growth in house prices, a closer read of the Tax Working Group’s (chaired by Michael Cullen) recommendations indicate that the capital gains tax will likely be applied to every asset class (property, shares, businesses, farms, restaurants, intellectual property, artwork, etc).
To be honest, we already have a weathered down version of a capital gains tax: the bright line test captures gains made from selling a residential real estate within five years of acquisition if purchased on or after 29 March 2018 (subject to some exemptions such as owner occupied houses), section CB6 of the Income Tax Act …
If you own a property in Auckland, here’s the good news. Auckland’s rental demand is likely to be strong from now to 2021.
Houses, apartments and units are being sought for rental in Westhaven, Viaduct Harbour, Princes Wharf, lower Auckland CBD, Herne Bay, St Marys Bay, Freemans Bay, Parnell, Ponsonby, Grey Lynn, Orakei, Mission Bay, Kohimarama, St Heliers, Remuera to accommodate America’s Cup team members and support crew and visitors who will watch the America’s Cup. Read more in this post
For years we have been hearing how someone flipped a property and made $100k in a few months doing nothing. Everything seems like easy money. But be warned. With every investment even property, there is a risk to losing your money. See more
The owners of an Otahuhu property has reported that gang members have illegally taken over their rental property (without paying rent) for eight months.
It is alleged that the gang members moved in during May when the Otahuhu property was vacant and changed the locks. As the legal owner puts it, “Someone walked off the street, gone in there and claimed that it is his”. Read this post for more details.
Australian home prices are likely to fall over the next couple of years, reflecting the impact of tighter lending standards and slowdown in Australian economy. The slowdown in the Australian economy is expected to lead to a drop in demand from investors and homebuyers become more cautious.
It has been said that the Sydney house market may drop as much as 10% this year and Melbourne housing market could be much worse. This appears to be good news for first home buyers (not really because at the same time the banks have made it stricter and harder to borrow. At the same time, if mortgage rates increase from their historical lows, mortgage affordability isn’t going to get any better). Plus as apartment projects keep coming into the market, supply will increase. Met with a decrease in demand, it is no wonder house prices are likely to slow down. This is a similar pattern in Melbourne.
We are at that time of the year again. Today we look back at what has happened in 2018.
The Federal Reserve put up the Fed Funds Rate four times this year. Back home, the Reserve Bank of New Zealand has indicated its unlikely to raise the OCR any time soon. The next move may even be down.
So far, mortgage interest rates in NZ haven’t been impacted too much but watch out for next year.
As for housing, 2 key developments have helped slowed the market.
And a blow for Kiwibuild when it was announced the man in charge of the Kiwibuild program had been off work since May 2018 due to employment disputes.
Outside of the property world, we see NZ government increase the fuel tax causing NZ’ers to experience more financial distress as their expenditure on fuel increases. It would be interesting to see if we get protests like the ones in France after the President announced increases on tax on diesel. Read more
And he does it again. The Federal Reserve announced that the key short-term interest rate will be increased by 0.25% to 2.25%.
This is the fourth time this year but economists predict there will only be two hikes in 2019.
In recent months, Trump has repeatedly criticized Powell for raising interest rates and urged the Fed not to hike before central bank policymakers last week unanimously agreed to a fourth rate increase this year.
On top of that, there has been speculation that Trump might get rid of Powell but a spokesman said that Trump is quoted as saying “I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time, especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”
Closer to home, the Reserve Bank of New Zealand and the Reserve Bank of Australia stated they are unlikely to raise the OCR due to the negative economic outlook. However, that doesn’t mean that mortgage interest rates will stay low forever. Because banks get a lot of their funding from overseas, if the Fed Funds Rates increases, so will the banks who borrow a lot of their money from offshore sources. What does it mean? If you got a mortgage, go fix your rate now. At least you will have some certainty in an uncertain world. Watch this space …
This month Tenancy Services have released a new template for the Bond Lodgement Form.
The bond lodgement and refund forms are now one page to help you print and submit them.
Over in Australia generally home prices have now been falling for the past year, caused by tighter lending standards, more properties coming into the market and a drop-off in both local and foreign investor demand. This has caused trouble for developers including Fletcher Building’s Australian unit, Lend Lease Corporation, and a number of other developers.
Over in New Zealand, the market has slowed down but more importantly, the tightening lending standards have put some developers and construction companies into pressure. Of course this means more construction companies will fail which will spell trouble for large construction projects (hint: apartments).
After having a leaky building lawsuit awarded against them, Corbel Construction’s directors decided to put the firm into liquidation.
And yes it is an extremely tricky time for subcontractors because they run the risk of not being paid. Remedial work had began at the Parnell Terraces before Corbel Construction went into liquidation and a Corbel sub contractor was reported to be owed $120,000 before Corbel’s collapse.
This scenario also reminds us why NZérs generally don’t like to buy apartments. If you discover you have bought a leaky apartment building, then it usually involves lengthy and costly litigation with the developers. Even after you win, the developers can file for liquidation leaving the apartment owners having to come up with the money to repair the apartment building, not to mention also they had to come up with money to pay for the lawsuit. Read more
The RBNZ announced today that as of 1 January 2019,
- No more than 15 percent (currently 10 percent) of each bank’s new mortgage lending to owner occupiers can be at LVRs of more than 80 percent. An 80 percent LVR means the borrower needs to come up with a 20% deposit.
- No more than 5 percent of each bank’s new mortgage lending to residential property investors can be at LVRs of more than 65 percent (currently 60 percent). A 65% LVR means the borrower needs to come up with a 35% deposit.
New property startup by the name of Miuwi (check it out Miuwi.com) aims to increase home ownership through co-ownership in New Zealand.
Auckland’s housing affordability means many young people are priced out of the market (given the stringent bank deposit requirements) so Miuwi’s founders decided to start an app to match 2 would-be buyers so they can co-own the property together.
Miuwi’s role is to help buyers decide if they match up, complete background credit checks, assist them to get the house they want, draw up the legal documents and connect them with insurance and home loan products. It helps buyers pool savings to get a deposit together saving years of saving a deposit on their own. Read more here
Westpac’s chief economist summarises it up when he says that his overall impression is that the Reserve Bank is relaxed and does not want to rock the boat. The Reserve Bank believes that the best thing to do is to leave the OCR low given the geopolitical uncertainty and economic uncertainty not just in NZ but overseas.
Currently, this means OCR rates are not likely to rise until 2020.
Banks seems to agree with his opinion and have lowered their one yr interest rate. Guess who came out with a 3.95% one year home loan rate?
The Residential Tenancies (Prohibiting Letting Fees) Amendment Act has been approved by Parliament & from 12 December 2018, tenants can’t be charged letting fees for residential homes.
Previously, property managers provided casual lets (where they help find a tenant but don’t manage the property) and charged a fee to cover the cost of showing the home, advertising, and vetting applicants.
Letting fees were normally the equivalent of one week’s rent (excl. GST), and paid at the beginning of a tenancy as an upfront cost. But the govt has deemed that this creates a financial barrier to renters.
This week you might read in the news about squatter rights.
Squatter rights basically allows you to get title (own the land) without buying it from the previous owner. Instead as set out in the Land Transfer Amendment Act 1963: If somebody possesses another person’s land continuously for a minimum of 20 years without objection from the legal owner, the squatter can apply to Linz for ownership, few questions asked. If nobody responds to the Linz notices by formally placing a caveat on title, Linz transfers title to the applicant/squatter. Read more here
Are you just a bit short of coming with a deposit to buy a first house? Well you may qualify for a HomeStart grant.
After 3 years of contributing to KiwiSaver, you may be entitled to a KiwiSaver HomeStart grant.
