RENTING IN NZ IS A DIFFERENT EXPERIENCE THAN IN EUROPEAN COUNTRIES

In many countries, renters are content with their lot, so why are Kiwis so hell-bent on owning their own home? Across the country, it costs the average first home buyer just $18 extra per week to pay off a mortgage than renting a home, according to CoreLogic data from June. As Bahmanteymouri [Elham Bahmanteymouri, Auckland University lecturer in urban planning] points out, when you’re paying a mortgage, you’re paying off an asset that’s likely to be increasing in value. This article outlines why renting in NZ is different to renting in some European countries. https://www.stuff.co.nz/life-style/homed/housing-affordability/300363549/housing-crisis-why-are-kiwis-so-hellbent-on-owning-their-own-home – 26 July

CHECK THAT INSURANCE COVERS REBUILDING AND REPAIR COSTS

Homeowners are being urged to check their insurance policy, to ensure it covers the actual cost of building and repair work. Construction costs have skyrocketed, with the price of steel and timber up 15 percent – something insurance hasn’t caught up with. Quantity surveyor Andy Thomson says most homeowners won’t get a payout big enough to cover the rapidly increasing cost of rebuilding or repairing a property. “Eighty percent of people are underinsured. They’re underinsured by about 50 percent. It’s not a small amount, and that’s before all this inflation started so it’ll just be getting wider,” he says. https://www.newshub.co.nz/home/money/2021/07/homeowners-urged-to-check-if-insurance-policy-covers-full-cost-of-rebuild-as-construction-costs-skyrocket.html – 24 July

IS IT CHEAPER TO BUY THAN RENT? DEPENDS WHERE YOU LIVE

It only costs $18 a week more on average to service a mortgage than pay market rent for first home buyers purchasing in June, according to CoreLogic data. In Christchurch, it was $68.50 cheaper per week on average to pay a new mortgage rather than carry on renting, but new owners in Auckland and Wellington aren’t so lucky, and usually find themselves spending roughly $100 or more a week. The figures are based on prices paid for first homes in June, a 2.5 per cent mortgage interest rate and 30 year repayment term. Rising interest rates are likely to increase mortgage repayment amounts more than rents, Davidson said, because rents are constrained by what renters can afford to pay. https://www.stuff.co.nz/life-style/homed/housing-affordability/300363754/its-cheaper-to-pay-a-mortgage-than-rent-but-only-if-youre-in-the-right-postcode – 23 July

HOUSING MARKET CLOSE TO A SIGNIFICANT TURNING POINT

New Zealand’s overheated housing market could be close to a “significant turning point”, with the Government’s investor crackdown earlier this year finally translating to an easing of demand and sales. Real estate data company CoreLogic released its latest Property Market and Economic Update for the second quarter of 2021, finding evidence house price growth could be set to cool. The report shows after a hot start to the year, sales volumes have now eased to the same levels as 2019 and demand has cooled too. Monthly gains are also slowing, with a drop in market share for mortgaged investors and a noticeable uptick in the number of first-home buyers entering the market. CoreLogic says a host of changes affecting investors – affordability pressures, the 40 percent deposit requirement, bright-line test extension, a tightening of interest deductibility rules and potential debt-to-income restrictions – are behind the fall in demand. And it’s predicted impending monetary policy changes will dampen the market more, with the Reserve Bank anticipated to increase the official cash rate (OCR) at some stage soon. https://www.newshub.co.nz/home/money/2021/07/new-zealand-housing-market-close-to-significant-turning-point-after-government-s-investor-crackdown-corelogic-report.html – 23 July : https://www.stuff.co.nz/life-style/homed/real-estate/125832886/hot-property-market-at-turning-point-corelogic-says – 23 July

ANTISOCIAL BEHAVIOUR OF TENANT FORCES OTHER TENANTS AND NEIGHBOURS TO LEAVE

A convicted fraudster at the centre of a neighbourhood dispute will soon be the last tenant living in a community housing complex. Other residents have either left or are in the process of leaving, and say they were left with no choice but to move. Sharyn Shepherd, also known as Hope Maree Taylor, allegedly harassed her neighbours, some of them elderly, in the formerly friendly row of flats in Templeton, on the outskirts of Christchurch. Stuff previously reported that neighbours claimed they had been abused by Shepherd, were frightened to sit outside, and feared for their pets after two cats were found dead. https://www.stuff.co.nz/national/125809916/controversial-tenant-drives-neighbours-out-of-community-housing-complex – 22 July

MANY RENTALS NOW IN BETTER CONDITION THAN PRIVATELY OWNED HOMES

Habitat for Humanity Invercargill general manager Paul Searancke said many homeowners on fixed incomes were living in cold and draughty houses which they didn’t have the financial means to fix. Anecdotally, many rental properties were in better condition, thanks to the Government’s Healthy Homes regulations, than homes which were owned privately, he said. https://www.stuff.co.nz/national/125779241/housing-charity-boss-renters-living-in-warmer-houses-than-homeowners – 22 July

WOF FOR RENTAL PROPERTIES WOULD BENEFIT LANDLORDS AS WELL AS TENANTS SAY GREEN MP CHLOE SWARBRICK

Green MP Chlöe Swarbrick says the party’s call to introduce a warrant of fitness (WOF) for rental properties would benefit landlords as well as tenants, arguing the proposal would protect “good landlords” from Tenancy Tribunal strife. Speaking to The AM Show on Wednesday morning, Swarbrick said the proposal would mitigate potential stress for both tenants and landlords by ensuring rental properties are licensed and up-to-scratch from the get-go. “Renters currently have the onus on them to go to the Tenancy Tribunal and drag their landlord or property manager through that process to enforce those Healthy Homes Standards. A WOF would front-load any of that potential stress and say, ‘hey, we’ve given this a license, it’s all good to go’ [sic],” she said. But some landlords disagree with the proposal. In an opinion piece written for Landlords in September 2018 – when the Green Party again pushed for the introduction of rental property WOFs – Andrew King, the executive officer of the NZ Property Investors’ Federation, argued that introducing the WOFs would only make rentals less affordable. “Private owners provide around 85 percent of rental properties in New Zealand. Do we really think that making it harder and more expensive to provide those rental properties is going to improve rental affordability and choice for tenants?” King wrote. “This will inevitably add more costs to providing rental property and cause more and more properties to become unable to be rented. This will increase the cost of rent and also reduce the number of properties available for renters.

https://www.newshub.co.nz/home/politics/2021/07/rental-property-wofs-greens-chl-e-swarbrick-says-rental-property-wofs-would-protect-good-landlords-as-well-as-tenants.html – 21 July

GREEN PARTY WANTS A MANDATORY WARRANT OF FITNESS FOR RENTAL PROPERTIES

The Green Party wants a mandatory warrant of fitness for rental properties, but landlords say the Healthy Homes standards mean it is not necessary. Swarbrick said that while the standards were an important step, they were not very enforceable. “People who rent their home shouldn’t have to get sick or complain before the safety of their home is tested and guaranteed.” But Property Investors Federation executive officer Sharon Cullwick said the standards, along with the code compliance certificate all houses should have, covered the same ground as a warrant of fitness would. The time was not right to try and introduce more regulatory requirements for rental properties when landlords were already working towards compliance with the standards, she said. “Compliance with the standards is a work in progress in itself. You can’t expect every rental to meet the standards right away. “And there is currently neither the materials nor the tradespeople to achieve what is already required, let alone anything else.” https://www.stuff.co.nz/life-style/homed/renting/125816286/time-not-right-for-a-rental-warrant-of-fitness-landlords-say – 22 July; https://www.stuff.co.nz/stuff-nation/125828585/do-we-need-a-rental-property-warrant-of-fitness – 22 July

GOVERNMENT CONSIDERING USING PUBLIC MONEY TO UNDERWRITE PRIVATE BUILD TO RENT DEVELOPMENTS

The Government is considering whether to use public money to underwrite private housing developments built to be rented out.

Housing Minister Megan Woods, said in a June Cabinet paper, that the $350 million set aside a year ago to underwrite housing developments at risk of not going ahead would be repurposed to “focus on supporting the sector to deliver affordable housing for purchase and rent on private land”. This Residential Development Response Fund was initially designed due to concerns COVID-19 would bring building activity to a stand-still. However, the problem didn’t materialise.

Woods’ office told interest.co.nz she’d have more to say on how the fund would be repurposed in “coming months”.

https://www.interest.co.nz/property/111443/closer-look-calls-government-provide-regulatory-and-financial-support-grow-build – 21 July

TENANT AWARDED $6,000 COMPENSATION

The tenant of a leaky and mouldy house that was described as “disturbing” has been awarded $6000 compensation by the Tenancy Tribunal. The adjudicator found that because of the clear knowledge and a failure to act, the landlord had “committed an unlawful act”. “The length of time taken to remedy was far from reasonable and the consequences on the health of the children living at the premises was significant,” Harris​ said. The tenant was awarded $2000​ in exemplary damages, $2560​ in a rent rebate because the mould impacted the tenant’s ability to live in the house as intended, and $1450​ compensation for property and furniture that was damaged by mould. https://www.stuff.co.nz/business/125794903/landlord-of-disturbing-mouldy-home-to-pay-tenant-6000-compensation – 21 July

SMALL INVESTORS TAKING A BREAK FROM THE HOUSING MARKET

Many small property investors have taken a break from participating in New Zealand’s housing market a few months after the government introduced reforms to cool the market, according to mortgage advisers. Craig Pope, a mortgage adviser at Loan Market Wellington, reported that he had seen “60% less investor loans” in recent months. However, recent investor activity was balanced by a rise in successful FHB activity. “I think investors are reaching a point where it’s just too much debt to keep leveraging,” Pope said, as reported by Good Returns. Glen McLeod, the director of Edge Mortgages, noted the same trend in the New Zealand property market, particularly among investors who have one or two investment properties.https://www.nzadviseronline.co.nz/news/small-property-investors-retreat-from-new-zealand-housing-market-277906.aspx – 20 July

LANDLORD TO PAY TENANTS $5060.44 FOR BREACHING REASONABLE PEACE, COMFORT AND PRIVACY

The tribunal found Mitchell breached the reasonable peace, comfort and privacy of the tenant, which amounted to harassment. She was ordered to pay the tenants $5060.44, have the bathroom and kitchen professionally cleaned, replace the clothes line, and have the heat pump serviced by a recognised service provider. Her tenants were also granted exclusive use of the laundry, garden and mailbox at the property. https://www.stuff.co.nz/business/property/300327462/dirty-laundry-aired-with-dunedin-landlord-ruled-out-of-her-depth – 8 June

NOT ENOUGH HOUSES FOR SALE AND NOT ENOUGH NEW RENTALS COMING ON TO THE MARKET

While the number of residential building consents issued continues to break records there are not enough houses for sale and consequently new rentals coming to the market. The latest data from realestate.co.nz shows nationally a total of 14,883 houses were listed for sale last month, a drop of 29.9% on the same time last year. Between March and May this year the number dropped from 11,322 to 8,760. However, the website shows the average asking price of properties has dropped for two consecutive months. https://www.goodreturns.co.nz/article/976518724/market-starting-to-cool.html – 9 June

SURVEY SHOWS INVESTORS COMING BACK INTO THE MARKET

We are now over two and a half months along from the March 23 tax changes for property investment announced by the Finance Minister. The various monthly surveys I run have allowed us to see that since late-March investors have stepped back strongly from the housing market as they wait to see what will happen. It now looks like some have waited long enough and are coming back to the market. The turning in investor opinion from a month ago has occurred across all age brackets but has been greatest for those aged 51-65 and over 65. These are the two groups least likely to be affected by the requirement for a 40% deposit because they have at some decades of wealth growth under their belts. They are also the two groups most sensitive to low term deposit rates in banks and other borrowing entities . https://www.oneroof.co.nz/news/39584 – 10 June

PROPERTY INVESTORS ARE WANTING RETIREMENT INCOME AND PEOPLE ON THE SOCIAL REGISTER NEED HOUSING

What can be done to solve the problems of these two disparate and growing groups? The solution is clear. We have two areas of urgent need: 1) Mum-and-dad investors need new, well-built residential properties with guaranteed rental returns. 2) People on the social housing register need warm, dry, safe homes which offer long-term, secure tenancies. The answer is so obvious it feels crazy that we are not already doing it: Bring these two groups together. Investors could buy properties which are then leased to Kāinga Ora, the Crown agency that provides rental housing for New Zealanders in need. Kāinga Ora could guarantee rental income to the investors, while providing homes to Kiwi families who desperately need them. https://www.stuff.co.nz/life-style/homed/renting/300317452/how-mum-and-dad-investors-could-help-develop-more-social-housing – 1 June

HOUSE PRICE INCREASES ARE SLOWING

CoreLogic publishes rolling average value figures for 100 urban districts throughout the country and of those, the rate of growth slowed over the three months to the end of May compared to the three months to the end of April, in 53 of them, increased in 45 and was unchanged in two. (The table below shows the latest CoreLogic average values in all 100 districts and the rate of change over three and 12 months). CoreLogic’s head of research Nick Goodall, said the slowing in the rate of growth reflected changes to the tax treatment of residential investment properties and mortgage borrowing rules recently announced by the Government and Reserve Bank (RBNZ). https://www.interest.co.nz/property/110663/changes-tax-rules-residential-investment-properties-new-lvr-restrictions-and – 1 June https://www.stuff.co.nz/life-style/homed/real-estate/125308308/rampant-house-prices-are-slowing-as-government-housing-policies-start-to-bite – 1 June

TENANCY TRIBUNAL AWARDS LANDLORD $47,000 TO COVER DAMAGE DONE BY TENANT

A north Auckland tenant has been ordered to pay $47,000 in damages after completely trashing his Whangaparaoa rental property. Clinton De Marcy Chelin put holes in every wall and some floors, ripped and cut the curtains, destroyed the stove and significantly damaged the plumbing and wiring, the Tenancy Tribunal found. He has been ordered to pay $47,096.29 in damages to Barfoot & Thompson Ltd Whangaparaoa immediately after he was found to have deliberately vandalised the property, including ruining the bathroom and kitchen, leaving the landlords with a massive repair bill. https://www.nzherald.co.nz/nz/tenancy-tribunal-rogue-tenant-fined-47000-for-trashing-rental-property/O7MJ2VDA2V4BDKDJ7M26PPA6JA/ – 2 June