To be eligible for a KiwiSaver HomeStart grant you must meet the following criteria:
- contributed at least the minimum required contributions to Kiwisaver (4% between 2007 and March 2009, 2% between April 2009 and March 2013, and 3% between April 2013 and now)
- be 18 years or over
- be purchasing or building your first home (or if you previously owned a house before you must no longer own one and be in the same financial position as a first home buyer.)
- have a household income (before tax) of less than $85,000 per year (for one person), or less than $130,000 per year (for two or more people)
- have a deposit that is 10% or more of the purchase price, including the addition of the grant
- be planning to live in the house for at least 6 months from the settlement/completion of the property.
There are also limitations as to the maximum price you can pay for the house. This depends on whether it is an existing property or a new build. For more information, find out here.
SBS Bank is a New Zealand bank headquartered in the South Island and has just come out with 3.95% interest rate for home loans fixed for 2 years.
Two things to note are:
- The rate is only available for Residential and Residential Investing lending with a minimum of 20% equity (or greater when Residential Investing lending restrictions apply)
- If you are not already an existing SBS bank customer, you have to borrow at least $100,000.
This is one of the lowest rates in the market …
The recent share market declines around the world is just a timely reminder that no investment is safe. There’s always a tradeoff between risk and return. It also reminds us that investing in shares is more volatile than property investments.
Here’s 5 reasons investors choose property over shares
- While it’s really hard to outperform the long term averages in the share market (that’s why few people have consistently outperformed the share market over a long period of time), it’s much easier to outperform the averages when investing in property. This is achievable through a combination of leverage, and buying properties in locations that will experience both population and economic growth.
- Banks prefer to lend you money to buy property but are less willing to lend you money to buy shares. Property leverage don’t face the likelihood of a margin call. As long as you pay the mortgage on time, you can control when you want to sell. Not so with shares.
- You can increase the value of your property through renovations. ….. For the complete list read this post on why property is better than shares..
The government has established KiwiBuild to help stimulate the supply of quality, affordable homes for New Zealanders who have been locked out of the housing market. Would Kiwibuild solve the housing shortage? The short answer is No. The biggest barrier to getting Kiwibuild done and on budget is the cost of construction. Construction costs are increasing driven by inflation and rising labour costs and labour shortages. On the face of it, Kiwibuild is a noble cause but actually the house prices aren’t that affordable. House prices start at $579,000 (with a 5% deposit, it will require a $550k mortgage) and go up to $649000. Plus most of these affordable houses are located all the way out in Takanini and further away. If you factor the price of petrol ($2.50 per litre and rising to $3.50 per litre next year if the Minister of Finance gets his way), the costs of travelling to work are almost prohibitive whether by car or bus. This may actually turn buyers away from buying Kiwibuild homes.
RBNZ Governor announces to keep OCR on hold at 1.75%
The key reasons for keeping the OCR on hold were:
Employment is around its sustainable level and consumer price inflation remains below the 2 percent mid-point of our target, necessitating continued supportive monetary policy. Our outlook for the OCR assumes the pace of growth will pick up over the coming year, assisting inflation to return to the target mid-point.
Our projection for the New Zealand economy, as detailed in the August Monetary Policy Statement, is little changed. While GDP growth in the June quarter was stronger than we had anticipated, downside risks to the growth outlook remain.
Robust global economic growth and a lower New Zealand dollar exchange rate is expected to support demand for our exports. Global inflationary pressure is expected to rise, but remain modest. Trade tensions remain in some major economies, increasing the risk that ongoing increases in trade barriers could undermine global growth. Domestically, ongoing spending and investment, by both households and government, is expected to support growth.
We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.
And The final OCR decision for this year will be announced on 8th November 2018.
Westpac economists compiled data on the capital growth and gross yields on Auckland suburbs over the 12 months from July 2015 to June 2016
For capital growth, the biggest capital growth came from the affordable suburbs of Otahuhu and Otara.
The only growth area with a price over $1 million was stonefields. Apartments continue to earn higher yields than houses. It is important to remember that the data was compiled on Auckland suburbs over the 12 months from July 2015 to June 2016 yields and although the data may be outdated by now, it is generally true that apartments earn higher yields than houses and townhouses.
340 Onehunga Mall is a new residential development comprising 42 high quality apartments (of which 25 apartments will be sold as Kiwibuild affordable homes).
The 25 affordable homes includes: 6 studio apartments priced from $380,000, 12 one bedroom apartments priced from $490,000 and 7 two bedroom apartments priced at $600,000. Construction of the project starts this week and will be completed about this time next year. For more information visit www.nzliving.net/340-onehunga-mall/
Already rental properties are required to be insulated by July 2019. Now the government is looking at what should be the minimum standards for a healthy home.
This is good news for everyone because a healthy home would lead to a healthy society and productive workforce.
Currently the government is consulting the public for their input into what should be the minimum standards for heating, insulation, ventilation, moisture and drainage, and draught stopping in residential rental properties.
There are several key components up for consultation including: heating requirements, which rooms need to be heated, what level of ventilation is required, how to keep houses dry and stop draught coming in, and what dates properties are required to be compliant. See this post
The Residential Tenancies Act is likely going to be amended and reviewed by Phil Twyford (the Minister of Housing). Minister Phil Twyford outlined a number of ways the Government is looking at amending the current act by ending “no cause tenancy terminations,” increasing the notice period landlords must give in order to terminate a tenancy to 90 days (up from 42), and limiting rent increases to once a year. Other updates to the law will include …
The Overseas Investment Act regulates the purchase /investment in sensitive land or an overseas investment in significant business assets in New Zealand. Basically, if the asset is classified as sensitive land or significant business assets (as in the sale of utility company etc), then the foreign purchaser needs to obtain consent from the Overseas Investment Authority before they can go ahead. Originally most residential land was not classified as sensitive land so non citizens and non NZ residents could purchase it. Now, the Overseas Investment Amendment Bill reclassifies all residential land as sensitive land. This means if you are a non citizen or not ordinarily resident in New Zealand , you need consent before you can purchase houses in NZ.
The general principle in deciding whether foreigners can purchase houses is whether the foreigner is able to demonstrate it will benefit New Zealanders. Read more
The last time this happened was in 2008 and 2015. And guess what happened then? Back in August-September 2008, the NZD also fell against the USD. In fact it didn’t stop at 1 NZD to 0.65 USD, it went all the way down to 1 NZD to 0.5 USD. Back then, it was Labour’s last few months in government before John Key and his National party came into power. 2008 was the start of the global financial crisis (GFC) and subprime mortgage crisis. While NZ didn’t have a widespread subprime mortgage problem, the property market took a hit and the property cycle was in a downturn. Will it happen again to NZ?
The sharing economy has seen a rise of Uber and Airbnb. Airbnb is a popular website used to book accommodation in advance. It’s similar to booking.com except Airbnb has a greater variety of accommodation types including holiday houses.
This week those owners who listed their houses on Airbnb found out their rates increased by up to 225% due to so called bed tax. A number like 225% doesn’t make sense out of context. In number terms, some owners have increases between $2000 and $10,000. So does it still make sense to list on Airbnb? We find that out today.
F you are having trouble getting a mortgage because you are a nonstandard borrower (self employed, contracting, or have a low deposit or low equity), you should always go see a mortgage broker first.
If your broker can’t help you, you can always try these non bank lenders. Here are two major non bank lenders
These are the 2 must ask questions to ask the vendor when you are buying a property
- What is the vendor’s reason for selling?
- Is there anything that I should be aware of such as special conditions or weathertightness issues?
The first question will should indicate whether its a motivated seller or someone who is just testing the market. If the agent is honest, it can reveal a number of issues with the property, such as a bad neighbour or bad experience with tenant.
The second question should reveal any unconsented works which the real estate agent is obliged to tell you about. It may also reveal potential weathertightness problems. Here’s how it saved $100k for one buyer
Home owners, property investors, property speculators, property developers, real estate agents, mortgage brokers, builders and those who work in the construction industry directly benefited from the property boom.
The rise in residential prices have increased the wealth of those who own real estate.
At the same time those who provide property services (real estate salespersons, mortgage brokers, valuers, property management companies) and those work in the construction and renovation business have seen their earnings grow substantially during the property boom of 2013-2017.
Often not mentioned is how well the banks have done. With the rising house prices, borrowers are forced to borrow more and pay more interest. Sure the interest rates have come down to historical lows, but the banks have been able to maintain their margin (the difference between the cost of funding they pay to RBNZ/overseas banks and the interest rate they charge borrowers).
But indirectly the property boom has contributed to the wider NZ economy: Rising house prices, generally encourages consumer spending and lead to higher economic growth. In this case, everyone benefits to some extent from a property boom. This is how it works
One property is traded one or more times before a deal closes – legal but controversial flipping that creates opportunities for agents to make multiple commissions and investors to profit from houses that are not yet technically in their possession.
Legally, this is possible and is called an “assignment”. Person A buys the house and then assigns the right to buy the house to another person B. Person B pays Person A for this right. Person B can assign the purchase to another Person C. And all this can happen before the deal settles.
At a recent auction, a commercial property sold for a 3% yield. (For your information, Yield is calculated as net rent divided by the purchase price. And Net Rent is the rent you get in your pocket after deducting operating expenses such as rates, insurance, body corporate fees).
But Does Comparing rental yields with term deposit interest rates, make any sense?
To compare the term deposit interest rate with commercial property yields can be quite misleading. ON the surface, the rental yield on an commercial property may be less than the term deposit interest rate, but in many cases, the yield does not account other factors influencing market value such as …
Landlords who self manage rental properties themselves need to carry out inspections once every three months. Read more.
In other insurance news, Tower Insurance’s premiums have put the squeeze on homeowners who live in disaster prone areas. Homeowners living in earthquake prone areas and flood prone areas have seen large increases in their insurance premiums, some seeing increase of over $1000.
Rewind back the years to thirty years ago. Imagine having $32,000 in 1986 (that’s the equivalent of $250,000 in 2018 terms)
$32000 in 1986 was a lot of money. In fact you could have bought a 2bedroom unit in Onehunga for that price and you didn’t even need a mortgage.
Suppose you decided to pass on the 2-bedroom Onehunga unit and instead bought a three bedroom house in Tokoroa (it comes with 883m2 land too)
30 years later in 2015, the Tokora property has gone up three fold to $91500 which sounds like a good return.
When it costs you $600,000 for a 2 bedroom unit in Auckland and up to $1 million for a house in Auckland, you might think that a house (with land 883 m2) located roughly 2.5 hours drive from Auckland is a bargain. But read this post and think again
The federal funds rate, which helps determine rates for mortgages, credit cards and other borrowing, now stands at a range of 1.75% to 2.0%. What will happen next?
Westpac forecasts the RBNZ will keep the OCR at 1.75% until Sept next year, and predicts that the Reserve Bank will ease restrictions on LVR ratio by the end of this year.
The RBNZ released a report this week outlining that the key areas of concern were household debt and international shocks. International shocks could include oil price shocks and sudden wars.
Given the RBNZ is cautious about household debt, it is likely that LVR limits will continue to be inforce. Further, the ability for borrowers to take on revolving credit (a form of credit where borrowers can borrow monies to fund cars, travel, boats as long as they using their house as a form of collateral/guarantee) has allowed households to take mortgage debt to fund consumption. This is particularly risky for banks and borrowers, if New Zealand housing market crashes or the world enters a global recession.
So should you borrow or not? If so, how much? The answer depends on…
Visitor numbers to Auckland is growing. To meet the demand, online accommodation services are expanding rapidly. In the last year Airbnb rentals is estimated to have taken at least 10% of the market share of short term accommodation.
As a result, ATEED which stands for Auckland Tourism Events and Economic Development is introducing a levy typically aimed at hotels, motels and serviced apartments to fund infrastructure to support more tourism. As a result Businesses in the hotel and motel industry pay higher rates than residential ratepayers. The new “tax”or rate is called Accommodation Provider Targeted Rate. Find out if you are affected.
The Government has committed $2 billion for KiwiBuild, an ambitious programme that aims to deliver 100,000 affordable, quality homes for first home buyers over the next decade. It is expected up to 50,000 of these homes will be in Auckland. But recently we have been told there will be delays in the Kiwibuild program and that not enough homes will be built.
We understand not everyone is a fan of Kiwibuild. While everyone is aware of the need to solve the housing shortage, not everyone agrees that Kiwibuild is the solution. But what can be done to address the housing shortage all over the country?
Are you a landlord or property manager in Auckland and want to simplify the process of calculating the tenant’s share of water charges?
Well instead of splitting the bill to pay the fixed wastewater charge each month, you can make a one-off annual payment each July.
For the rest of the year your water bills will show volumetric usage charges only – making splitting the bill a thing of the past.
You need to sign up with Watercare by 23 June 2018.
Plus if you sign up for e-billing and receive your water bill by email, you can even choose to have a copy emailed to your tenants.
Find out more on Watercare’s website for more information.
A shared equity scheme is being considered by the Government for first-home buyers. The Kiwibuild programme is planning to build 10,000 houses a year, which will is expected to be priced at 650,000 to first home buyers.
But this might still be out of reach for many NZ’ers, so the govt is deciding to implement a co-ownership scheme. At $650,000, if a couple has a 10% deposit, they may not be able to afford a $585k mortgage. However, more people can qualify for a $400k – $450k mortgage, which means …
Today RBNZ Governor announced that the OCR will be kept at 1.75%.
The governor is quoted as saying “Economic growth and employment in New Zealand remain robust, near their sustainable levels. However, consumer price inflation remains below the 2 percent mid-point of our target due, in part, to recent low food and import price inflation, and subdued wage pressures.” This is why the RBNZ chose not to increase the rate. More
When you go to your bank to take out a home loan, the banks are increasingly likely to ask for a valuation on the real estate you are buying and any other property you are using as collateral (for those of you who have a portfolio of property and pool them together to take out a loan).
As the property market cools, there are some bargains to be found. And if you found a bargain, you may question why would the bank want a valuation on a property that you believe you have bought up for far less than its worth? Well, the banks are worried that the so called “bargain” price actually turns out to be the new market value.
And here are other situations where the bank will require you to get a registered valuation from a registered valuer.
NZ interest rates largely unchanged from this time last year. But the consensus is that we expect longer-term interest rates to move higher this year as US interest rates lift.
Currently, the 1 year and 2 year interest rates seem to offer good value but there is always a risk that in two years time the interest rate will be significantly higher. So should you fix your mortgage for one year, two year or longer? What are the trade offs?
In their recent April 2018 Newsletter, Westpac Economists provide an update on the state of the housing market. Based on their analysis, although the housing market is still in positive territory, Westpac economists warns that the housing market is headed for a downturn. There may be a continual increase in house prices as buyers bring forward their purchase decision in order to lock in generally low interest rates and other buyers rushing to beat the upcoming 5-year bright line test rule.
The Tax Working Group are looking at recommending a capital gains tax as well as removing the ability for landlords to offset rental losses against their other sources of income. Together this will bring more income for the government and in the government’s point of view, reduce the housing demand from investors.
Westpac produced the graph below showing the negative correlation between house price inflation and interest rates. As interest rates rose between 2003 and 2008, the growth rate in house prices slowed down. See more
Compulsory insulation from 1 July 2019. Will your house be able to comply?
Ceiling and underfloor insulation must be installed in places where it is reasonably practicable to install. But caution not to install electrically-conductive insulation (Electrically conductive insulation is banned in all residences including rental homes.) A landlord who fails to comply with the regulations may be liable for a penalty of up to $4,000
New apartments springing up in the Auckland CBD fringe are probably not the solution to Auckland’s housing problem.