SUPPLY OF HOUSES STILL NOT ENOUGH TO MEET DEMAND

Building might be booming but the housing supply shortage is unlikely to ease in the short term as that stock of houses for sale hits a record low. Realestate.co.nz spokeswoman Vanessa Williams said the general decline in housing stock was despite a 5.2 per cent year-on-year increase in new listings nationally and a booming building industry. There were simply not enough homes for sale to ease the supply shortage and that was continuing to put pressure on property prices, she said. Realestate.co.nz’s figures also showed the national average asking price was up by 15.3 per cent year-on-year to $841,816 in May. However, 10 regions recorded small drops in prices between April and May, including Bay of Plenty, Hawke’s Bay, Manawatu/Whanganui and Wellington. https://www.stuff.co.nz/life-style/homed/real-estate/125303351/it-will-take-a-flood-of-properties-coming-onto-the-market-to-reverse-price-rises–industry-report – 2 June: https://www.tvnz.co.nz/one-news/new-zealand/nzs-housing-shortage-not-expected-ease-soon-despite-building-boom-report = 2 June

LANDLORDS ASKED TO SHOW MORE COMPASSION

New Zealand was still in the thick of the housing crisis and the Government was doing everything it could, including supporting private rentals, Woods said. “We’ve got information and data that tells us that actually people are often coming from private rentals before they fall into transitional housing or emergency housing. “We’ve started a programme to help people sustain their tenancies, so if they miss a payment we’re there to support them so that they don’t lose their home, their community, their schooling for their whānau.” It would take everyone to sort out the housing crisis, Ardern said, and Woods agreed – saying the Government wanted private investors and developers to help. There was room for some to do better, she said. “I think there are a number of really good landlords and I think we all meet them when we’re out and about – but certainly, with some landlords – as there is in any sector of society – yes, there is more need for compassion.” However, the Government was not relying on compassion to deal with the housing crisis, Woods added, and had also reformed tenancy laws to ensure they were fit for the 21st century. https://www.newshub.co.nz/home/politics/2021/06/minister-megan-woods-encourages-landlords-to-show-more-compassion-to-ease-housing-crisis.html – 3 June; https://www.rnz.co.nz/national/programmes/checkpoint/audio/2018798312/more-need-for-compassion-from-some-landlords-housing-minister – 3 June

BUILD TO RENT SECTOR SET FOR A BREAK THROUGH THIS YEAR

The housing rental system is broken and the build-to-rent model is the best way to fix it, a property developer, who is a recent returned from Britain, says. The private rental market is dominated by small scale individual property owners, the majority of whom own one to two rental properties. Since returning to New Zealand recently, Gardner had become an advocate for build-to-rent developments which he believed was part of the solution to the country’s housing woes. Build-to-rent involves the development of multi-unit residential buildings for long-term rentals, rather than sales to individual owners. It has become both a major part of the rental market and a sought after investment asset class in Europe and the United States and is now taking off in Australia. New Zealand has lagged behind, but proponents of the build-to-rent model have said the sector was set for breakthrough this year. Gardner said build-to-rent had not yet taken off here because it was capital intensive with low yields, but the world had changed. “Low yield, high social impact is the holy grail of investing in 2021. Long term, stable, low returns that make a difference are what institutional investors like me want.” https://www.stuff.co.nz/life-style/homed/real-estate/125269926/buildtorent-is-the-best-way-to-fix-the-broken-rental-market–developer-says – 3 June

EFFECT ON GOVERNMENT’S NEW TAX POLICIES ON HOME OWNERS WHO HAVE TO BE AWAY FOR AN EXTENDED PERIOD.

Homeowners who spend more than a year away from home could be caught out by the Government’s new housing tax policies, a chartered accountants’ organisation is warning. Under the new rules, homeowners could be away from the family home for a continuous period of up to 365 days. But that was too short to protect family homeowners in some circumstances, such as if they were seconded to another town for work for more than a year or if they were travelling for an extended period, Cuthbertson said. The tax changes were intended to dampen investor demand for residential property, but some non-investor property owners have already raised concerns that the new rules would also impact negatively on them. Cuthbertson said examples of where the family home exclusion did not apply would not be rare and that, thanks to high house prices, the tax bills would not be small. https://www.stuff.co.nz/life-style/homed/real-estate/125324036/travelling-home-owners-might-face-a-big-tax-bill-when-they-sell – 3 June

LACK OF SUPPLIES AFFECTING HOUSE BUILDING SECTOR

The effects of Covid-19 continue to linger on the house building sector, which is now being held back by supplies. A Statistics NZ survey covering 3000 new home projects showed that half were still being impacted in the March quarter by Covid-19 problems. For more than two-thirds of the homes, availability of building materials and equipment was the number one impact, and Auckland was hardest hit. Westpac economist Satish Ranchhod said overall construction activity is expected to remain very strong over the year ahead, underpinned by record new dwelling consent numbers. Spending on commercial projects has taken a knock in the wake of last year’s outbreak, particularly in the retail and office space, which has recently seen the end of several big projects such as Commercial Bay. But with the economy on firmer footing and investor interest in commercial property on the rise, “commercial construction may prove to be more resilient than we previously expected,” Ranchhod said. https://www.stuff.co.nz/business/125355820/empty-shelves-hamper-building-industrys-covid-recovery – 5 June https://www.interest.co.nz/property/110709/construction-commercial-buildings-declining-while-residential-construction-appears – 4 June

WHAT IS FAIR WEAR AND TEAR OF A RENTAL?

Tenancy can be difficult terrain to navigate, whether you’re a long-time renter or a first-time tenant. And when something gets damaged, it can be hard to know what to do – and who is required to stump up for repairs. One common point of confusion is the concept of fair wear and tear. To state the obvious, homes are meant to be lived in, and damage is inevitable. Freshly installed faucets will, at some point, become leaky, and once pristine carpets will eventually wear out when people are trampling on them daily. According to Tenancy Services, fair wear and tear is defined as the gradual deterioration of things that are used regularly in a property by its occupants. A tenant is not liable for damage to their rented property caused by fair wear and tear. However, the distinction between “fair” damage and “careless” damage can sometimes be murky. For example, a common factor is whether or not a tenant should have had the foresight to avoid the situation that led to the damage. Property management expert Bernard Parker agreed, telling Newshub foresight is a key factor in wear and tear predicaments. “Common sense usually prevails,” Parker said. “If a reasonable person could foresee the possibility of damage, then the tenant possibly should have foreseen it.https://www.newshub.co.nz/home/new-zealand/2021/05/tenancy-laws-what-s-fair-wear-and-tear-should-the-landlord-or-renter-pay-for-paint-peel-worn-carpet.html 24 May

AUCKLAND RENTS ARE RISING

Auckland’s rents have tipped into the $600 range for the first time. Last month, the first in the second quarter, average weekly rents rose 2.8% year-on-year. In the first quarter the average weekly rent increased by 2.3% on the same time last year, reaching $599, Barfoot & Thompson’s latest research shows. For three-bedroom homes, which make up the majority of Auckland’s rental stock, the average rent reached $603 per week in March 2021 – $19 or 3.3% more than in March 2020. Director Kiri Barfoot says the figures are yet to reflect the impact of recently announced changes to the bright-line test or interest cost deductions for residential rental property income. https://www.landlords.co.nz/article/976518647/auckland-rents-keep-lurching-up – 24 May

INCREASING INVESTIGATIONS OF RENTAL PROPERTIES TO ENSURE HEALTHY HOMES REGULATIONS ARE REALISED IS A WASTE OF MONEY

Some of the $80 million to be spent over the next four years to police Healthy Homes standards, fix the bond centre and fund RTA disputes could be better spent, says the Property Investors Federation. Property Investors Federation president Andrew King says $16 million to be spent increasing investigations of rental properties to ensure healthy homes are realised is a total waste of money. “Landlords are generally following the legislation and getting advice where they have failed inspections, many of them around heat pumps, which has become an issue. “This is an area where landlords are having to rip out perfectly good heat pumps and install new or extra pumps to meet the Healthy Homes legislation only to find tenants don’t want them because of rising power bills, is a problem.” He says the legislation doesn’t need more policing. Instead the money set aside could fund a lot of extra medical operations, new medicines from Pharmac and teachers in schools. https://www.landlords.co.nz/article/976518661/more-policing-of-landlords-total-waste-of-money – 24 May; https://www.scoop.co.nz/stories/PO2105/S00219/landlords-say-that-money-would-be-better-spent-on-something-else.htm – 21 May

ANZ’S REPORT SUGGESTS HOUSING SHORTAGE IS STARTING TO DECLINE

ANZ’s latest report on the residential property market suggests the housing shortage is starting to decline, but whether that continues depends on immigration settings once the border is reopened. “The closed border means the New Zealand housing market is in the rare position of being able to build enough houses to keep up with new demand,” ANZ’s economists say in their latest Property Focus report. ANZ is the country’s biggest home loan lender with over $100 billion of residential mortgage exposure at March 31.

The ANZ economists also warn that disruption to international supply chains is aggravating capacity pressures and pushing up costs in the construction sector, which could put a handbrake on the supply of new homes. “On net, it looks like New Zealand will be able to chip away at the housing shortage pretty quickly over 2021,” the report says.   https://www.interest.co.nz/property/110554/anz-report-says-border-closure-means-housing-supply-catching-demand-theres-still – 25 May

COST OF RENTALS RESULTS IN OVERCROWDING IN PORIRUA

A recent Salvation Army report found a three-bedroom home in Porirua costs around $600 per week to rent. And with rent increases, Shamubeel Eaqub says in 30 years’ time social housing in the suburb will cost the Government $1.5 billion. Meanwhile, the mayor of Porirua is worried about the negative impact rent price increases are having on the community. We’ve got families over in the east where there’s three or four families living in a three-bedroom house,” Anita Baker told Breakfast in a separate interview.  https://www.tvnz.co.nz/one-news/new-zealand/porirua-rents-soar-mayor-says-up-16-people-living-in-three-bedroom-homes?auto=6255822415001 – 25 May

HOUSE PRICES STRONGER THAN EVER IN THE JANUARY TO MARCH PERIOD THIS YEAR

CoreLogic chief property economist Kelvin Davidson said almost everybody who resold between January and March this year did so for more than the price they paid for the property, regardless of the location, buyer or property type. “The figures are stronger than ever and consistent with what we know has happened to property values themselves which have pretty much been on an unbroken upwards trend for a decade now.” But, driven by low mortgage rates and a tight supply/demand balance, capital gains intensified in the first three months of this year with a 7.2 per cent rise in that period alone, he said. https://www.stuff.co.nz/life-style/homed/real-estate/125230594/biggest-profits-on-record-for-house-sellers – 25 May

TONY ALEXANDER FINDS THERE ARE FEWER INVESTORS IN THE MARKET BUT ALSO FEWER FIRST HOME BUYERS

Fewer investors are in the market, but the pace of their withdrawal has eased a bit. That is interesting, but not as interesting as the net 15% of advisors saying that there are fewer first home buyers about. That is actually a worsening from a net 13% last month, and 19% positive in February. Why would first home buyers back off right when the Government is trying to tilt the playing field in their favour? The answer is probably this. First home buyers will step forward when investors get exact clarification of the new rules for new builds and then re-engage with the market – as has happened every time in the past when rules have been changed against them. That is the irony of the situation. https://www.oneroof.co.nz/news/39507 – 26 May ; https://www.newshub.co.nz/home/money/2021/05/more-first-home-buyers-pulling-away-from-property-but-investor-enquiries-bounce-back-mortgage-advisors.html – 26 May

GOVERNMENT’S RECENT HOUSING CHANGES YET TO HAVE IMPACT ON RESIDENTIAL PROPERTY PRICES

Much has been made of how the Government’s recent housing changes would cool New Zealand’s overheated property market – but new data suggests Kiwis’ demand for real estate hasn’t waned yet. The changes, announced in March, included the removal of interest deductions on investment properties – a move that made owning multiple homes significantly less lucrative. But while this has caused some investors to drop away from the housing market, the changes are yet to have any real impact on residential property prices, according to new data from state-owned valuation company Quotable Value (QV). https://www.newshub.co.nz/home/money/2021/05/house-prices-lifting-faster-than-before-despite-government-changes-causing-investor-drop-off.html – 26 May

INTEREST RATE RISES COULD DAMAGE THE HOUSING MARKET AND ECONOMY

With house prices up 24 per cent in a year and nearly a third of all mortgage debt now carried by highly-leveraged buyers who took out loans in the last two years, key players are concerned any interest rate rises could damage the housing market and have flow-on effects to the whole economy. Property Investors Federation president Andrew King sums up his concerns like this: “You can get a fixed rate for 2.5 or 3 per cent. If say you have a 2.5 per cent rate at the moment, if they go up to 3 per cent, that’s a 20 per cent increase in your costs. So tiny margins now have a huge effect.” The Reserve Bank states increases in mortgage payments could cost the economy, as highly indebted households reduce their consumption and distressed borrowers could default on their loans.https://www.stuff.co.nz/life-style/homed/housing-affordability/300316220/fears-reserve-bank-faces-choice-between-recent-house-buyers-and-economy – 26 May

INVESTOR LENDING FELL IN APRIL

Lending for mortgages dropped by $2 billion in April but it is still running at record levels, new Reserve Bank data shows. There was a total of $8.4 billion borrowed for mortgages in April, down from $10.4 billion borrowed in March. The new Reserve Bank data suggested the Government’s move had impacted on April’s lending. Investor lending fell from $2.3b in March to $1.6b in April, while first-home buyer lending remained relatively flat – dropping from $1.7b in March to $1.5b in April. The share of lending that went to investors also dropped, to 19.7 per cent, but first-home buyers’ lending share increased to 18.5 per cent. https://www.stuff.co.nz/business/money/125263054/mortgage-lending-down-but-far-from-out – 27 May

MORTGAGE RATES MAY START RISING AGAIN NEXT YEAR

Mortgage rates are set to start rising again as soon as next year, meaning thousands of home buyers who’ve recently bought into the housing hype could be at risk. The Reserve Bank expects to start hiking the wholesale rate as soon as next year, which will take it from Thursday’s record low to nearly two percent by June 2024. Rate increases will only happen if the economy keeps up its COVID comeback, but crazy growth won’t be coming from house prices, according to the Reserve Bank and Treasury. They now both expect prices to come crashing back to earth – a blow for those who just got on the property ladder. https://www.newshub.co.nz/home/money/2021/05/housing-mortgage-rates-to-rise-again-fears-recent-home-buyers-at-risk.html – 27 May https://www.nzherald.co.nz/business/be-wary-reserve-bank-warns-house-price-party-is-over-with-interest-rates-rising-next-year/3VHEM2Z3B3GZKARZ6LA47SBFUM/ – 26 May