Eden View apartments touted as Brand New Urban Apartment Lifestyle apartments and boasting 130 m2 floor area plus a balcony have starting price STARTING at above $1 million and go upwards to over $2 million. While the quality of living may be comparable to a house and are in all the right school zones, this is barely affordable for first home buyers.
To be honest, people just need a modern, comfortable place to live and somewhere to park their car. While the price range is more reasonable, Ockham Residential’s Daisy development isn’t practical for most families who have cars and need somewhere to park their automobiles.
IRD has released an issues paper proposing to ring-fence or restricting the ability to offset rental property losses against other sources of income.
The rules are aimed at levelling the playing field between property speculators/investors and home buyers.
Currently investors who make a rental property loss (rents being less than the deductible expenses) are able to offset their loss against other sources of income to reduce tax on other income.
Some have claimed this is unfair and want to ring-fence this loss so that the loss can only be offset against future rental income.
In other words, The proposed loss ring-fencing rules will mean that speculators and investors with residential properties will no longer be able to offset tax losses from those properties against their other income (for example, salary or wages, or business income), to reduce their tax liability. The losses can be used in future years, when the properties are making profits, or if the person is taxed on the sale of land.
The value of New Zealand’s residential property market has increased to almost $1 trillion dollars. Property Institute released a publication this month showing that the total value of residential property in New Zealand is worth about $941 billion, up from $667 billion 3 years ago. Auckland continues to make up the largest proportion of the total value of housing stock because it is NZ’s most populous city and has a larger share of the countries jobs. On a separate note It’s also interesting to note that Auckland’s regional GDP is larger than the Wellington region, Canterbury region and Waikato region combined.
Thinking of building your own home? It all sounds like a dream come true. Design your own home and get a builder to build it for you. But be warned: When you choose a builder, don’t always go for the lowest priced. Because your dream home plans can be ruined if the builder themselves go out of business.
We saw what can happen to construction businesses when Fletcher came out and told the media that it had underbudgeted for costs of 2 of its projects resulting in $300m losses.
For now we are not even talking about building defects, we are talking about choosing the right builder so they can finish your building project on time so you have a house to live in.
A number of building companies have gone into liquidation leaving several unfinished projects with notice. Construction companies including Bella Vista homes have been liquidated…
Rents have increased across Auckland. Market rent is a useful guide for landlords when they’re deciding what the rent will be.
This week we take a look at Auckland – Parnell.
The Honorable Sir John Key owns a house in Parnell. Parnell is considered an up market suburb and is becoming trendy again.
Tenancies usually go wrong when you have selected the wrong tenant. With the right tenant, even if tenancy issues arise, it can usually be resolved between the landlord and tenant themselves. With the wrong tenant, it will be a headache and usually ends up in the Tenancy Tribunal. 99% it is better to rent to a good tenant at a slightly lower rent than to go for a marginal candidate who may initially offer higher rent but then cause many problems later during the tenancy. A list of best practices:
A landlord should always have all tenant applicants complete a tenancy agreement before entering into an agreement with the successful applicant.
The tenancy application gathers all the information about the applicant to allow the landlord (or property manager) to properly assess the suitability of the applicant.
Labour’s election promises included extending the 2-year bright line rule to 5-year bright line rule.
The new Bright-Line Test will take effect as soon as it is enacted in Parliament. It is likely to apply prospectively, meaning it will apply for purchases from this year onwards. Previous purchases will likely fallu nder the 2-year rule. What we may see is an increased investor interest bringing forward their purchases before April 2018. If you are still not familiar with the bright line rule, read this post.
National party leader announced he will resign as National’s party leader and leave parliament at the end of this month.
Bill English said “Now is the right time for me to step aside and from the leadership of the National party and embark on new professional and personal challenges.”
Bill English has held several leadership positions including Health Minister, Finance Minister and more recently as the Prime Minister (after John Key stepped down).
RBNZ governor today left the Official Cash Rate (OCR) unchanged at 1.75 percent. This was expected but the New Zealand dollar still fell to a four-week low against the USD.
The governor continued to signal that …
Janet Yellen leaves Fed rates unchanged and this is her last meeting as Fed Chair.
As you may know, banks lending rates are impacted by the Federal Reserve’s cash rate decision. If the Fed increases its official cash rate (Federal Funds Rate) it will increase bank’s borrowing costs. If banks borrowing costs increases, they will onpass the cost to lenders in the form of higher mortgage interest rates.
According to projections released in December 2017, officials expect there to be another …
Residential Tenancies Act governs the rights and obligations of tenants in rented residential properties.
Not all types of living arrangements aren’t covered by the Act.
Briefly, the Residential Tenancies Act does not apply to motels, hotels, student accommodation that have a contract with the school, hospitals, retirement villages, holiday homes, and flatmates.
A question was asked from a reader whether it is ok for landlords to ask “How much are you willing to pay?” Landlords cannot discriminate tenants but there is nothing wrong with renting to a person who is willing to pay more. An examination of the Residential Tenancies Act…
Market rent is a useful guide for landlords when they’re deciding what the rent will be.
But remember no two properties are the same. Even if the house is built by the same builder, one house could have a better view or better frontage which means it can rent higher. It all depends on the individual renter and landlord.
The information here comes from data provided by Tenancy Services. This means it only reflects properties where bonds are lodged.For more information, visit https://www.tenancy.govt.nz/
When’s the best time to sell your house? Ron Hoy Fong says ideally you won’t ever have to sell your house. If you need money, just refinance it. But assuming you have decided to sell your house due to personal circumstances (migrating, relocating to another area, downsizing), when is the best month to sell your house?
It’s difficult to time the market. market timing is best left for speculators. However, obviously it is important to know what is happening in the property market and the economy as a whole, before you sell your house.
We are at that time of the year again. Today we look back at what has happened in 2017
Politics, Economic Events, and Property. Here’s what happened in 2017 …
The Labour led coalition is sticking to its election promise to ban foreign buyers.
The new law will allow Permanent residents and Australians to buy a property without screening as long as they have resided in New Zealand for at least 183 days of the past year. Here’s what you need to know.
Former Reserve Bank Deputy Governor Adrian Orr has been appointed as the Reserve Bank Governor from March 2018. Finance Minister Grant Robertson said Orr was the unanimous choice of the Reserve Bank board. He was the former RBNZ deputy governor from 2003 -2007 and during this time …
Bitcoin has surged over $13000 USD per coin, having risen an eye-popping 1,200 percent this year. That’s better than most investments available right now.
Real estate is a more stable investment compared to bitcoin. Here’s why:
- Bitcoin is a decentralised cryptocurrency. It can be hacked and you can lose your bitcoins if your computer is hacked. Recently the news reported that “Nearly $64m in bitcoin has been stolen by hackers who broke into Slovenian-based bitcoin mining marketplace NiceHash.” Here’s 5 more reasons why.
RBNZ confirmed it will ease the lending restrictions on home buyers from January 2018.
From 1 January 2018, the LVR restrictions will require that:
- No more than 15 percent (currently 10 percent) of each bank’s new mortgage lending to owner occupiers can be at LVRs of more than 80 percent. This is good news for first home buyers who don’t have a 20% deposit.
- No more than 5 percent of each bank’s new mortgage lending to residential property investors can be at LVRs of more than 65 percent (currently 60 percent).
Auckland Council 2017 Valuation increased by 46 per cent compared to 2014 values to make the average Auckland home worth $1,076,000
Auckland Council has released revaluation figures for properties across Auckland this week.
No surprise the region’s house values have gone up. But how much? On average, values have increased by 46 per cent to make the average Auckland home worth $1,076,000.
But not everybody is pleased.
If you don’t agree with the value of your property, you can object to it. To make a valid property valuation objection, you must provide a reason why you are objecting. You can object if you think a property valuation is incorrect, but not because of the effect a valuation has on your rates. Not all properties change value in the same way. For example, flats may sell differently than apartments, houses or shops. Many other factors affect a property’s value, such as age, size, construction and location. If you have added another room or extended the house and this is not reflected in the valuation, you can object.
Come join Ron Hoy Fong and the Ronovationz team this Saturday 18 November.
The recession is coming but that doesn’t mean you shouldn’t invest in property
Come to the seminar to learn:
– Where the Auckland housing market is heading with the new Labour/NZ First/Green government
– Where the new HOT SPOTS in Auckland are
– Pre-Christmas opportunities
– Where are the Auckland COLD SPOTS and where NOT to invest in the next few years and more …
9 November – The RBNZ has kept Official Cash Rate unchanged at 1.75 percent.
Here are the 3 takeaways from the Governor’s speech:
- The RBNZ is not looking to introduce any further restrictions to cool down the housing market.
- Although the LVR ratio requirement is not likely to removed any time soon, the RBNZ is unlikely to introduce debt to income requirement to get a home loan.
- Low house inflation is likely to continue due to reduced demand, tightening credit standards, and the government’s housing policy.
What’s Labour housing plans? Will they work? For instance, Labour’s policy to is ban foreign purchasers from buying existing homes. Aussies are not classified as foreign buyers. So they can still buy homes in NZ. And As it is worded, technically foreign purchasers can still buy new properties (either off the plan or a vacant section and develop a house there).
Labour wants to increase the bright line test from 2 years to 5 years. This again is aimed at discouraging speculators from entering the market. Well that’s a good thing. Most people don’t want speculators in the market. Mind you, it all comes down to being envy. When the speculators lost money in the 2007-2008, nobody felt sorry for them. But the same people became envious of the speculators who earned over 6 figures and then some more in the 2013-2016 boom. For those who are not in the game, it’s easy to criticise people. To complain when others make money. When few people had confidence in the market, speculators helped provide that confidence. Should really thank them for turning the property slump in the 2007-2009 period around. The speculators and early investors acutally started the property boom which actually led to a consumption boom and construction boom.
Anyway that aside, labour also plans to build affordable homes. Here’s how it works. Read more
As you may know, Labour leader, Jacinda Arden is now the Prime Minister of NZ.
New Zealand First and Labour agreed to ban foreigners from buying existing homes, strengthen the Overseas Investment Act and set-up a comprehensive register of foreign-owned land and housing.
Compared this to Canada: Foreigners who buy homes in Toronto and its surrounding area face an additional 15% tax.
And compared to Australia: foreigners can only buy new houses. Foreign non-residents will normally be allowed to purchase new dwellings in Australia without being subject to any conditions. There is no limit on the number of new dwellings a foreign non-resident may purchase, but approval is generally required prior to each acquisition.
Australia’s policy on housing recognises that new houses create construction jobs which have flow on effects to other sectors of the economy. That’ s why they allow foreigners to buy new housing.
If New Zealand bans foreign buyers outright, what does it mean for existing home owners? Will prices fall? Is this good news or bad news? Read more Prices will probably stay on hold for the next six or 12 months
The Capital Value (CV) is the value used by a city council to allocate and assess the rates for a property.
In the Auckland region, the CV (Capital Value) is the same as the Rateable Value.
There is no fixed relationship between the CV and the market value of the property.
That is why some owners have found their property to sell only 50% above the 2014 CV while other owners have seen their property sell for nearly double the 2014 CV.
HSBC has just come out with 3.87% interest rate fixed for 18 months. It’s 3 year fixed rate is 4.89%.
Westpac is offering a 4.94% three year fixed home loan rate.
ASB has come out with a 4.39% fixed for one year home loan rate.
Let’s take a step back．what are the key asset classes for you to invest in? Sharemarket, Cash at the Bank, Precious Metals, and property.
Leverage. Cashflow. Control. Capital gains. That is why you should invest in property. Read this post for a comparison between sharemarket, cash at the bank, precious metals and real estate.
The value of cash is constant in a non-inflationary environment and the value of cash falls in an inflationary environment. Term deposits barely keep up with inflation, while gold and silver usually keeps up with inflation, it does not produce regular income like real estate. more …
As you may know, NZ had its GENERAL ELECTION on Saturday 23 September, and the preliminary results are shown below: It is more in line with the Newshub polls which had National 10% ahead of Labour.
Nz Herald got it wrong when they said that Labour will beat National. But as this post reveals, don’t get too carried away if your party didn’t get voted into government, your success doesn’t depend on it. success depends on the individual and is a function of effort (and sometimes luck) and less about who’s in government
Recently stumbled upon an article about leaky townhouse block onNorth Shore.
How much would it cost to reclad their house? Experts estimate it could cost more than $300,000 to reclad a two bedroom townhouse. And this does not include other holding costs you incur such interest on your current mortgage, rates, insurance), and there are other costs too.
Because Productivity has been flat in New Zealand, wages haven’t kept pace with house price inflation. And its not just NZ. It’s a phenomenon across the Western world
Luckily New Zealand’s economy has been enjoying strong growth in GDP in recent years – helped by record migration population growth, record low interest rates, and a construction boom.
Every property investor’s should want to own a property that has a strong rental return , has big capital growth potential, and require low maintenance.With the slowing down of capital growth in property investments, investors will return to focussing on cash flow and will need to calculate yields.
Especially with commercial property, investors like to compare competing investments using yields.
Do you know the difference between gross rent, net rent, gross yields and net yields? Find out
Come next month, the country will decide who will be in the Prime Minister for the next three years.
Labour has definitely picked up some momentum but have not ruled out a capital gains tax.
National’s leader and PM Bill English responded by saying.
Do you want a water tax? No.
Do you want a new petrol tax? No.
Do you want a new capital gains tax? No.
The NZ election is just a month away and Jacinda Arden is closing the gap on National. Labour’s appeal is that they’ll bring change. What change? “the more things change, the more they stay the same”. You still pay taxes. Transport has gotten worst whether it was Labour in government or whether it was National in government. so it doesn’t matter. We’ve had prosperous times and downturn times whether it was National or Labour. But does it really matter who is in government? Find more in this post.
Barfoot and Thompson, the leading residential agent in Auckland is lobbying for first home buyers be exempt from LVR lending. Is this the solution to the housing problem? Read more
Just went to an open home and saw this New house but builder in a rush forgot to open up the drainpipe
The builder was in a rush he forgot to check that all drainpipes were flowing…
Despite the slowdown in volumes in the Auckland Property Market, a Glendowie home has managed to sell for double its CV at an Ray White Auction. Ken Choong marketed 11 Bryant Place and Guess how much 11 Bryant Place sold for? $1.626 million…
This week the NZ Herald released an estimate of the total value of properties in Auckland, Wellington, and Christchurch.
It estimated there were a total 482,000 residential properties in Auckland. If we add up the value of all the residential properties in Auckland, what do you think it will be worth? NZ Herald puts it at $530b. NZ’s GDP is about $180 billion. So the total value of Auckland’s residential properties is approx 3 times NZ’s GDP.
For a different perspective, Auckland has roughly 482,000 residential properties. And Christchurch, Queenstown, and Wellington combined have almost 240,000 residential properties. So Auckland has roughly double the total number of properties in Christchurch, Queenstown and Wellington combined. However, the sum of all Auckland’s residential properties is worth nearly FOUR times what Wellington, Christchurch, and Queenstown’s are worth combined.
The latest round of Reserve Bank lending limits, combined with the stricter lending policy by the main banks have reduced back the number of people able to get mortgages.