GOVERNOR OF RESERVE BANK EXPLAINS HOW THE DRIVERS OF HOUSE PRICE INFLATION HAVE CHANGED

The Governor of the Reserve Bank says the only drivers of house price inflation left are “the fear of missing out, the speculative behaviour, fads, fashion and cycles”. Adrian Orr says there’s nothing fundamental left in the economy pushing them up, and expects them to “come to a grinding halt and go sideways for some time”, if not fall. “All of those drivers have come to a halt,” he told The AM Show on Thursday. So what’s changed? “You’ve got increased tax for housing investors, you’ve got increased lending restrictions imposed by ourselves, you’ve got slowed population growth and you’ve got a big supply of housing coming on,” said Orr. https://www.newshub.co.nz/home/money/2021/05/time-for-house-price-growth-to-come-to-a-grinding-halt-reserve-bank-governor-adrian-orr.html – 27 May; https://www.stuff.co.nz/national/politics/300318628/reserve-bank-and-mps-clash-over-high-house-prices – 28 May

TENANCY SERVICES ARE AUDITING RENTAL PROPERTY TO ENSURE SMOKE ALARMS ARE INSTALLED CORRECTLY AND ARE WORKING

Wendy Alexander, Acting Chief Executive at REINZ says: “With the recent focus on Healthy Homes Standards in New Zealand, REINZ thought it timely to remind property managers and landlords of the importance of ensuring appropriate smoke alarms are installed in the required locations throughout their rental properties. “Tenancy Services has mentioned in recent conversations with REINZ that as part of their ongoing compliance checks, they will be continuing to audit rental properties to ensure that smoke alarms are installed in the correct places and are in working order. So, it’s important smoke alarms are not forgotten in the current environment,” continues Alexander. “The 2016 legislation requires smoke alarms to be installed within 3 metres of each bedroom or in every room where a person sleeps; in each level of a multi-level home; in all rental and boarding homes, rental caravans and self-contained sleep-outs. http://www.voxy.co.nz/national/5/387765 – 27 May

SURVEY SHOWS EXPECTATIONS ARE THAT HOUSE PRICES WILL KEEP RISING

Expectations that house prices will keep rising remain high, despite Government policy changes and a slowing market, a new ASB survey shows. A net 64 per cent of respondents to the ASB Housing Confidence survey, which covers the three months ending April, expected house prices to keep climbing during the next year. While that was down from the record 73 per cent recorded in the last quarter’s survey, it was still the third highest result in the 25 years the bank had been running the survey. https://www.stuff.co.nz/life-style/homed/real-estate/125270377/no-shaking-stubborn-belief-house-prices-will-keep-rising – 28 May https://www.newshub.co.nz/home/money/2021/05/housing-crisis-first-home-buyers-scared-of-what-s-happening-out-there-not-stepping-forward-as-investors-step-back-economist.html – 28 May https://www.rnz.co.nz/news/business/443525/housing-confidence-drops-slightly-but-still-at-near-record-high – 28 May https://www.tvnz.co.nz/one-news/new-zealand/gloomy-gets-one-in-five-kiwis-think-s-bad-time-buy-house-new-data-suggests?auto=6256312403001 – 28 May

TAX BREAK WANTED BY DEVELOPERS OF BUILD TO RENT

A property developer has plans to build thousands of homes to rent out with long-term tenancies. He and his international backers have poured in $40-million already, including building a 48-home site in south Auckland about to open up to tenants. But he’s looking for a tax break. A new development of one and two-bedroom units in Onehunga aren’t for sale and they won’t ever be. They’re being built solely for rent. A Rental Company CEO Kent Gardner said a one-bedroom apartment at the development would cost around $500 per week. The 48 units are due to hit the rental market in August and they’ve taken about a year to build – roughly a home a week. “The renting model here is broken, we’ve got the wrong capital I believe in the market, not long term capital, we’ve got poor quality stock,” Gardner said. And in return for boosting rental housing stock – he wants a tax exemption. “We’ve asked for that, and explained why it’s necessary,” he said. Newshub understands Gardner and other build to rent developers are actively lobbying the Government to continue to be able to write off the interest costs of their developments against their total tax bill. Some say if they don’t get what they want, they won’t provide long-term rental housing. https://www.newshub.co.nz/home/money/2021/05/auckland-property-developer-wants-tax-breaks-for-rent-to-own-properties.html – 28 May

CONFUSION OVER ACCEPTABLE LEVELS OF METH CONTAMINATION

Residential properties should have to be tested for methamphetamine before they are listed for sale, says an Auckland investor whose renovation plans were scuppered by a late-stage positive test. Part of the problem is the ongoing confusion around acceptable methamphetamine testing levels for rental properties, due to differences between the official New Zealand standard, which was adopted in 2017, and a 2018 report by Sir Peter Gluckman, who was then the Prime Minister’s chief science adviser. There have been pleas from the property sector for more clarity on how to deal with the issue, with the Real Estate Institute is the latest to call for the situation to be addressed. Property managers and landlords were facing similar challenges with rental properties, with some insurance companies and Tenancy Tribunal adjudicators using the New Zealand standard level and others using the level recommended by the Gluckman report, Alexander said. https://www.stuff.co.nz/life-style/homed/real-estate/125258000/1200-spent-on-p-property-investor-calls-for-prelisting-tests – 29 May


TENANTS WITH PETS STAY LONGER

While nearly two thirds of Kiwi households own at least one pet, less than a tenth of landlords allow pets, and many of those who do restrict it to cats and small dogs. Dog-owners are left competing over the scraps; not just with other pet-owners, but with everybody else in an increasingly tight housing market. Companion Animals New Zealand welfare and operations officer Fiona Esam​ said every shelter the organisation worked with reported struggling to keep up with the number of dogs needing to be rehomed. New Zealand Property Investors Federation executive officer Sharon Cullwick​ said part of the problem for pet-owners was more landlords were turning their rental properties over to property managers. Property managers were even more likely than owners to consider pets too much of a hassle, particularly since the 90-day end-of-tenancy notices became more limited. New Zealand Property Investors Federation executive officer Sharon Cullwick​ said part of the problem for pet-owners was more landlords were turning their rental properties over to property managers. Property managers were even more likely than owners to consider pets too much of a hassle, particularly since the 90-day end-of-tenancy notices became more limited. Auckland landlord Ani Armstrong is among the minority who welcome pet owners at their properties. Armstrong said the tenant-landlord relationship was built on trust.  When pet-owners find a reasonable and understanding landlord they stick with them, and were more motivated than most tenants to look after the property, she said. A 2016 study by property firm Barfoot and Thompson found pet-owners paid on average $20.50 extra in rent a week, and stayed around seven months longer than tenants without pets. https://www.stuff.co.nz/national/300312779/i-cried-the-whole-way-home-sharp-increase-in-renting-kiwis-forced-to-give-up-their-dogs – 

 

LETTER TO GOVERNMENT MINISTERS DISMISSED OUT OF HAND

The NZ Property Investors Federation (NZPIF) and other organisations have called on the government to reconsider removing mortgage interest costs on rental properties. However, King said their feedback on the new tax policies were “dismissed out of hand.” “It appears no consideration is being given to advice from tenants, first-home buyers, and officials from the IRD, Treasury, the Housing and Urban Development Ministry, economists, and tax experts who do not agree with this tax change.” https://www.nzadviseronline.co.nz/news/calls-on-tweaking-new-housing-package-dismissed-out-of-hand-276888.aspx – 17 May; https://www.stuff.co.nz/life-style/homed/real-estate/125148658/property-investors-fail-in-bid-to-overturn-housing-changes – 17 May

LAW CHANGES AND TIPS FOR MAXIMIZING RETURNS

Dan Hellyer, Partner, Deloitte Private, says if you look at an investment property as an income-generating asset not much has changed. “Although being able to claim the funding costs is being phased out, you can still claim ordinary operating expenses. These are the costs that are incurred in generating rental income.” Sharon Cullwick, executive officer, New Zealand Property Investors’ Federation, says sometimes people don’t bother claiming for small expenses, like vehicle costs when they travel to their rental property. “But it all adds up, so claim for everything you’re able to.” Cullwick says it’s important to consider what costs could be in the next few years rather than just concentrate on what they are now. “If you bought your property before 27 March this year, the ability to claim your interest as an expense may be phased out over the next few years. So your costs may rise over that time. Interest rates are also at historic lows and could rise in the next few years.” “Make sure your property can pay for itself,” says Cullwick. “Don’t have a property that you need to dip into your own pocket for and pay $50 or $100 a week for the next 25 years.” If you’re looking to add to your property portfolio, but you’re not sure how long you intend to hold a property for, then consider new builds. Not only will maintenance and repair costs be lower, but it’s been proposed that the bright-line test will remain at five years for new builds. Again, Cullwick says it’s important to consider yield when buying a new build. “The numbers have to make sense and the property has to pay for itself.” http://www.voxy.co.nz/business/5/387134 – 18 Mayhttps://www.nzadviseronline.co.nz/news/experts-offer-tips-on-maximising-property-investments-276922.aspx – 19 May

TIPS FOR RIDING OUT THE TAX CHANGE STORM

Property accountancy company GRA has come up with a number of suggestions for landlords affected by the Government’s new tax rules. The latest MBIE stats show 98% of landlords own four or fewer rentals. That means six from seven rental properties are provided by private landlords and non-government organisations (NGOs). GRA managing director Matthew Gilligan says the majority of landlords are hardly “rich listers”, but they are being treated like “economic terrorists” and “scapegoated” for successive governments not solving the housing supply. GRA partner Salesh Chand says landlords are looking at passing the additional costs they incur on to tenants. “The majority of landlords are caring people, and they are saddened that such cost has been added to the running costs of their property, and that it now needs to be on-charged to their tenants.” He says if investors are forced to sell they are genuinely worried about where their tenants will go, as there will be fewer rental properties available. And many of these tenants don’t have the ability, or the desire, to become homeowners. The rest of the article is a list of Chand’s recommendations. https://www.landlords.co.nz/article/976518627/top-tips-for-riding-out-the-tax-change-storm – 18 May

OCR COULD INCREASE TO 1.25 PERCENT BY END OF 2023

Banks are picking the official cash rate (OCR) to rise over the next few years, potentially pushing up the cost of paying down a mortgage – but first-home buyers hoping for a break might have to wait a bit longer yet. ANZ, the biggest of the ‘big four’ banks in New Zealand, says it expects the OCR to increase 400 percent – from its present 0.25 percent to 1.25 percent – by the end of 2023. ASB thinks it’ll hit that mark in early 2024. The Reserve Bank will meet to decide its next move on May 26, after the delivery of this week’s budget. https://www.newshub.co.nz/home/money/2021/05/small-increase-in-ocr-will-hit-mortgage-holders-hard-economist.html – 18 May https://www.oneroof.co.nz/news/rise-and-fall-will-kiwis-get-it-wrong-on-house-prices-and-mortgage-rates-39472 – 19 May

RENTS IN THE AUCKLAND REGION HAVE TOPPED $600 A WEEK

Rents for a typical three-bedroom home in the Auckland region have topped $600 a week for the first time, the city’s biggest real estate agency says. Barfoot & Thompson’s latest quarterly data shows the average weekly rent for a typical three-bedroom home, which make up the bulk of the rental stock, was $603 in March. That was an annual increase of 3.3 per cent, or $19. Landlords and property managers have continued to warn of the likelihood of rent increases, in response to the Government’s changes. Nearly three-quarters (70.3 per cent) of landlords who responded to a recent NZ Property Investors Federation survey said they would increase rents by a median of $21 to $30 per week in order to keep their rental properties. This has prompted tenant advocates to call for rent controls to be introduced and Finance Minister Grant Robertson has said the Government “will take action if necessary” should investors hike rents .https://www.stuff.co.nz/life-style/homed/real-estate/125183890/aucklands-average-rent-for-a-threebedroom-home-tops-600-for-the-first-time – 19 May

LANDLORD TO PAY $1520 FOR BREACHING TENANT’S QUIET ENJOYMENT OF THE PROPERTY

An Auckland landlord verbally abused his tenant and accused her of being a sex worker, a tribunal has found. Landlord James Francis was ordered by the Tenancy Tribunal to pay $1520 to the woman for breaching her quiet enjoyment of the property and failing to have a tenancy agreement in writing. The woman lived at a rental property in Waimauku in Auckland’s northwest, and Francis had a separate house on the same property.https://www.stuff.co.nz/life-style/homed/renting/125179058/auckland-landlord-verbally-abused-tenant-accused-her-of-sex-work-tribunal-hears – 19 May

AVERAGE RENT ON NEWLY TENANTED PROPERTIES ACROSS NZ $30 A WEEK HIGHER IN FIRST QUARTER OF THIS YEAR

The average rent charged on newly tenanted properties across New Zealand was $30 a week higher in the first quarter of this year compared to the first quarter of last year, according to interest.co.nz’s new Residential Rent Report. The report measures the average rent and the number of bonds deposited in 30 major urban districts around the country every quarter, based on bonds received by Tenancy Services. Because bonds are usually paid at the start of a tenancy, the report is a leading indicator of movements in market rents, reflecting rents agreed between landlords and tenants at the start their tenancies. It shows that in the first quarter of this year the average rent charged for the whole of New Zealand was $491 a week, up by $30 a week (+6.5%) compared to the first quarter of last year. Across the 30 districts measured, average rents ranged from $344 a week in Invercargill to $614 a week on Auckland’s North Shore, (see table below for the average rents in all 30 districts). The only district to record a decline rent over the year was Queenstown-Lakes, where the average rent declined to $520 a week in the first quarter of this year, down by $130 a week (-20.1%) compared to the first quarter of last year. https://www.interest.co.nz/property/110471/rents-have-risen-much-more-slowly-auckland-compared-rest-country – 20 May https://www.stuff.co.nz/life-style/homed/real-estate/125183890/aucklands-average-rent-for-a-threebedroom-home-tops-600-for-the-first-time – 19 May https://www.newshub.co.nz/home/politics/2021/05/accommodation-supplement-ends-up-going-towards-landlords-is-under-review-grant-robertson.html – 20 May

GOVERNMENT CLAIMS IT HAS TAMED RAGING HOUSE PRICE GROWTH

The government claims that it has tamed raging house price growth through the changes it is making, primarily against property investors. n the Budget Treasury forecasts that annual house price growth is forecast to reach a peak of 17.3% in the June 2021 quarter before easing to 0.9% by June 2022. “This is a very sharp adjustment in house prices,” Finance minister Grant Roberston says. “But a very necessary one.” Treasury says leveraged investors will be impacted the most as the removal of interest deductibility increases their tax liability. “Highly leveraged investors will be more impacted than those less leveraged, implying that highly leveraged investors will demand fewer homes going forward. “Furthermore, existing property owners facing higher tax costs may seek to divest to bring overall costs down. This will increase selling pressure and reduce demand in the market for existing homes. https://www.landlords.co.nz/article/976518654/govt-reckons-its-tamed-house-price-growth – 20 May

NZPIF MEDIA RELEASE ON THE BUDGET

The government used the housing announcements of March 23 as its main avenue for legislation relating to rental properties. Still, it has, however, set aside $80 million in yesterday’s Budget for the Bond Centre, Tenancy Tribunal, and Healthy Homes initiatives. “The NZ Property Investors Federation (NZPIF) believes that the $16 million which has been set aside for the investigation of Healthy Homes compliance of private rental property providers would be better spent in other areas such as Pharmac, schools or education where the funds are required,” said Sharon Cullwick, executive officer of the NZPIF. “Most of our members are bringing their properties up to the Healthy Homes Standards, as and when these are required, with many already implementing the changes before the required deadlines.” https://www.nzpif.org.nz/news/view/61186 – 21 May; https://www.scoop.co.nz/stories/PO2105/S00219/landlords-say-that-money-would-be-better-spent-on-something-else.htm – 21 May https://www.landlords.co.nz/article/976518661/more-policing-of-landlords-total-waste-of-money – 24 May

CHANGES TO LENDING POLICIES

Changes to lending policies are quite common but they are usually very minor. However, the Government’s March announcements resulted in significant changes to how the banks were assessing mortgages. The lending policy changes started with the reintroduction of loan to value ratio (LVR) restrictions in May, although most banks had fully implemented the new deposit requirements – 20% for a first home buyer, 40% for an investor – many months before after the Reserve Bank signalled their early return in December last year. Following the LVR changes, banks started to nudge down their servicing rate – the interest rate used to calculate the affordability of a mortgage. At least one major bank has also fully embraced new builds, offering floating rates of as low as 1.79% for home builders, around half the price of their normal floating rate. For investors, at least one bank has made an adjustment to how they calculate rental income from investment properties, adjusting for the increased tax costs that investment properties will eventually pay. Other banks will inevitably follow suit. https://www.oneroof.co.nz/news/six-months-of-home-loan-changes-who-are-the-winners-and-losers-39493 – 21 May

WILL THE HOUSING MARKET STALL IN 12 MONTHS?

The Government predicts the housing market will stall in the next 12 months, but economists and real estate experts are not too sure. In its economic forecast, released in the Budget, the Treasury said that annual house price growth would slow from a peak of 17.3% to just 0.9% by mid next year. The Treasury attributes the dramatic drop in growth to the Government’s recent housing market shake-up, which included measures aimed at curbing investor activity, and the Reserve Bank’s reintroduction of home loan restrictions. Finance Minister Grant Robertson said: “This is a very sharp adjustment in house prices but a very necessary one.” However, economist Tony Alexander believes that the Treasury has overestimated the impact of its policies on investors, namely the extension of the brightline test and removal of tax benefits on interest payments.https://www.oneroof.co.nz/news/39494 – 21 May

AMOUNT GOVERNMENT SPENDS ON ACCOMMODATION SUPPLEMENTS IS RISING

The amount of money spent on accommodation supplements to help struggling tenants pay rent has doubled in recent years but there are warnings there is no easy way to redesign the system. Accommodation supplements are paid to people who need assistance with their housing costs, and are tied to incomes. In the March quarter of this year, there were 360,549 receiving the accommodation supplement, up 43,023 on the year before. Minister for Social Development and Employment Carmel Sepuloni said the supplement was introduced to help low-middle income houses with their accommodation costs and provide additional income for daily expenses. The supplement is a vital component of the social security system and plays a role in ensuring households with high housing costs, relative to income, can sustain their accommodation in the private rental market. The accommodation supplement is the government’s largest investment in private sector housing subsidies. For the 2019/20 financial year, the accommodation supplement cost $1.7 billion.” https://www.stuff.co.nz/business/125195278/accommodation-supplement-propping-up-rental-market-by-30m-a-week – 22 May https://www.newshub.co.nz/home/politics/2021/05/accommodation-supplement-ends-up-going-towards-landlords-is-under-review-grant-robertson.html – 22 May

 

SURGE IN NUMBER OF SECONDARY DWELLINGS ON PROPERTIES

Rocketing house prices have seen a surge in savvy Kiwis who are building secondary dwellings on their property to earn an extra buck. Secondary dwellings, granny flats and tiny homes are being built for extended families, rental tenants or Airbnb-income spinners. Latest figures show the demand for Bay of Plenty lifestyle blocks has soared after Covid-19 as more people search for a spacious haven. Simon Anderson, managing director of the Realty Group Ltd, which operates Eves and Bayleys, agreed and said if the property had a second dwelling there would always be strong demand. These were attractive for growing or migrant families and those who wanted extra income. https://www.nzherald.co.nz/business/thinking-of-putting-a-second-dwelling-on-your-property/VUZT6YLS2TNZD5C7U4M6G2Z6NE/ – 23 May

HALT IN HOUSE PRICE GROWTH IS ALREADY BEING FELT IN PROVINCIAL CENTRES

The Government’s predicted halt in house price growth is already being felt in provincial centres like Whangārei, as investor interest falls away, real estate experts say. Treasury forecasts annual house price growth to peak at 17.3 per cent in the June 2021 quarter, and ease to 0.9 per cent by the June 2022 quarter, as part of its Budget economic outlook. Finance Minister Grant Robertson said it was a “very sharp adjustment in house prices, but a very necessary one”, as the Government comes under pressure to arrest New Zealand’s runaway housing market. https://www.stuff.co.nz/life-style/homed/real-estate/125183120/real-estate-property-price-growth-already-halted-in-whangrei-as-investors-cool – 23 May

TENANTS AWARDED $17451

A family renting in Auckland has been awarded $17,451 by the Tenancy Tribunal after it ruled their landlord failed to fix their mouldy, rotten, rat-damaged home. The Cardon-Smith family rented the Hillsborough house from the landlord Southbridge Trustee Limited from April 2017 to July 2020. But from the start, the family says they had issues with its condition, and subsequently went to the Tenancy Tribunal arguing their landlord failed to maintain the property and failed to fix the issues fast enough. https://www.newshub.co.nz/home/money/2021/05/auckland-renting-family-awarded-17k-from-landlord-over-rats-yellow-water-rotten-floors.html – 10 May

RENTAL MARKET IS STARTING TO SHOW SIGNS OF COOLING

The rental market is starting to show signs of cooling, according to Trade Me’s latest rental price index. The median national median weekly rent remained unchanged for the second consecutive month in April, Trade Me Property sales director Gavin Lloyd said. April’s median rent, of $540 a week, was up 4 per cent on the same time last year, however, price growth had slowed since the Government’s new housing policy was announced, Lloyd said. “In April we also saw demand for rentals fall 17 per cent nationwide when compared to March, with every region experiencing an annual drop in demand apart from Gisborne and West Coast,” he said. https://www.stuff.co.nz/life-style/homed/renting/125089461/government-housing-policy-appears-to-be-slowing-rent-increases–trade-me – 11 Mayhttps://www.interest.co.nz/property/110379/national-median-dwelling-price-declined-18-april-price-movements-were-mixed-around – 13 May

RENT CONTROLS WILL ONLY EXACERBATE PROBLEMS IN THE RENTAL MARKET

Thinktank, the New Zealand Initiative has produced a paper concluding rent controls will only exacerbate problems in the rental market and are a recurring policy mistake. Green Party MP Chlöe Swarbrick says rent controls should be considered to keep rents in check, and Finance Minister Grant Robertson is not ruling them out. In fact, in 2013 when vying for the Labour Party leadership Robertson proposed introducing rent controls, noting that if elected leader he would introduce a private member’s bill to stabilise rents in Christchurch. However, the paper says when there are fewer places to rent available at the going price than there are people who wish to rent properties at that price, and prices cannot adjust, some mechanism other than prices has to ration scarce rental spaces among competing potential tenants. If there are already concerns that landlords prefer tenants who they see as being less risky, with potentially discriminatory consequences, rent controls will worsen an already bad situation.https://www.landlords.co.nz/article/976518531/rent-controls-not-the-answer – 11 May

GOVERNMENT DISMISSES REQUEST TO RECONSIDER REMOVING INTEREST DEDUCTABILITY ON RENTAL PROPERTIES

The First Home Buyers Club, Tenants Protection Canterbury and the NZ Property Investors Federation have presented a letter to Government requesting them to reconsider removing mortgage interest costs on rental properties. Research has shown that 90% of rental property owners will be affected by the tax increase, with each rental property being taxed an extra $4,542 per year. Although the tax increase will force some providers to sell their rental properties, the majority hope to be able to keep them through reluctantly increasing rental prices. All three organisations supported the Government’s goal of helping first home buyers, however they were disappointed not to have been consulted and to have the recommendations in their letter rejected. https://www.nzpif.org.nz/news/view/61161 – 12 May

PEOPLE MAKING GAINS FROM INVESTMENT PROPERTIES CAN NOW BE TAXED UP TO 39 PER CENT ON THEIR PROFITS

People making capital gains on some investment properties can now be taxed up to 39 per cent on their profits, a rate that tax experts say is high by international standards. The Government has introduced a 39 per cent tax rate, from this tax year, for income over $180,000.Profits from residential investment property sales are taxable when a property bought between March 2018 and March 2021 is sold within five years, and when a property bought since March 27 is sold within 10 years. Geof Nightingale, tax partner at PwC, said 39 per cent was a higher rate than would be applied to capital gains made in Australia or the US. The gains are added to a person’s annual income to calculate the tax applicable. Mike Rudd, a director at Baker Tilly Staples Rodway, said most countries would have a fuller capital gains tax but apply it at a reduced rate, rather than combining capital gains with someone’s other income. Nightingale said a trust with a rental property would still only pay 33 per cent and a company only 28 per cent. https://www.stuff.co.nz/business/money/300305269/new-zealands-new-39-capital-gains-tax-its-pretty-harsh – 12 May

RESERVE BANK IS ON THE VERGE OF IMPLEMENTING NEW RULES REQUIRING BANKS TO HOLD MORE CAPITAL

The Reserve Bank is on the verge of implementing new rules requiring banks to hold more capital to make the banking system safer, after drawn-out consultation and Covid delays. The four large banks must increase their total capital ratios from 10.5 per cent to 18 per cent, smaller banks must increase their capital to 16 per cent. So, as well as the blanket increase to capital requirements coming into force next month, banks would also be required to increase their capital ratios still further when lending on residential property. The Reserve Bank presents this as a response to the higher risk if there is a downturn and property prices drop, leaving both homebuyers and banks exposed. But critics are dubious. https://www.stuff.co.nz/business/property/300305431/house-prices-the-littleknown-fourth-tool-in-the-reserve-bank-kit – 12 May

GOVERNMENT MOVING TO CLEAN UP PROBLEMS WITH EMERGENCY HOUSING IN ROTORUA

The Government is moving to clean up the problems with emergency housing in Rotorua, in response to reports of crime and unsafe living conditions. It will directly contract motels for emergency accommodation in the city for group families and children together in particular motels, and provide social support services. The Ministry of Housing and Urban Development (MHUD) will take over responsibility for contracting motels used for emergency housing, and ending the practice of “mixed-use” motels. It already administers a similar system for transitional housing. https://www.tvnz.co.nz/one-news/new-zealand/emergency-housing-no-more-mixed-use-motels-in-rotorua-after-reports-crime-unsafe-conditions – 13 May

EXODUS OF LANDLORDS NOT HAPPENING YET

Landlords’ threats that Government housing policy changes would drive property investors out of the market have been overblown, new data suggests. The Government announced a range of changes at the end of March, designed to tilt the balance of the housing market in favour of first-home buyers. They included an end to interest offsetting, which will increase many investors’ tax bills. Investors warned it could lead to an exodus and rental shortage, but 10 per cent of the more than 22,000 respondents to Stuff’s NowNext survey, which ran for three weeks after the Government announcement, said they were actively considering buying an investment property. While 20.8 per cent of respondents did not own property, the rest owned at least one property and 9.56 per cent of them said they would like to buy an investment. https://www.stuff.co.nz/life-style/homed/real-estate/125026377/exodus-on-hold-survey-reveals-more-investors-plan-to-buy-than-sell – 13 May

RENOVATION THE LATEST HOBBY FOR HOME OWNERS

Home improvement, it seems, is the latest hobby for homeowners everywhere. Whether it’s a new kitchen, better landscaping, or a full-house renovation, we are putting money into our homes – possibly for capital gain, but most probably so we can enjoy a better quality of living. In Stuff’s NowNext survey, which asked how we expect our lives to develop over the next 12 months, 27 per cent of homeowners who responded said they planned to carry out renovations. In comparison, 17 per cent said they were thinking of moving home.https://www.stuff.co.nz/life-style/homed/renovations/124991100/the-rise-and-rise-of-home-improvements-why-were-spending-so-much-on-renovations – 13 May

ANZ HAS DECREASED THE AMOUNT OF RENTAL INCOME INVESTORS CAN USE IN THEIR SERVICING CALCULATIONS FOR A NEW LOAN

ANZ has decreased the amount of rental income investors can use in their servicing calculations for a new loan, but the other big banks have not yet followed suit. From Thursday, May 13, ANZ would take 65 per cent of rental income into consideration when assessing mortgage applications from investors, ANZ spokesman Stefan Herrick said. Prior to Thursday, it was possible for investors to include 75 per cent rental income in their assessments of what they could afford to pay. Herrick said the change was in response to the Government’s move to remove the ability of investors to offset their interest expenses against their rental income when calculating their tax obligations. https://www.stuff.co.nz/life-style/homed/real-estate/125127099/anz-first-to-impose-tighter-lending-criteria-on-investors – 14 May

HON DAVID PARKER PREDICTS HOUSE PRICES WILL NOT BE SPIRALLING OUT OF CONTROL NEXT YEAR

A senior Labour MP has put his reputation for predicting the future on the line, saying this time next year house prices will no longer be spiralling out of control. David Parker told The AM Show on Friday a record number of homes were built in the last 12 months, and more of them in the affordable range than before. “Prices of new housing are being more distributed towards lower-cost housing. We have made that shift.” Parker said rents haven’t been going up faster than usual, and they haven’t. Trade Me data released this week showed rents have gone up 4 percent in the past year. According to Ministry of Business, Innovation and Employment data, in the past 10 years rents have gone up about two-thirds – an annual rate of just over 5 percent. They stalled during the rent hike freeze last year, but bounced back quickly once it was lifted. https://www.newshub.co.nz/home/politics/2021/05/housing-crisis-labour-mp-david-parker-says-recent-price-rises-a-blip-predicts-it-ll-be-another-year-before-they-stop-skyrocketing.html – 14 May