In particularly, the banks are being very strict on lending to the apartment sector. One project, Sugartree, has been in the news recently
Sell through rates at auctions continue to fall. This may not be a bad sign as buyers are becoming more cautious and want to put a conditional offer.
While many are of the opinion that Auckland’s house prices could be falling, land with a big section continue to be popular (even if it is at the end of a long driveway).
It is common for people to own properties in their own name or in partnership with their spouse. Depending on your financial situation, you may be better off owning property using a different vehicle such as a trust, company, or look through company. Read this post to find out the differing tax implications for each ownership structure.
New Zealand once again wins the America’s Cup.
That’s good news for Auckland and good news for New Zealand.
No doubt Auckland city’s waterfront will be vibrant when Auckland stages the next America’s Cup in four years time.
Who will be the biggest winners? Find out in this post.
Although there is no specific capital gains tax in New Zealand, you can still be taxed on the gains you make when you sell your real estate properties.
The Income Tax Act has a separate section on taxing land transactions, specifically sections CB 6A, and CB6 to CB 14 deals with land transactions. Find out in this post if I have to pay tax if I sell my property.
It seems market analysts are in agreement that the June rate hike of 25-basis points (bps) is almost certain.
The market has pretty much priced in a rate hike. Gold price has come back down from $1300 and steadied at $1268.
But say you didn’t have tome to attend auctions but was interested in the result?
The 3 most common ways to find out what the auction results are:
Subscribe to an agent’s newsletter.
Check out Barfoot and Thompson’s latest auction results pages.
An apartment in Remeura sold for over $8 million. But then again this is not your typical apartment, it has a floor area of 356 square metres.
Earlier in the year another apartment on the 29th floor of the Sentinel building in Takapuna sold for about $7 million. The apartment had a floor area of almost 700 square metres. This includes over 200 square metres of deck on the roof. Wow! This apartment’s deck is bigger than most people’s homes.There is a big difference in prices between luxury apartments (with over 300 square metres of floor) compared to the typical apartments which have only up to 60 square metres of floor area. Take an ordinary 2 bedroom apartment in Nelson Street (328/72 Nelson Street). It sold for $418,000. Even a new 2 bedroom apartment in Freemans Bay (G6/5 Howe Street) with 72 square metres of floor area only sold for $620,000 in April 2016.
Just recently, owners of a Mount Wellington apartment block on 68 Mountain Road found they are collectively facing a potential $32.8 million bill to fix leaky, fire, roof, & structural issues in their apartment block.
This story reminds people of another reason why Aucklanders and New Zealanders in general don’t like apartments. It’s what I call the hidden costs. What are these hidden costs?
Let’s do the maths: Say it cost $15 million to fix an apartment complex. The apartment complex has 250 apartments. So $15 m divided by 250 apartments means each owner has to contribute……..
Many years ago, it was common to find a place in Auckland City (This region includes the areas within the boundaries of Blockhouse Bay, Avondale, Royal Oal, Otahuhu, Mount Wellington, Pt England but excludes East,South, West Auckland and North Shore) for less than $600,000.
Is it still possible today? A quick search on Trade Me revealed …
Most importantly, before you sign an agreement for sale and purchase, you should understand the document you are signing.
Value can be added through renovation, development and/or subdivision.If the land area is large, some investors may consider adding another dwelling or subdividing the land. For most investors, Renovation is the key to adding value. If you can spend money on putting up a partition wall to create another bedroom, you can easily increase the property’s value by …
Money is never the only problem. It’s usually something else. Lack of knowlege, discipline, is a bigger problem than lack of money.
Are property prices currently too high? It depends who you ask. If you ask the rich, houses still seem affordable. In places like Remuera and Epsom, houses regularly go for above $1.6 million. Yet they are still selling like hot cakes. In reality, money is not the problem. Perhaps the problem us many people have a lack of understanding of how to earn money and manage money. This creates a divide between those who have it and those who don’t. If school did’t teach you how to become wealthy, then you still have a chance. Grant Cardone put out THE millionaire booklet. And it’s just 44 pages. You can read it in one sitting. People just don’t have time to read whole books anymore so Grant Cardone made a booklet especially for those time poor people. This post contains a nice little summary but the best part is you can get your copy for free. Here’s how.
If you do quick research, you will find that a 3 bedroom house on the same road sold for $402000 in March 2016. That’s 90,000 below CV. When a neighbouring property sells for less than the CV in a booming market, That’s always a red flag. The seller is not stupid. In a booming market, there must be something wrong with the property for the owner to sell below CV as we find out in this post.
When it comes to property, while rents provide the cash flow to cover the mortgages, the real wealth comes from capital gains. That’s why the buy and hold strategy is very popular among property investors in NZ. On average, Auckland’s house prices doubles every 10 years, Due to the effect of compounding, a property bought for $50,000 in 1960 will appreciate as follows:
Properties located near Power pythons seem to have a lower value. Despite being located in a area with 3 bedroom house values averaging over $800,000, this property is selling for less than $700,000. Read more.
Promoters and property managers have enjoyed a surge in fees from organising property syndications over the last few years.
What exactly is a property syndication? Is it right for you? Our opinion is that property syndications should be only for sophisticated investors. Those wanting to get a higher return thank investing in a term deposit, should be reminded that …
Last week, the RBNZ reported Inflation is closer to the target band and if it doesn’t exceed 3%, there is no need for the RBNZ to take action.
Auckland’s flood prone areas can be found on Auckland Council’s website.
This is of importance to both investors and residents especially following the flooding of certain places in Auckland several weeks ago.
New Lynn, which was badly affected by the flooding it experienced in this month’s major storm, had over 70 homes …
Get this excellent tax guide. This tax guide contains 101 tax tips and essentials that NZ property investors should be aware of. An essential for serious property investors. If you care about your investments, you will take the time to read this.
And she does it again. The Federal Reserve announced that the key short-term interest rate will be increased by 0.25%. This is the second time in three months. This takes the overnight funds rate to a target range of 0.75 percent to 1 percent. How will this impact you?
In a previous post, I wrote about the importance of having a mentor. Gary Lin is a property coach from Ronovationz. Ronovationz was founded by Ron Hoy Fong, a super property investor who now wants to pass on his knowledge to his students.
This weekend, Saturday and Sunday, Ronovationz will hold a free seminar at ICL Education Group, 12-14 Lorne Street.
To address potential housing shortages, A developer is planning to build affordable apartments in Mason Square in Mason Avenue, Otahuhu.
The bulk and scale of the buildings have been deliberately kept to three stories to keep them in context with the adjacent historic church.
Named the “Mason Square Project”, the developers plan to build just over 80 apartments in 2 stages. If you are interested contact the marketing department at email@example.com.
As always, apartments are a little bit more complicated than freestanding homes and townhouses, especially understanding body corporates and body corporate levies.
Just like you wouldn’t lend your brand new car to any stranger, investors should be more active in the tenant management process, even if you outsource your property management to a property manager.
Just recently, a full time investor found out one of his properties were let out to irresponsible tenants. The owner discovered his property in Whangaparaoa was contaminated with Meth after the tenants left without notice. Unfortunately, the tenant vetting process didn’t identify this tenant as a potential problem. Now the owner has to spend over $100k in repairs to make the property livable again.
More useful resources: QV.co.nz
Previously, we posted a list of where to find information on property for free. Here is the link to that post if you haven’t seen it yet.
Today, we tell you about another resource QV.co.nz. This post shows how you can access information on sales history, changes in council valuation as the suburb history.
As expected and discussed in this post the RBNZ governor announced this week that he will hold the OCR at 1.75%.
Reserve Bank Governor Graeme Wheeler today announced that he will not be seeking another term as Reserve Bank Governor. His current term ends on 26 September this year, and Grant Spencer is expected to be the acting RBNZ governor for the first six months after Wheeler’s term ends. There will be unlikely be any major changes to monetary policy between now and September, because both Graeme Wheeler and Grant Spencer share similar views on the housing market.