GOVERNMENT DISMISSES NZPIF CONCERNS ABOUT NEW TAX POLICIES

Federation president Andrew King says its concerns over the Government’s new tax policies, which also include extending the bright-line property rule to 10 years, were “dismissed out of hand”. This in spite of backing from The First Home Buyers Club, Tenants Protection Association (Christchurch) and Renters United in Wellington. While kicking the federation’s concerns into touch, the Government has asked officials for advice on rent controls, indicating it realises rental increases are highly likely to stem from the new tax law, says King. If rent controls are introduced, the federation believes it will only confirm removing mortgage interest as a tax deduction is a poor Government decision. https://www.landlords.co.nz/article/976518597/concerns-about-new-tax-dismissed-out-of-hand – 14 May https://www.stuff.co.nz/life-style/homed/real-estate/125148658/property-investors-fail-in-bid-to-overturn-housing-changes – 17 May

TENANT EVICTED FOR ANTI SOCIAL BEHAVIOUR

The Airedale Property Trust took its tenant Kirsten Hooper to the Tenancy Tribunal following the thefts and abusive behaviour towards others living in the apartments in central Auckland’s Eden Terrace. Hooper would often play loud music and party, causing disruption to others in the building, the trust said. Tribunal adjudicator Jane Northwood said breach notices had been served to Hooper twice in the past year for excessive noise, parties being held, allowing non-residents access to the car park, and covering up a smoke detector. “It would be inequitable to refuse to terminate the tenancy,” Northwood said.https://www.stuff.co.nz/life-style/homed/renting/125101837/auckland-tenant-kicked-out-of-rental-after-inviting-friends-over-to-steal-mail – 15 May

UNIT TITLES AMENDMENT BILL URGENTLY NEEDED

Apartment law reform is urgently needed, the NZ Law Society says. The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill addresses long-standing concerns about body corporates, which manage multiple title dwellings like apartments, and the rules surrounding them. Sponsored by National’s housing spokesperson Nicola Willis, it aims to improve the way information is disclosed to prospective buyers, strengthen body corporate governance arrangements and change rules around the funding of long-term infrastructure projects. Given the length of time it had taken for the Bill to get to the Select Committee, the momentum can’t be lost, the Law Society said. The Bill improved several aspects of the existing legislation and, subject to amendments, should be enacted as soon as possible, the society said. https://www.stuff.co.nz/life-style/homed/real-estate/125146433/urgent-action-needed-on-apartment-law-reform-law-society-says – 16 May

BEST PRODUCE-GROWING LAND IS BEING USED FOR HOUSING

New research shows New Zealand is disproportionately developing its best produce-growing land but that research will also help inform the Government exactly how much land is being subdivided. Soil scientist Fiona Curran-Cournane says once New Zealand’s best fertile land is cut up, there’s no going back. “It’s really important that we’re taking stock of what’s happening to these land and soils,” she says.https://www.tvnz.co.nz/one-news/new-zealand/taking-stock-our-soil-housing-developments-threatening-nzs-fertile-land?auto=6254430591001 – 16 May

RISING PRICES A SIGN THAT DAYS OF LOW INFLATION ARE OVER

Fruit, ready-to-eat meals, cars, petrol and rents – rising prices for a few products and services are a sign the days of low inflation are over. New statistics confirm, there’s no such thing as a cheap lunch. The Statistics NZ rental price index, published yesterday, shows new rental rates have risen 1.6 percent in the past 12 months. Factoring in rent rises for existing tenants, that figure leaps to 3.1 percent – continuing an alarming increase in rents over recent years. And a survey shows four out of five landlords say they expect to raise rents even further this year. Sharon Cullwick, the executive officer of the Property Investors Federation, says it’s hard for everyone. “Food’s gone up. Petrol’s gone up 20c in the past three or four weeks. Everything seems to be going up.” https://www.newsroom.co.nz/news/theres-no-such-thing-as-a-cheap-lunch – 19 April

TT ADJUDICATOR DECLARES EVICTION NOTICE INVALID

Tenants whose lease was terminated after they made repeated complaints about the neighbours have had the termination notice overturned by the Tenancy Tribunal. The unnamed tenants live in the middle unit of a property with a shared driveway. The key issues for the tenants in unit 2 were about how their neighbours in unit 3 used the shared driveway and that they parked their cars outside the double garage that separated the two properties.  After multiple emails addressing the complaints the landlord issued a breach notice to each of the tenants. The timing of the notice raised the suspicion that it was motivated, at least in part, by the earlier complaints, adjudicator Ross Armstrong said. Armstrong declared the tenancy notice invalid. https://www.stuff.co.nz/business/124878655/tenants-eviction-halted-by-tenancy-tribunal-because-of-landlords-suspicious-timing – 19April

TENANTS NEED TO BE CAUTIOUS WHEN RENTING ‘AS IS’, ‘WHERE IS’ HOMES

A Christchurch tenant says her mental and physical health has “deteriorated” due to the subpar rental she’s living in, but her complaints have fallen on deaf ears. This house in question is an ‘as is, where is’ property. These homes are common in earthquake-damaged places like Ōtautahi (Christchurch) and Kaikoura. The phrase is a red flag for buyers that what you see is what you get. But if you choose to buy, then rent out the property – from July you’ll still need to comply with the Healthy Homes Standards no matter what condition you bought the house. Well-known property manager Pru Morrall told Fair Go tenants need to be cautious when renting ‘as is, where is’ homes, advising them to check the walls and bricks instead of the charm. https://www.tvnz.co.nz/one-news/new-zealand/should-tenants-do-their-rental-property-isnt-healthy – 19 April

NEW RULES MAY HAVE  UNINTENDED IMPACT ON FIRST HOME BUYERS

In March, the government launched new rules that Prime Minister Jacinda Ardern said would “increase housing supply, relieve pressure on the market, and make it easier for first-home buyers.”  Crucially, new builds are exempt from the doubling of the bright-line test period – a key exclusion that experts say could drive investors towards new properties. Andrew Nicol, managing partner at property investment service Opes Partner, told stuff.co.nz that this exemption, along with other factors, will make new builds a good option for investors. However, property accountant Anthony Appleton-Tattersall told stuff.co.nz that activity from investors could have an unintended impact on first-home buyers – who, because of lower deposit requirements and KiwiSaver incentives, are especially active in the new build market.https://www.nzadviseronline.co.nz/news/new-housing-rules-could-have-unintended-impact-on-firsthome-buyers-276443.aspx – 20 April

TENANTS AWARDED $18,000

A Northland landlord has been ordered to pay his tenants more than $18,000 after allegedly turning up to the property drunk late at night. Marcus Zanetich was taken to the Tenancy Tribunal by his tenants Rhona and Richard Parangi for harassment, exemplary damages, power reimbursement and taking their belongings. The Parangis occupied the property on Spains Rd in Awanui for six months, right next to where Zanetich lived. The tribunal’s decision noted how Zanetich would sometimes frequent the property multiple times per day without notice and on many of those occasions he was drunk. https://www.newshub.co.nz/home/new-zealand/2021/04/northland-landlord-harassed-tenants-and-frequently-visited-property-drunk.html – 21 April

NEW REPORT BY COLLIERS INTERNATIONAL OUTLINES WINNER OF THE RECENT GOVERNMENT’S HOUSING PACKAGE

The new-build residential, build-to-rent projects and commercial property sectors will probably be the big beneficiaries of the Government’s housing package – extending the bright-line test and scrapping mortgage interest deductibility. While there is still a lot of consultation to be done in this area, there are some expected outcomes, says a new report by Colliers International https://www.goodreturns.co.nz/article/976518422/winners-from-new-housing-policies.html – 21 April

RISE IN INTEREST RATES A SCARY PROPOSITION

New rules for the property market mean interest rate increases will now have more of an impact on house prices, ANZ economists say. In a new research report, the ANZ economists say that house price inflation will slow more quickly than it otherwise would and there was a greater risk of house price falls. “There’s now a greater chance that interest rate increases could cause investors to sell up, meaning a faster braking impact on the housing market than previously. We’re anticipating this policy change to have a relatively muted impact in the near term, but it makes mortgage rate increases even scarier for the housing market” They said the game had changed “a lot in a short space of time” for property investors but the structural issues of a lack of housing supply remained. https://www.stuff.co.nz/business/300282483/housing-rules-make-interest-rate-rises-scarier – April 21

BUILD TO RENT AN ALTERNATIVE FORM OF PROPERTY INVESTMENT

In the wake of the Government’s recently announced raft of housing policy measures, Jacinda Ardern and her Cabinet were accused by critics of unfairly putting “mum and dad investors” and other landlords in the firing line. It is a claim Ardern and other ministers have pushed back on – but with official advice floating the possibility of rising rents due to the changes, they are swiftly looking elsewhere for alternative models to fill the gap in the market. In an interview with Newsroom last week, Housing Minister Megan Woods specifically cited build-to-rent developments as the type of housing investment the Government was keen for Kiwis to pursue. Although the build-to-rent sector is not well-developed in New Zealand, there are some developments already in place. https://www.stuff.co.nz/national/300282479/building-a-case-for-buildtorent-developments – 21 April      https://www.newsroom.co.nz/pro/building-a-case-for-build-to-rent-developments – 21 April https://www.stuff.co.nz/business/property/124908485/build-to-rent–a-modern-innovative-way-to-invest – 23 April

GOVERNMENT NOW HAS MORE POWER IN RESERVE BANK DECISION MAKING

Reserve Bank inaction on the housing market has led the Government to introduce a new process that gives the Finance Minister more power in its decision-making, one economist says.   The Government announced a package of measures on Thursday, including guaranteeing deposits up to $100,000 per person. The reforms also include a new process for setting lending restrictions, like the loan-to-value ratios that limit the amount of low-deposit lending that can be done. “This will give the Minister of Finance a role in determining which types of lending the Reserve Bank is able to directly restrict. The Reserve Bank will then have full discretion to decide which instrument is best suited to use and how the restrictions are applied,” Grant Robertson said. https://www.stuff.co.nz/business/money/300284164/slow-reserve-bank-forces-governments-hand-economist-says – 22 April

RENTS INCREASE BUT NOT CLEAR IF THIS IS BECAUSE OF RECENT TAX CHANGES FOR PROPERTY INVESTORS

New Zealand rents in March grew by their largest percentage in two and a half years, according to online auction website Trade Me. But the website said the jury was out on whether the demand was being driven by recent tax changes for property investors. Median rents across the country rose to $540 per week, up 6 per cent on the previous year and matching a record high in January. “This is the first time we’ve seen a year-on-year percentage increase of 6 per cent since October 2018,” Trade Me Property sales director Gavin Lloyd said. Demand was clearly outpacing supply in many areas, but Lloyd said it was not yet clear whether the Government’s housing policy changes in March were having an effect. “Some economists are predicting rents will rise as a result of changes to property investment rules, but it’s still too early to see if this is the case, and we may even see rents cool off in the coming months as we enter the quieter winter period.” https://www.stuff.co.nz/business/300283395/rents-jump-on-strong-demand-but-too-early-to-blame-property-rule-changes – 22 April

NO SIMPLE ANSWER TO THE QUESTION CAN A LANDLORD TAKE THE FRUIT OFF TREES

Prof Grinlinton is urging landlords and renters to have an upfront discussion about their expectations – such as the acceptability of fruit-picking – at the beginning of any tenancy. “If the harvesting of fruit is something that is important to the landlord or the tenant, then they should think about that at the start of the lease term,” he said. “They should make sure there is something in the lease or the actual tenancy agreement that covers that issue and says who has the right to harvest the fruit.” https://www.newshub.co.nz/home/new-zealand/2021/04/law-expert-explains-if-your-landlord-can-take-fruit-off-trees-in-your-yard.html – 23 April

EXEMPLARY DAMAGES OF $600 AWARDED TO TENANT

Exemplary damages of $600 have been awarded against a landlord who tried to evict tenants after a row over ceiling insulation and other property repairs. The inference the tribunal drew from the facts is the tenants’ 14-day notice was not welcomed by the landlord. And that at the time the termination notice was given, the issues raised by the tenant had not been fully responded to or remedied by the landlord. The adjudicator found it difficult to escape the conclusion the landlord was motivated, at least in part, by the exercise of the tenants’ rights. The termination was found to have met the statutory definition of a retaliatory notice for which exemplary damages could be awarded.  https://www.landlords.co.nz/article/976518489/eviction-notice-oversteps-tenants-rights-results-in-damages – 23 April

TENANT AWARDED $38,000

A pair of Kiwi landlords have been ordered to pay a tenant tens of thousands of dollars for failing to solve a major pest infestation, fix a collapsed wall or empty a pungent septic tank at their “barely habitable” rental. The Tenancy Tribunal told Victor and Lilly Yeoh to hand over more than $38,000 for ignoring an order to carry out remedial work on the damp, uninsulated house, the whereabouts of which are suppressed. The tenant first raised concerns about the state of the property not long after moving in. After getting essential repairs done early on with the Yeohs’ guidance, she claims they soon stopped engaging with her on further maintenance issues. https://www.newshub.co.nz/home/new-zealand/2021/04/landlords-ordered-to-pay-38k-after-man-bitten-by-rat-wall-collapses-in-dangerous-pest-infested-house.html – 23 April

END OF RECORD LOW INTEREST RATE ERA IS LOOMING ACCORDING TO ECONOMISTS

The end of the record low interest rate era is looming, but borrowers shouldn’t worry about being hit with a sudden, steep jump in costs. ASB increased its interest rates on three- to five-year home loans on Friday, as expectations of a global economic recovery strengthened. The move came after a long period of record low interest rates. This pre-dated Covid but was heightened by the Reserve Bank’s Covid response, including its quantitative easing programme and cutting of the official cash rate (OCR) to 0.25 per cent.Following ASB’s move, economists said shorter-term fixed rates of one- and two-years were unlikely to rise this year, but it has raised questions about what the future holds for interest rates and for borrowers.https://www.stuff.co.nz/business/money/124942350/the-end-of-record-low-interest-rates-is-near – 24 April

LANDLORDS NEED TO SHOW THAT THEY UNDERSTAND THE MORAL OBLIGATIONS ON THEM

OPINION It’s true that the past couple of months haven’t been great for those who own the country’s private rental stock. But the response from landlords, or at least those who vocally represent them, has been outrageous. There’s an inherent power imbalance in the housing market. Landlords need to show that they understand the moral obligations on them and that they are willing to engage on whether the current rental market model is serving vulnerable people as it should. So far, that awareness seems to be sorely lacking. And I say that as a property investor – albeit one who has not contemplated a rent increase.https://www.stuff.co.nz/business/opinion-analysis/300284756/landlords-missed-a-chance-to-change-nzs-mind – 25 April

DU VAL GROUP CONFIRMS BANKING SUPPORT OF THE BUILD TO RENT FUND

On Friday 23rd April 2021, the Du Val Group confirmed banking support for the Build To Rent fund of 17.3 million dollars with one of the locally represented international banks following extensive discussions with a short list of providers. The Du Val group’s vision has always been to create New Zealand’s preeminent institutional grade Build To Rent fund. The fund will provide secure long term and sustainable rental income streams that ensures predictable returns for investors even through challenging economic periods. It is envisaged the fund will play a significant role both economically and with positive societal benefits in the community. Their Mission is to bring to market a series of Build To Rent investment opportunities, which helps establish this emerging asset class in New Zealand, meets people’s housing needs, and supports economic growth by enabling people greater choice, flexibility and convenience for them to respond to changing personal and family circumstances including moving to gain better accessibility and proximity to employment opportunities. https://www.scoop.co.nz/stories/BU2104/S00378/announcement-of-multi-million-dollar-financial-partnership.htm – 26 April

A NEW WEBSITE FOR STORIES ABOUT THE LIKELY IMPACTS OF NEW INTEREST DEDUCTIBILITY RULES

“A flood of stories about the likely impacts of new interest deductibility rules has necessitated a new website to hear them all,” says ACT Housing spokesperson Brooke van Velden. “Labour’s interest deductibility changes represent a stealth tax on Mum and Dad investors, 80 percent of whom own just one rental. The changes will squeeze the middle class and hurt renters. “ACT is asking New Zealand’s 120,000 residential property investors to visit act.org.nz/housingstories and share what the new rules will mean for them and their tenants. https://www.scoop.co.nz/stories/PO2104/S00076/new-website-to-hear-housing-stories.htm – 12 April

RENT INCREASES MAKE IT EVEN HARDER TO SAVE A DEPOSIT TO PURCHASE A HOUSE

A single mum whose ultimate goal is to buy a home says rent rises make saving a deposit near impossible. Her comments follow a raft of housing changes introduced by the Government on March 23 in a bid to help first-home buyers. For tenant and single mum-of-two Shannon Rees, the housing changes aren’t likely to get her out of the rent trap any faster. If more landlords hike rents in response to investment property cost increases, she suspects many renters, particularly single mothers like herself, will struggle to put food on the table, let alone save. A NZ Property Investors Federation March/April survey of 1719 property investors showed 70.3 percent weren’t charging tenants what they considered to be full market rent. But to cope with the increase in tax, over three-quarters (76.8 percent) would either “increase” or “probably increase” rent prices. https://www.newshub.co.nz/home/money/2021/04/near-impossible-single-mum-says-rent-rise-will-stall-progress-saving-for-a-first-home-deposit.html – 12 April

FRUSTRATION OVER THE NEW HEALTHY HOMES HEATING STANDARD

Frustration over the new Healthy Homes heating standard is reaching boiling point, with one supplier saying it discounts any heating technology other than heat pumps and woodburners. Frustration over the new Healthy Homes heating standard is reaching boiling point, with one supplier saying it discounts any heating technology other than heat pumps and woodburners. Property Investors Federation executive officer Sharon Cullwick agreed that government officials were unwilling to listen to alternative suggestions about the heating standard. She said the heating measurement was set around the temperature on the coldest night of the year rather than the median temperature for an area and the result was that huge heat pumps had to be installed to meet the standard. It was a huge problem because there was no flexibility on the issue, despite the concerns expressed by landlords and groups like air conditioning specialists, Cullwick said. But Otago University public health research fellow Lucy Telfar-Barnard said that New Zealanders were not used to heating their homes adequately. That meant people were often surprised by the amount of heating, and the size of the heat pumps, they were required to install in a rental property.https://www.stuff.co.nz/life-style/homed/renting/124816105/are-heat-pumps-really-the-best-option-under-the-healthy-homes-standard – 13 April

RENTERS UNITED CAMPAIGN TO HIGHLIGHT THE COST OF ESCALATING RENTS IS NOT HELPFUL

A Renters United campaign, which highlights the cost of escalating rents for tenants, cheapens ordinary Kiwis’ struggles with skyrocketing living costs, landlord advocates say. Renters United advocates for the introduction of rent controls and the group’s latest campaign encourages tenants who have experienced a rent increase in the last year to put the details into an online letter to the Government. Along with the letter, this generated a rent “bill”, which Renters United would collect and then deliver to Associate Housing Minister Poto Williams. Renters United spokesperson Robert Whitaker said the goal was to show that successive governments had done nothing about steeply rising rents and it was costing tenants and taxpayers a huge amount of money. But the Auckland Property Investors Association said the “fake rent bills cheapen the real struggle ordinary Kiwis face amidst skyrocketing living costs”.https://www.stuff.co.nz/life-style/homed/renting/124824432/fake-rent-bills-campaign-irks-landlords – 14 April

RENT CONTROLS MAKE EVERYONE WORSE OFF

If we really want to help the housing situation in New Zealand, instead of arguing for rent controls, we should actively work to increase the supply of housing, which means supporting proposals for more dense housing in historically leafy, open suburbs. Some students might consider studying in alternative but comparable universities where rents are much lower. As Stuff recently reported “the average weekly rent for a flat bedroom in Ilam (in Christchurch), $143, is almost half what Wellington students pay.” The costs and risks associated with rent controls, however, should give us pause when considering their use. Overall, what appears as a simple solution to high rents ends up making everyone worse off. http://www.gisborneherald.co.nz/column/opinion/20210415/the-crater-effect-of-rent-controls – 15 April https://www.indiannewslink.co.nz/rent-controls-run-the-risk-of-corruption-and-opacity/ – 15 April

MAJORITY OF PROPERTY INVESTORS ARE JUST LIKE EVERYONE ELSE

Squirrel founder John Bolton said the prevailing image of property investors is that they are the “super rich” of the country, though in reality, few of the very wealthy purchase residential property. He said the new tax rules will have the hardest impact on “mum and dad” investors who rely on their properties to make savings, and that, ultimately, the value of those assets is also likely to fall. The reality is that really wealthy people don’t buy residential property – they own the Auckland CBD, commercial property, land banks and companies. The last thing they want to do is deal with tenants. So, the bulk of residential property investors are just regular, hardworking mums and dads who want some level of financial independence.” Bolton said that there are from 200,000 to 300,000 property investors in New Zealand, and the majority of them “look like everyone else” – careful with their finances, and keen to save as much as possible. https://www.nzadviseronline.co.nz/breaking-news/the-urban-myth-surrounding-new-zealands-property-investors-276374.aspx – 15 April

TENANT AWARDED $2,000 FOR LACK OF INSULATION, HEATING AND LOSS OF BATHROOM FOR TWO MONTHS

A tenant has been awarded more than $2000 after she was forced to share a bed with her daughter as a way to keep warm in an uninsulated property. Tenancy Tribunal adjudicator Nicole Walker said the landlord seemed “unaware and unconcerned” by the fact the tenancy agreement did not include an insulation statement. Walker ordered JC Property Holdings Ltd to pay Paulo $2223.93 for failing to provide locks, a lack of heating, no insulation or insulation statement, not lodging bond, and the loss of the bathrooms for two months.https://www.stuff.co.nz/life-style/homed/renting/124820264/auckland-rental-home-so-cold-tenant-and-daughter-had-to-share-a-bed-for-warmth- 15 April https://www.rnz.co.nz/news/national/440716/shortage-of-rentals-narrows-options-for-tenants-advocate – 18 April

WHAT DOES AFFORDABLE RENT MEAN?

Whatever the politics, it seems all agree: getting into a home has become unaffordable, But what does “affordable” mean? Clearly, very different things to different people. That’s why, as part of the $47 million government-funded National Science Challenge into Building Better Homes, Towns and Cities, economists have been tasked with discovering the magic number. What is an affordable price for a first home? What is an affordable rent? So investors are just as motivated as renters-cum-homebuyers to discover what the magic number is. Sharon Cullwick, executive officer of the NZ Property Investors Federation, is wary of predicting if and when other landlords will really raise rents, lest she be accused of trying to instigate cartel behaviour under new criminal provisions that came into force this month. But she does believe investors will wait until the impact of the interest payments are really starting to impact on them. The reduction in interest deductibility will be phased in from October. “We need. To. Build. Houses.” That’s the ultimate answer, in Sharon Cullwick’s view, and most other observers and market participants, too. But that doesn’t provide a roof over children’s heads today. So we need to make housing more affordable now. https://www.newsroom.co.nz/affordable-housing-the-magic-number – 15 April

AFFORDABLE RENTALS ‘TOP OF MIND’ FOR LABOUR

With concern that the overall package of reforms could benefit aspiring home buyers but leave renters further behind than ever, Woods insists affordable rentals were “top of mind” when the policies were being developed. “One of the core beliefs of us as a government over the last four years – well, nearly four years – has been that New Zealanders need more safe, dry homes, regardless of tenure. “It’s why we’ve embarked on the reform around residential tenancies, it’s why we’re wanting to make sure that regardless of whether you own or rent your home, that you’ve got a secure place you can feel secure in and your kids can grow up well in.” Whether or not Woods can deliver on that ambition may determine how her eventual successor feels about taking the job on. https://www.stuff.co.nz/national/politics/300278436/megan-woods-on-housing-the-market-hasnt-delivered – 16 April

LANDLORD ORDERED TO PAY $670.44 EVEN THOUGH DELAYS IN REPAIRS WERE NOT INTENTIONAL

A landlord who left tenants with broken toilets for more than three months has been ordered to pay $670 for delays in repairs to the property. While the delays were not intentional, that didn’t mean the tenants were not entitled to compensation. The landlord was ordered to pay $670.44 immediately, including a $20 contribution towards water rates, repair the blinds and provide a garage door opener.https://www.stuff.co.nz/business/124860812/landlord-ordered-to-pay-after-taking-three-months-to-fix-toilets – 16 April

NEW INVESTOR-TARGETED TAX CHANGES INCENTIVISES INVESTORS TO BUY NEW PROPERTIES

The investor-targeted tax changes in the package, which are the removal of interest deductibility and the extension of the bright line test to 10 years, have exemptions for new builds. CoreLogic senior property economist Kelvin Davidson says this incentivises investors to buy new properties, rather than existing ones, and will open up the new build market further. Assuming new builds are exempt from the tax changes, they will clearly be a better option for investors in the future, property investment coach Andrew Nicol, from Opes Partners, says. This increased desirability of new builds for investors could have an unintended negative impact on first-home buyers, who are particularly strong players in the new build market. https://www.stuff.co.nz/life-style/homed/real-estate/124810343/govt-changes-likely-to-drive-investors-to-new-properties – 18 April

SMALL FINES CRITICISED BY RENTERS UNITED

Renters United said often landlords found to have flouted tenancy laws are only fined a small amount, which does little to discourage bad behaviour. The criticism follows a landlord being fined $3500 after allowing months of substandard insulation and maintenance at the property that he rented to tenants. It was so cold a mother and her daughter shared the same bed to keep warm. Renters United spokesperson for Wellington tenants Ashok Jacob said inadequate fines are part of a broken enforcement system. https://www.rnz.co.nz/news/national/440716/shortage-of-rentals-narrows-options-for-tenants-advocate – 18 April

 

 

PRIVACY COMMISSIONER TO LOOK AT INFORMATION BEING COLLECTED BY LANDLORDS FROM PROSPECTIVE TENANTS

The Privacy Commissioner has launched a probe into the large amounts of information being collected by landlords from prospective tenants as they search for a rental property. The meetings with stakeholder representatives will help inform Edwards’ office of the collection, use, and disclosure of personal information in the rental sector and of compliance issues under the Privacy Act. Edwards said landlords are entitled to collect personal information where it is necessary for their “lawful purpose of selecting a tenant” and may only disclose that information in a way that is “consistent with that purpose”. Landlords and property managers also need to be transparent about why they are collecting certain information and how it will be used. It is their obligation to ensure that any personal information they hold is stored and handled securely.https://www.newshub.co.nz/home/new-zealand/2021/03/privacy-commissioner-launches-probe-into-landlords-breaching-prospective-tenants-privacy.html – 15 March

NZPIF WILL BE TALKING TO THE PRIVACY COMMISSIONER

NZ Property Investor Federation executive officer Sharon Cullwick said she had not heard of many landlords who were acquiring, or trying to acquire, more information than they should be. Most of their members used the tenancy application form the NZPIF provided, or the one that was provided on the Tenancy Services website and both these forms adhered to privacy guidelines. Cullwick said she agreed with the Privacy Commissioner that the collection, retention, and disclosure of personal information on tenants must be open and fair. Cullwick confirmed the NZPIF would be talking to the Privacy Commissioner over the next couple of weeks. “We want to see fairness for both landlords and tenants and are looking forward to engaging with the Privacy Commissioner.” https://www.stuff.co.nz/life-style/homed/renting/124542166/rental-sector-privacy-investigation-ramps-up – 15 March

PRIVACY COMMISSIONER SHOULD DO A WELL RESEARCHED ACADEMIC STUDY OF TENANTS TO FIND OUT WHAT THEIR EXPERIENCE IS.

Privacy commissioner John Edwards wants to hear from tenants if they think their landlord or property manager has asked for more personal information than warranted under the Privacy Act. And if they have ever been put on a blacklist. Property Investors Federation president Andrew King says the Privacy Commission’s probe is reasonable. But it could give the public the perception the practices are widespread across the whole sector and this is wrong. “A perception is often worse than the reality. “Tenants who haven’t had a problem with their landlord or property manager won’t speak up. It will be only those who have grievances and that gives the impression all landlords are demanding too much private information when we don’t believe they are.” Federation executive officer Sharon Cullwick says there was a private Facebook group that had a secret blacklist of tenants. “It was a closed group but the privacy commissioner shut it down and I haven’t heard of any other such lists.” King says the Privacy Commission could do better research than just hearing anecdotal evidence from tenants. “It has access to information from the Tenancy Tribunal on bonds and could do a well-researched academic survey of tenants to find out what their actual experiences have been.” As the president of a federation that has a catchment of about 12,000 property investors, King says his surveys of members doesn’t indicate any private landlords asking for bank statements and they don’t agree with the practice. Cullwick says there are other ways landlords can establish whether tenants can afford the rent rather than asking for bank statements. “Landlords can ask what a tenant’s monthly income is, what rent they were paying at their previous flat and if they lived with other people. They can then talk to the previous landlord and simply ask if they would have the tenant back. It soon establishes the reasons for the tenancy being relinquished.”