The good news is the Federal Reserve announced they will keep the interest rate unchanged – for now.
The bad news is the current interest rates is still well below the historical average. Its inevitable that interest rates will rise in the future. But just how much will interest rates increase by in the future? Just what is the average floating mortgage interest rate since 1990? This is what the data shows: the average floating interest rate on mortgages between 1990 and 2016 was 8.4%. Wow!
What a start to 2017.
President Trump stood by his promise to withdraw from the TPP (Trans Pacific Partnership trade agreement. Its not clear what effect this would have on the economy.
Closer to home, Kiwibank has announced 2 rate increases in their mortgage interest rate since January 6. Its likely other banks will follow suit over the next few months. What’s the best way going forward? Find out in this post.
REINZ (that’s Real Estate Institue of New Zealand) reported that the median sale price of real estate across New Zealand dropped $4000 to $516,000 in December. For Auckland, the median was $840,000 and had fallen about 1.4%.
REINZ projects 2017 will get off to a slow start. This is not something to be worried about. Its normal for the property market to slow down in December, January and February. Usually we have to wait until March 2017 before we know for sure whether the market is slowing. Read more in this post
With the rising cost of housing, some people may just decide to commission a builder to get a custom house built on a section they have purchased.
Because each housing project is different, it is difficult to provide a rough guide of how much it will cost.
The Department of Building used to publish a guide that allowed you estimate how much it will cost to build or rebuild your own home. But eventually took it down because people complained it was not accurate enough.
Before spending a bunch of money getting a quantity surveyor to calculate the building costs, you should try out this clever tool from Cordell.
We ran the tool based on a contemporary 2 storey home in Auckland, with a floor area of 180 m2 , 2 ensuites, 1 lounge, 1 double garage. And the Cordells website estimate it will cost $520,000 to build this house. Have a closer look in this post.
The OECD (Organisation for Economic Co-operation and Development) came out with a report that put house prices in the spotlight.
Particularly, it came out with this chart:
It found that house prices in Belgium, NZ, Canada, Norway, Australia and the Great Britain were overpriced. But overpriced compared to what? What does it mean for you? Find out in this post.
We are at that time of the year again.
With a few days left in 2016, this is a good time to reflect on 2016. Here’s what we came up with.
Bill English announced his new cabinet lineup earlier this week.
Notable changes include moving Judith Collins from Minister of Police to Minister of Revenue and promoting:
- Simon Bridges to Minister for Economic Development.
- Amy Adams to number 6 on the party list. She took on Minister for Social Housing and Minister for Housing New Zealand.
Michael Woodhouse continues to look after immigration and Dr Nick Smith held onto his Minister of Building and Construction portfolio.
As expected, Steven Joyce was promoted to Minister of Finance, which was previously held by Bill English.
Today Janet Yellen, the Federal Reserve Chairman raised the short term Fed rate by 0.25% from 0.5% to 0.75%.
This is the first rate increase since last year December 2015.
She also announced that the Fed is likely to raise interest rates again in the coming year.
Citing the improving economy, Yellen also said there was increasing employment and household spending. This led to the decision to increase the Fed rate.
Following John Key’s resignation from the office of Prime Minister of New Zealand, the National Party selected Bill English to succeed him. No surprises there.Bill English was previously the Finance Minister under John Key.
Mr Steven Joyce will become the new Finance Minister. At least 4 ministers are retiring and won’t stand for election in 2017. Expect a few new faces in the National Party next year. Read more
John Key announced his resignation from being Prime Minister of NZ today. Citing family reasons, he becomes one of the few NZ prime ministers who resigned voluntarily before serving out the term.
Such an announcement caught the financial community by surprise, because shortly after his announcement, the NZD weakened compared to the USD.
The NZ sharemarket dropped 54 points.
There is a famous saying in economics that goes “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.” Rudi Dornbusch is famous for saying this.
This week we saw that oil prices rebounded to over $50. In the space of 12 months, oil prices have risen 60%. Few times in history has this happened. What has this got to do with property? Find out in this post
Wondering what a neighbour’s house recently sold for at an auction? You can now find it on relab.co.nz. It’s for free and currently does not require you to register or login.
In March 2015, the St James Apartments developers proudly announced more than 170 apartments in Auckland’s had been presold. Actually, the site has a lot of heritage.
It is located on the corner of Wellesley & Kitchener Streets, Auckland Central. Auckland city is now home to many apartment buildings but there are only a handful of these beautiful old Heritage buildings of which St James is one. Many apartment investors were looking forward to its completion.
Now more than a year and a half later, the developers make another announcement. Early investors may have to put up more money or cancel their agreement. This post reminds us why investors prefer houses over apartments.
The polls got it wrong again. After calling the Brexit the wrong way, it looks like the polls got the US election wrong too. A Donald Trump victory means the Republicans are back into power after 8 years of rule under the Democrats.
What effect does this have on New Zealand and the property market? Not much really unless you happen to be investing in shares.
It is common to buy a property through an intermediary such as a real estate agent. Or perhaps you purchased a house at an auction. The auctioneer facilitated the sale and either you had to be physically present or you could have placed a phone bid. However, recently, PropFi started to facilitate online property auctions (similar to Trade Me). Is this the start of a major trend or is it just a fad?
Do you invest in property in New Zealand? Good. Make sure you don’t make these 5 common tax mistakes involving depreciation on chattels, depreciation recovery, capital expenditures below $500, taxing capital gains, and incorrectly applying the 2-year bright line test.
The OCR is expected to drop in November 10 (after the US election).
This will be the eighth and last time this year the RBNZ reviews the OCR.
What impact will it have on the property market?
Would you take your client to court to claim commission on a property you could not sell? One real estate agent did just that…
Recently, an Auckland real estate agent made the news trying to sue a former client. To make matters worse, the agent did not close the sale or introduce a buyer, yet wanted to claim a 32k commission on a property he didn’t sell in 2012.
In the end, both parties lost: they lost money and wasted time. Find out the details here.
Immigration Minister Michael Woodhouse made an announcement this week:
Fewer residence approvals would be decrease for the next two years: the new target for residence approvals over the next two years will be 85,000-95,000. This is less than the current target of 90,000 -100,000 approvals. What impact will this have on the housing market?
In a previous post on Why house prices keep on rising? I stated population growth was a key contributor to house price growth. With the influx of immigrants and local people to key cities, the demand for housing increased and pushed house prices higher. If you are trying to predict when house prices will peak, watch out for changes in population and immigration policy.
From 1 April 2011, you can no longer claim depreciation on the building as an expense. This 0% depreciation rule applies to buildings with an estimated useful life of 50 years of more. If you owned investment properties before this date and have claimed depreciation, then when you sell your property, you may tax to pay under the depreciation recovery provisions. Read this post to find out more about depreciation recovery and how it applies to you.
Labour is considering banning foreign house buyers from purchasing properties if they get into office. So if Labour gets their way and ban foreign buyers from purchasing properties, what will happen to house prices? Second, what effect will this have on the economy?
Is Living Big in a Tiny House the home solution for millennials?
You may be familiar with units and apartments, but have you heard about the tiny house?
When people hear your home is 7m by 3m, they think of a tiny small place. Actually, Holly and Oli demonstrated a 7m by 3m dwelling can be a dream home for creative young couples. It comes complete with a climbing wall and 2 lofts (one for watching tv and one for the bedroom). Find out more.
Thinking of buying a new property just off the plans? Read this post for an insight into the benefits and drawbacks of buying off plans.
The latest figures by QV show that the average value of a house in Auckland is $1,013,632. Real Estate Institute of New Zealand prefers to quote the median house price. Their recent data collected in July indicated the median house price was over $825,000. Which is more reliable? What do these numbers mean?