King says by far the biggest problem facing landlords is rent arrears. “It is overwhelmingly the most common reason for tenancy tribunal disputes. “The Government should be looking at the issue, particularly as people are often spending money and not paying their rent.” While he has no idea of the ultimate solution, King says landlords should be able to charge interest on rent arrears and this might make tenants realise they will be penalised if they don’t pay their rent. https://www.goodreturns.co.nz/article/976518291/better-research-wanted-for-privacy-probe-into-landlords.html – 16 March

CHANGES TO RTA MAKE IT HARDER TO HOUSE PEOPLE

One of the changes to the Residential Tenancies Act has been the removing the 90-day no-cause termination and the inability to give a tenant a trial period to assess their suitability. “This makes it harder for a private landlord to ‘give someone a go’, says Sharon Cullwick, executive officer of the NZ Property Investors’ Federation (NZPIF) Before the 11th February 2021 changes, a landlord may have been willing to put a marginal or borderline tenant in to a rental property. This could have been achieved by giving the tenant a 90-day fixed-term agreement. If everything went well that could then have been rolled over in to a periodic tenancy or another fixed term agreement of a more extended period. Now a 90-day fixed-term trial to ascertain the desirability of a tenant is not permitted. This change by the Government has created many unintended consequences. http://www.voxy.co.nz/national/5/383497 – 15 March

TARGETING OF INTEREST-ONLY LOANS SUGGESTED TO CURB DEMAND FOR HOUSING

Nationwide, 98.4 percent of residential properties sold between October 1 and December 31 went for more than what the buyer paid – the highest figure CoreLogic has ever reported, and the first time it’s been above 98 percent since 2007. “It’s not surprising because we know prices have been rising for a pretty steady period of time – go back 10 or 15 years really, the New Zealand housing market has been on an upswing,” senior property economist Kelvin Davidson told Newshub.  Davidson said it was likely profits would remain strong in the first half of this year, but start to be reined in later on.

“In addition to loan-to-value ratios being reintroduced, the Reserve Bank now also has to explicitly report on how its official cash rate decisions, which target inflation and employment, might impact housing prices. The Government also wants the Reserve Bank to look further at possibly restricting interest-only lending for investors and also how debt to income caps for mortgages might work.

Economist Cameron Bagrie of Bagrie Economics said targeting interest-only loans could help curb demand and make it fairer to owner-occupiers and first-home buyers. “In excess of 40 percent of lending into the residential investment market is interest-only,” he told The AM Show on Tuesday. “[Investors are] not paying principal. If we change that dynamic so they’ve got to pay principal and interest, you are going to change the cashflow on residential investment literally overnight. They’re not going to be able to chase the yields down as low, they’re not going to force the valuations up.

https://www.newshub.co.nz/home/money/2021/03/housing-crisis-record-profits-reaped-by-property-owners-and-investors-revealed.html  -16 March

https://www.newshub.co.nz/home/money/2021/03/housing-crisis-economist-says-curbs-on-interest-only-lending-for-investors-could-be-partial-solution-to-rocketing-house-prices.html – 16 March:  https://www.stuff.co.nz/national/politics/300253999/housing-crisis-greens-push-to-end-equityonly-mortgage-deposits-in-bid-to-lower-prices – 17 March

KIWIBANK SUGGESTS OTHER MEASURES TO TARGET INVESTORS

The Kiwibank economists say the return of LVRs, with banks effectively applying them from December last year, should take some heat out of the market. “However, LVRs may not be having as much of an impact on investor activity as previously thought,” they say. “The recent sharp surge in house prices has helped to push up investors’ equity on existing portfolios. Equity that can be used as a deposit for additional borrowing.” The economists say “other measures” are needed to tame the housing market. “…We await to see if the Government gives the RBNZ go ahead to use debt-to-income restrictions on investor related mortgage lending.” https://www.interest.co.nz/property/109538/kiwibank-economists-say-they-have-drastically-revised-their-projected-near-term – 16 March

OPINION: GOVERNMENT’S WELL MEANING INTENTIONS ARE MAKING THE HOUSING SITUATION WORSE

This Government was elected to make housing affordable. Over three years later, the median house price has risen astronomically. Reports show housing in New Zealand is not only unaffordable by international standards and getting worse, but also the reason why: We are not building enough homes. This shortage and price inflation had to filter through to the rental market. Here’s a simple, practical example of why the Government’s policies haven’t helped: heat pumps. A new law requires the installation of larger heat pumps in many rentals. Bigger sounds better and warmer except that larger heat pumps are more costly to run and, as a result, they’re less likely to be turned on to heat rooms. Especially when there’s just enough money coming in to pay rent and feed the kids. That’s not to mention the initial cost, but if the landlord doesn’t install an oversized heat pump, they can’t rent it out. It’s the law. This is just one small example of how the Government, with the best will in the world, makes things worse. Ask any landlord and their eyes will sink as they list the costs the Government’s added recently. https://www.nzherald.co.nz/nz/brooke-van-velden-families-cant-live-in-warm-intentions-from-jacinda-arderns-government/5D644MCJNKONC4HJC7IJIWAAGM/?utm_source=newsletter&utm_medium=nzh_email&utm_campaign=Premium_News_Briefing_Newsletter&uuid=882934c27f684b948a476fd786fd803d – 17 March

GREEN PARTY UNVEILS HOUSING PLAN

The Green Party has unveiled its plan to stop the “runaway housing crisis” as the Government gears up to announce the first of its much-anticipated steps to address the overheated market. But the plan does not come from Marama Davidson – who is an Associate Minister of Housing (Homelessness). Rather, the party’s finance spokeswoman Julie Anne Genter has outlined what the Greens want to be done in the housing space, which is:

• Removing the five-year cap for the bright-line test
• Ending interest-only mortgages
• Implement debt-to-income ratios, especially for property investors
• Requiring cash deposits for investment properties
• The Government to spend more money on income support schemes
• Kāinga Ora to lead a large-scale urban redevelopment and home buying programme

The Greens plan comes as house prices across the country continue to rise sharply. https://www.nzherald.co.nz/nz/the-green-party-urges-bold-action-on-housing-ahead-of-governments-first-housing-package/62GOTNMJQN5CVH5VYBY3UOQSK4/ – 17 March

CORLOGIC PREDICTS CHANGES LIKELY FOR PROPERTY INVESTORS

Corelogic this week released its latest Pain and Gain report, which outlines the capital gains that sellers are making on property around the country. Owner-occupiers sold for a profit slightly more often than investors in the quarter, at 98.7 per cent of owner-occupier sales and 98.2 per cent of investors. Davidson said, while most owner-occupiers “recycled” any gains they made into their next purchase, unless they were downsizing, investors had the option of cashing up. But Davidson said it felt like things would change in the second half of this year. It was looking increasingly likely that there would be restrictions put on investors’ interest-only lending, he said. Many who had bought recently were small-scale investors with only one or two investment properties, he said. They were the type of investors who were more likely to be affected by changes such as the Green Party’s suggestion that investors be required to have cash as part of their deposit, not just equity in other properties.  https://www.stuff.co.nz/life-style/homed/real-estate/300254963/landlords-selling-properties-make-median-300000-per-sale – 17 March

MOMENTUM GROWING FOR CHANGE IN REGULATIONS GOVERNING PROPERTY MARKET

The research house has released new data that shows that, for the second month in a row, mortgaged investors’ share of property purchases was at a record high in February, at 29 per cent of the market. But first-home buyers, at 22 per cent of the market, had dropped to a level not seen since early 2018.  Economist Kelvin Davidson said people who owned a small number of rental properties were driving the investor activity. But Davidson said rule changes enacted over the coming months could cause the market to soften in the second half of this year. “Overall, investors are clearly still a significant force in the market, but things are about to get harder for them. On top of higher deposit requirements, there’s a looming possibility of debt-to-income ratio caps for investor loans and/or restrictions on interest-only lending.”  Davidson said momentum seemed to be building for a change in the regulations governing the property market. “The game seems to be changing for investors.” https://www.stuff.co.nz/life-style/homed/real-estate/300255545/property-investors-record-run-could-soon-end-corelogic – 18 March

NEW SECOND TIER LENDER FOR DEVELOPERS

Second tier lender Pearlfisher Capital has launched a new first mortgage fund for lending to property developers. The non-bank lender says its fund is for developers who are finding it more difficult to secure funding from banks. Pearlfisher director Tony Abraham says the fund gives borrowers an opportunity to access non-bank funding for well-considered projects that are at the low to medium end of the risk spectrum. And which meet Pearlfisher’s investment criteria. Abraham says developers will need to have consents and a construction contract in place and have pre-sold a percentage of the development before funding is considered. https://www.goodreturns.co.nz/article/976518300/fund-opens-housing-development-options.html – 18 March

THE GOVERNMENT’S EMERGENCY MOTEL BILL IS GROWING

Newshub can reveal the multimillion-dollar extent of the Government’s emergency motel bill and just how much Kiwis are forking out to some of the top earners. One motel made $6 million off the Government last year, charging much more for rooms than it normally would. In the three months to December 2017, the Government spent $6.6 million on motels. By the following year it more than tripled and just keeps growing. The number one earner, MCentral Apartments in Manukau, was paid $6 million – an average of $444 a night. It’s advertising rooms to the public starting at $170. “We have to charge more than we charge corporates because there’s more damage to deal with, there’s more hassle to deal with, it’s just more difficult,” said a director who spoke on the condition he wasn’t named. “It’s part of the sort of ‘danger money’ that we factor into it.” It’s danger money or no deal. “We wouldn’t house them, we wouldn’t bother, it just wouldn’t be worth our time because of the amount of hassle,” he said. “Some accommodation providers just refuse to deal with them at all.” https://www.newshub.co.nz/home/politics/2021/03/revealed-the-multimillion-dollar-cost-of-the-government-s-emergency-motel-policy.html – 18 March  http://community.scoop.co.nz/2021/03/emergency-motels-have-taxpayers-over-a-barrel/ – 19 March

SUPPLY OF HEAT PUMPS STARTING TO DRY UP

The supply of heat pumps could be starting to dry up just as demand from landlords accelerates due to a looming Healthy Homes standards deadline. Landlord representatives were also concerned the situation had the potential to become difficult for some people. Auckland Property Investors Association president Kristin Sutherland said they were hearing there was a shortage of cheaper heat pumps, but most expensive ones were readily available. NZ Property Investors Federation executive officer Sharon Cullwick said they hadn’t yet received complaints from local investor groups about their members having problems getting heat pumps, but she had heard supply was tight. Advice from all those Stuff spoke to was consistent: landlords should act now to get a heat pump order locked in, but be prepared to wait for the stock to arrive. https://www.stuff.co.nz/life-style/homed/real-estate/124583078/heat-pump-crunch-as-healthy-homes-deadline-looms – 19 March

TENANCY SERVICES SWAMPED WITH ENQUIRIES

Calls to Tenancy Services have jumped by more than a third in the past month compared to late last year. The surge is partly down to a seasonal peak in fixed-term tenancies ending but also changes to rental laws, including no-cause evictions, coming into effect last month, Tenancy Services spokesperson Steve Watson said. Landlords are also contacting the services for advice in the lead-up to the Healthy Home Standards deadline approaching in July, he said. Tenancy Services said staff are aware of delays and are looking to improve its services. https://www.nzherald.co.nz/business/tenancy-law-changes-renter-and-landlord-queries-swamp-tenancy-services/XJ7MUPLE34YD3H2OBAPLM2UVJU/ – 19 March

LEGAL ISSUES AROUND AN EARLY TERMINATION OF A TENANCY

A Wellington tenant’s financial difficulties during the Covid-19 lockdowns has led to the Tenancy Tribunal considering legal issues around early lease terminations. The tribunal accepted the tenant had done all she could to expedite matters, while the landlord and manager did little. The tribunal says the substantial merits and justice of the case meant the tenant’s liability for rent is limited to the time she vacated the premises and commenced her new tenancy on February 17, 2021.  https://www.goodreturns.co.nz/article/976518301/tenant-s-hardship-brings-up-legal-issues.html – 19 March

TENANT WITH HISTORY OF DUPING VULNERABLE HOME OWNERS HAS BEEN ORDERED TO LEAVE A PROPERTY

A Northland man described as the ‘tenant from hell’ with a history of duping vulnerable home owners has been pinged by the Tenancy Tribunal. The ruling comes as a relief to those in the property market following multiple changes to the tenancy law taking some power away from landlords. Raymond Bird has now left the property many months after he said he needed two months’ worth of temporary accommodation, after an order from the Tenancy Tribunal. Bird was also before the Tenancy Tribunal in 2018, refusing to move from a property that had sold despite being issued a 90-day notice. Until February 11, landlords were able to issue a 90-day notice to get tenants out without stipulating a reason – but that’s no longer the case. The Property Investors Association say some landlords leapt in to issue notices before the February deadline.https://www.tvnz.co.nz/one-news/new-zealand/northland-tenant-hell-finally-moves-rental-but-appealing-14-000-damages-order20 March

 

GOOD TIME TO BE A DEVELOPER BUT RISKS REMAIN

Developers wanting to build affordable housing used to be public enemy number one in most neighbourhoods, but that’s changed now that the housing shortage is viewed as a national emergency, according to New Zealand Mortgages & Securities (NZMS) director James Kellow. “Councils are a lot more confident saying yes, helped by politicians and the public being more onboard. So developers promising attractive and integrated projects are positively working with council staff and communities to deliver some great results. “With construction booming, building consents at record levels and a visible surge in the number of multi-unit dwelling developments underway, particularly in Auckland, it does look like a good time for developers. It also looks like lots of average Kiwis are having a go at being a developer themselves. NZ Property Investor Federation executive officer Sharon Cullwick says many more investors than usual have development projects in the works. However, professional developers themselves are urging novice developers to proceed with caution as the business is complex and comes with hidden risks that have the potential to bankrupt. That has always been the case, and it has not changed just because some aspects of the current climate are helpful to the development process, Auckland developer David Whitburn says. https://www.stuff.co.nz/business/property/124514725/is-2021-the-best-time-in-a-generation-to-be-a-property-developer – 21 March