This post answers some common questions regarding tax and rental properties. You will find answers to questions such as
- what expenses are tax deductible?
- what is depreciation recovery and how it affects my tax?
- Is the bond included as income?
- If I am registered for GST, can I claim the GST on my expenses?
On 18 August 2016, the Reserve Bank announced it is deferring the start of the proposed changes to investor loan-to-value restrictions (LVRs) nationwide from 1 September to 1 October 2016. The Governor also clarified in what situations the borrower will be exempt from the 60% Loan to Value ratio.
What’s the most noticeable impact of the Unitary Plan? Due to the larger population, the Unitary Plan allows for greater intensification of land use. This means the Unitary Plan encourages more apartments and terraced style housing. We are likely to see more development in existing shopping centre areas such as Manukau, Botany, Albany, Sylvia Park, and Henderson. This post explores the Unitary Plan in more detail.
The Health & Safety Act was reformed recently and came into force on April 2016.
Generally when we think of Health and Safety, we think about it applying to the workplace. But it actually has wide reaching effects which impacts landlords and property managers. Just how could it affect you? Find out in this quick post.
NZ house prices have gone up compared to last year. While the Labour party and other opposition parties are blaming foreigners for pushing up the house prices, this is not entirely true.
Here comes the news: Just over 3% of the homes sold in New Zealand between April 2016 and June 2016 were sold to non-residents.
So the majority of people buying NZ residential property are either NZ residents or citizens. So what is driving up the house prices in NZ? Find out in this post.
The rise and fall of Mortgage interest rates: Interest rates on mortgages are at an historical low in NZ, having peaked at over 20% in 1987. Will this low interest environment continue and for how long?
A lot of attention has been focused on how to get finance, so homebuyers and investors can get into the property market. Less attention has been put into showing how mortgage finance can affect your personal finances.
Do you know how long it takes to pay half your mortgage? And how much interest have you paid on your home loan already? In this short post, you find out the answers to these questions and how one homeowner can save almost $100,000 interest by paying an extra $110 per fortnight.
Earlier this week, RBNZ announced that as of 1 September 2016 there will be a requirement for loans to residential property investors to have a minimum of 40 percent deposit. Basically, this means the maximum LVR can be 60%. What does that mean for you? Find out in this post.
If you look back 50 years of the property cycle, you will find that when property prices double from their last peak, we have reached the top of the current property cycle. As pointed out by Ron Hoy Fong, prices have doubled since their 2007 peak. Sure. There may be been overshoot in prices but the market always come back to equilibrium (The one thing I learnt from behavioural finance is that over-reaction always occurs). Just a side note, beware of forecasts from experts specially those from Bernard Hickey. He’s been saying the property prices will fall since 2012. I think he was five years out
Is your property negatively geared? Does negative gearing make sense for you? This post explains what is negative gearing and how it helps some property investors.
If you are a landlord, it’s your responsibility to make sure you are complying with the rules and regulations regarding tenancies.Recent changes include requirement to have smoke alarms (from 1 July 2016) and requirement to have insulation on rental residential properties (starts from 1 July 2019). You can find more details in this post.
Want to buy another investment property, but don’t quite have enough cash to meet the down payment? Refinancing your existing mortgage is another possibility. Read this post to find out how refinancing your mortgage can help finance another property or a new car.
One thing separates successful investors from the unsuccessful investors. And that is the investor’s mindset. How you think and how you make decisions will determine your investment success.
Just last week I had lunch with Gary Lin (Find more about Gary Lin at http://www.garylin.co/).
Gary Lin is a successful and passionate investor in the Auckland property market. He started with $200,000 in 2010 and now has a multi million real estate portfolio.
Over lunch with Gary, I found out what it takes to be a property millionaire. Here are the five key take-aways
Standard practice is to require a tenant to pay a bond equivalent to four weeks rent and one week’s rent in advance.
In this post, you will find out how much bond you can charge, how to lodge it with Tenancy Services, and what happens to the bond at the end of the tenancy. Included are the links to the Bond lodgement form, the Bond Refund form and the Bond Transfer form.
If you several rental properties, you know that regular property inspections are necessary. If you are a new landlord, how do you know what to inspect? We’ve put together a checklist and a short post to guide you through inspecting your rental property after you have rented it out.
City apartments located in the CBD and near universities are in popular demand among university and tertiary students.
Apartment owners can experience vacancy when the students finish the school term and either go back to their country or visit another place in NZ.
If you have a job, you know about PAYE tax deductions. PAYE tax is deducted from your wages by your employer and paid directly to IRD. If you have a term deposit, you will know about resident withholding tax. The bank deducts tax on the interest income you earn and pays it to IRD. And now we have Residential Land Withholding Tax (RLWT). The law takes effect on 1 July 2016 so read here to find out whether the Residential Land Withholding Tax applies to you.
Apartments are getting popular in Auckland again. A few current projects include Queens Square, Princes Residences, Victoria Residences and the Sugar Tree Apartments Project.
It is interesting to note a lot of these projects are based on the floor plans. Buyers sign a binding contract and pay down a deposit well before the apartments are built. Buyers place high confidence on the developer to complete the building on time and to a high standard, hopefully free of weather-tightness issues. How is this relevant to the Code Compliance Certificate?
How do you terminate a rental agreement? This is a very relevant question and the answer is of interest to both landlords and tenants. The answer can be found in this post.
With rising insurance and council rates, New Zealand landlords may have to increase their rents to get a decent return on their investment.
If you’re the landlord, can you increase the rent whenever you want? Well not exactly. Here’s what you need to do in order to comply with the Residential Tenancies Act.
Not many people know Ron but many have heard of Tofu Shop. For those of you who don’t know who I’m talking about, Ron Fong founded the Tofu Shop chain and is now a highly successful property investor. He’s accomplished so much in the property market to the extent that he has become a property coach. Yes, he’s paid to coach and teach people how to invest in property. In this post, I share with you Gary Lin’s experience after going through Ron Fong’s coaching programme.
Here’s a list of ten important things to know when buying a house:
1. Know what your requirements are.
2. Have your financing options ready. There is nothing worse finding out you can’t raise a mortgage to complete the purchase of your chosen house.
3.When you have found a house you are interested in, request a copy of the LIM report ……. Read more
Sharine Burns from Professionals Lovegrove Realty is one of top salespeople and won the runner up for top salesperson in 2013/2014 and 2014/2015.
Sharine Burns from Professionals Lovegrove Realty shares her take on the East Auckland property market.
Selling your home can be very emotional. There can be a tendency to expect a price which is way above the market value. A good agent will help guide you into forming a realistic value of your property.
Today I will do a short post on buying at auctions. Buying at auctions is different from tender and “price by negotiation” type of purchases. The key point to note is that once your bid has been accepted by the auctioneer, the contract is unconditional. So if you intend to buy at an auction, make sure you do your research beforehand…… Read more to find out about vendor bidding and reserve prices.
In fact, the location is 1/14 Abraham Place, Saint Johns. Why is it only selling for well below the Auckland median house price?
If you like shopping, chances are you have been to Sylvia Park in Mt Wellington, Auckland. Have you ever wondered how you could own (indirectly) a part of Sylvia Park Shopping Mall? Need a few million dollars right? Nope. Less than that. Here’s how.
“By 2017 over 50% of new homes built in Auckland will be attached.” RCG 2016
“Auckland apartment builds to outstrip houses by 2017” NZ Herald, 2016
“Auckland residential house prices in February have retreated from the record prices” Barfoot and Thompson, February 2016
Perhaps this means Auckland house prices are going to fall. Is this possible? Find out all about it in this post.
You just bought your first investment property. YAY!
Assuming you took it in vacant possession; you now have to look for a tenant.
If you need tax advice, Don’t forget to visit Mr Tax.co.nz.
They are also helping you apply for tax refunds.