SLEEPOUT RULED AS AN UNLAWFUL BUILDING BY TENANCY TRIBUNAL

A south Auckland tenant has been awarded $30,000 from the tenancy tribunal after his family spent three years living in a sleepout with no insulation or sufficient ventilation. Tribunal adjudicator Jack Tam agreed the property was unlawful because it had only been consented as a “games room” or additional sleepout. “Due to the landlord’s failure to comply with requirements in respect of buildings, health, and safety, and the nature of the dwelling, it is clear to me that the unit should not have been let out to anyone,” Tam said. “The only redeeming feature is that Mr Brar and his family had a roof over their head in the unit for three years when they paid a modest sum of $210.00 rent per week from 18 November 2017 to 7 February 2020 and $220.00 rent per week from 8 February 2020 to 20 September 2020.” https://www.stuff.co.nz/life-style/homed/renting/124040098/tenant-awarded-30k-after-living-with-his-family-in-uninsulated-sleepout – 24 January

NEW RTA LAW CHANGES WILL MEAN SOME TENANTS WILL FIND IT HARDER TO GET A RENTAL

Northland residents struggling to find rental accommodation believe landlords are turfing them out ahead of new tenancy laws that come into effect next month. One Whangārei resident recently received 90 days’ notice from her landlord after living in the house for 10 years. She has until April 12 to find a place, but the soaring cost of rentals and a lack of available houses is making it difficult. The heavy machine operator, who doesn’t want to be named, believes laws that come into effect on February 11 could be to blame. Her neighbour also recently received notice and she’s spoken with several others in the same boat. The changes to the Residential Tenancies Agreement Act – the biggest tenancy law overhaul in 35 years – were passed by the previous coalition Government in a bid to strengthen the rights of renters. The New Zealand Property Investors’ Federation has 19 property investor associations throughout the country including one in Northland. Chief executive Sharon Cullwick said the main changes are around how difficult it will be for landlords to remove tenants. This means landlords will be “very choosy” about who they put into the property, she said. “Marginal tenants” – who may be out of work, solo parents, young people and those with a bad credit history – will find it really tough, she said. This could lead to an increase in the need for emergency and state housing. “They will find it very hard to find a rental,” Cullwick said. “It will make it really hard for these people. “Marginal tenants won’t be able to find a place to rent because no landlord will want to take the risk because they’ll find it harder to remove them from the property.” But Cullwick said the law change won’t necessarily put people off becoming landlords. https://www.nzherald.co.nz/northern-advocate/news/rental-woes-as-landlords-turf-out-tenants-ahead-of-law-changes/JN24ETGJ6P45QLV6MVBOVEMMHM/ – 23 January

GOVERNMENT’S PLANS NOT ENOUGH TO MEET THE HOUSING CRISIS

The Government has been slammed for its “underwhelming” Public Housing Plan. Yesterday it unveiled where it intends to build 6000 public and 2000 transitional housing places between now and 2024 – places already promised in last year’s Budget. Emergency housing providers and the Opposition say with demand skyrocketing, the Government needs to do much more to address the housing shortage. National Housing spokeswoman Nicola Willis said yesterday’s announcement was “cynical”. “The Government will never get there through state house building alone, the Government simply can’t keep up with the surging demand as people are priced out of the private market.”https://www.nzherald.co.nz/nz/jacinda-arderns-government-facing-continued-criticism-over-its-housing-plans/2A4GOAEDLPGMG2DR236JN2HFOE/ – 22 January

KAINGA ORA FAILED TO ENSURE TENANT HAD REASONABLE PEACE AND SAFETY AND ORDERED TO PAY NEARLY $2,000

Kāinga Ora has been ordered to pay nearly $2000 for failing to fulfil its duties to a tenant who was left with an open face wound after an attack. The tenant, who came to New Zealand as a child war refugee from Sierra Leone, was harassed, intimidated and physically assaulted by neighbours while living at two separate rentals in the south Auckland suburbs of Wiri and Papatoetoe. The tribunal ruled Kāinga Ora failed to take reasonable steps to ensure its other tenants did not interfere with the woman’s “reasonable peace, comfort or privacy”. https://www.stuff.co.nz/life-style/homed/renting/300208177/auckland-refugee-awarded-2000-after-attack-by-neighbour-at-kinga-ora-rental – 19 January

DEMAND FOR EMERGENCY ACCOMMODATION HAS ESCALATED AND MOTELS ARE NOT IDEAL

Demand for emergency accommodation has escalated this past year with the number of emergency housing grants increasing by half. On top of that, the government has contracted over 70 motels to house families and individuals. As of November 30, they housed 1200 individuals. But social services providers said the pace of demand was not slowing. And they sounded a warning about the impact living in a motel was having on residents. In a statement, Ministry of Social Development housing manager Karen Hocking said it accepted motels were not the ideal accommodation type. Our role is to ensure that people with no other option are supported into emergency housing, usually in motels,” Hocking said. “We accept that for people with nowhere to live, a motel is not ideal. However, it is preferable to being homeless or sleeping rough.” https://www.nzherald.co.nz/nz/housing-crisis-emergency-accommodation-grants-up-by-50-per-cent/UR44L3L74VHVF3UFUJTDK3JTKQ/?ref=readmore – 18 January

SELF MANAGEMENT OF RENTAL PROPERTIES MAY BECOME SOMETHING OF THE PAST

Andrew King, of New Zealand Property Investors’ Federation, has claimed that New Zealand’s rental management and industry regulation are trailing behind Australia by around 16 years – with many rental property owners saying being a landlord is now “becoming increasingly difficult.” King has pointed out for years that the way New Zealand manages and regulates the rental industry is decades behind Australia as 80% of rental properties in Australia are professionally managed compared to around 40% to 50% in New Zealand. Every state in Australia also has detailed licensing requirements and governance for property management. “With the changes to the RTA and licensing regime, this inevitably is where New Zealand is heading. The DIY landlord could well be something of the past,” Property Brokers said, noting that the amended Residential Tenancies Act requires landlords and agencies to keep records for current tenancy and all documents for 12 months. “In our opinion, requirements in this specific area of the ACT are equivalent to the software that professional agencies use and pay for to comply with the regulations,” Property Brokers said. “Have a look at what is required now on a tenancy agreement under Section 13a of the RTA! If you don’t have access to these systems, we don’t see how it is going to be possible to meet this new requirement? https://www.nzadviseronline.co.nz/news/expert-nz-rental-management-is-16-years-behind-australia-274672.aspx – 8 December

RESERVE BANK PROPOSES BRINGING BACK LOAN TO VALUE LENDING RESTRICTIONS FROM MARCH

The Reserve Bank today opened consultation on its plan to bring back loan to value lending restrictions from March, two months earlier than expected. Under its proposal banks would be restricted to giving up to 20 per cent of new lending to owner occupiers with a deposit of under 20 per cent and less than 5 per cent to investors with a deposit under 30 per cent. ASB, BNZ and ANZ have all said they will start restricting lending to investors with a deposit of under 30 per cent before then while Westpac has said it did not change its lending policy despite the lifting of the restrictions. The report notes that it was likely that new high-LVR lending would decrease well before the March 1 reinstatement date. But it seems the impact on house prices will be limited. https://www.nzherald.co.nz/business/house-prices-could-fall-1-2-per-cent-on-return-of-lending-restrictions/3LMDRRATEKCMSYEV5Z34A4TG4E/ – 8 December

MORTGAGE ADVISERS AGAINST EXTENSION OF BRIGHT LINE TEST

Finance Minister Grant Robertson has asked Treasury to review the effectiveness of the current five year test. Recent Inland Revenue figures suggest that a quarter of investors subject to the bright-line test did not pay the tax that applied. With talk of the bright-line test being extended beyond five years, advisers fear the potential changes will harm the property market. Glen McLeod of Edge Mortgages said: “Just like when it was adjusted to five years serious investors will take it in their stride. It is capital gains tax covered up,” he added. McLeod said an extension of the test would be a broken election promise, and said the move would not solve NZ’s chronic undersupply problem. https://www.landlords.co.nz/article/976517938/mortgage-advisers-against-bright-line-test-extension – 9 December

LANDLORD RESPONSIBLE FOR PAYING ELECTRICITY TO OPERATE A PUMP TO AVOID FLOODING OF PROPERTY

A landlord has been ordered to pay a Timaru woman $550 compensation for various maintenance issues at a property she was renting. The Tribunal ruling made by J Talbot on November 4 ruled the landlord, DTJ Holdings Ltd, has to pay $280 compensation to the tenant for loss of amenity due to flood damage in the property. On November 23, 2019, the landlord installed a one-metre deep sump under the property with an electric submersible pump that is activated when the water rises above a trigger level. Talbot ruled that the pump was successful in draining the property, and while it was operational the landlord wasn’t in breach. One of the pipes that carried away storm water was damaged in a hail storm on January 8, 2020. While the pipes weren’t repaired until July 2020, Talbot ruled the landlord was only in breach up until the tenant requested the pump be turned off on February 12, 2020, as she was concerned at the high electricity use of the pump. Talbot ruled the landlord was not at fault for the time after the pump was turned off. “Flooding from this time forward arose from the tenant’s request, and has not been established to have been caused by any breach by the landlord.” However, Talbot also ruled the landlord was responsible for paying for the electricity cost of the pump. https://www.stuff.co.nz/timaru-herald/news/300178183/timaru-woman-wins-compensation-for-flood-damage – 9 December

EXTENDING THE BRIGHT LINE TEST A CAPITAL GAINS TAX BY ANOTHER NAME

Finance Minister Grant Robertson has asked for advice from Treasury before Christmas, on extending the bright-line test. “I expect to receive that advice towards the end of the year, and will discuss it with Cabinet as soon as possible after that,” he says. Mortgage advisers responded quickly: extending the test would be a broken election promise that would not solve New Zealand’s chronic undersupply problem, said one; the move would be foolish, said another. Treasury is expected to advise the Government whether the bright-line test (which initially taxed anyone who flipped a property within two years, later extended to five years) should be extended again to 10 years. Kelvin Davidson says: “An extension of bright-line would just be inching it ever closer to basically being a capital gains tax by another name.” “A capital gains tax would discourage landlords from investing in rental property and many would leave the rental market, causing supply issues.” An extension to the bright-line test may be a way the Government can effectively implement a capital gains tax on residential property without coming under quite so much fire for breaking its promise. None of this may do much to rein in those galloping housing prices. That’s acknowledged even by supporters of an extended bright-line test or a capital gains tax on residential property. https://www.newsroom.co.nz/all-is-calm-all-is-bright-line – 10 December

COULD BE LEGITIMATE REASONS FOR GHOST HOUSES

Housing Minister Megan Woods has tasked her ministry with finding out exactly how many empty houses there are in the country, but has not said what their plans for those houses would be. The Property Investors Federation’s Andrew King told Heather du Plessis-Allan the Government can’t necessarily do anything about it. “If it is a lot of houses where people have brought them but won’t rent them out, then I guess they can do something about that and tax them, but if its private individuals choosing what they do with their home, I don’t think there’s much the Government can do.” He says that there could be very legitimate reasons why some of these houses are empty, such as holiday homes or people who are away. King says that it could be good to establish just how many “ghost houses” there are in the country. https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/andrew-king-government-wants-to-find-out-how-many-ghost-houses-there-are-in-nz/ – 10 December

RESIDENTIAL PROPERTY DEVELOPMENT LOANS DOWN

Residential property development loans have fallen by 18% year-on-year, according to Reserve Bank data, with advisers calling for changes to fix the house-building crisis. The RBNZ figures show residential property loans hit $2.77 billion in October, down from $3.3 billion the same month last year. The lacklustre numbers come as pressure mounts on the government to build more houses to satisfy nationwide demand. Housing Minister Megan Woods has delayed a plan to set up a $250 million Residential Development Response Fund to kick-start housing projects across the country. The minister said this week the project had been delayed as there was less urgency due to the strong Covid recovery. The RBNZ data suggest the flow of money from the quantitative easing programme has not flowed through to development projects. Ian Webb, of NewBuild Home Finance Limited, said there needed to be less emphasis on tax and demand-side measures to cool the housing market, and more of an onus on making it easier to build new homes. https://www.goodreturns.co.nz/article/976517942/development-loans-fall.html – 10 December

LATEST ASB HOUSING CONFIDENCE SURVEY

Ongoing talk on ways to cool the blistering housing market isn’t resonating with Kiwis according to the latest ASB Housing Confidence Survey, with expectations for New Zealand house prices now sitting at a record high. ASB senior economist Mike Jones says, “after a brief dip during lockdown, price expectations have spiked. In October a net 67% of people expected house prices to keep rising over the coming year – the highest month in the 24-year history of the survey.” Jones says: “Rightly or wrongly, these results suggest housing is increasingly being perceived as a ‘one-way bet’.” Jones says people are expecting interest rates to fall further. “We think one and two-year fixed mortgage rates will ultimately move closer to 2% than their current roughly 2.5% levels. That’s even without the RBNZ having to resort to negative interest rates, which we no longer see as likely. https://www.landlords.co.nz/article/976517885/housing-market-to-cool-yeah-right – 30 November

ANDREW KING WRITES WHY HE IS PROUD TO BE A PROPERTY INVESTOR

There is a good reason why privately owned rentals make up around 85 per cent of all rental properties. It is because we do a pretty good job of it. I’m proud to be a rental property owner, and I think all rental property owners should be proud as well. To the few that are not proud, because their rental is not up to scratch, they should do something about it or get out of the business. Calls to replace private rentals with state or community housing is not desirable or affordable. Social housing is portrayed as being non-profit and therefore affordable, but is actually very expensive. It is the high level of taxpayer funding that makes it affordable for the tenant, but expensive for our country. We actually need more investors to increase the supply of rental properties. We are part of the housing solution, not part of the problem. Remember, a property investor provides tenants with a home; they are not traders or speculators buying and selling properties. https://www.stuff.co.nz/business/property/123538204/why-im-proud-to-be-a-property-investor – 30 November

RATES INCREASES IN AUCKLAND WILL AFFECT PROPERTY INVESTORS AND SUBSEQUENTLY TENANTS

Auckland Mayor Phil Goff has today announced plans to raise rates by 5 per cent next year. NZ Property Investors’ Federation Sharon Cullwick said the rates rise would likely hit more than just homeowners. “It seems continuous now that costs keep going up for property investors and because most people nowadays have to run them as a business it means the costs inevitably get handed over to the tenants,” Cullwick said. She called on the council to examine its costs closely before raising rates so dramatically and to consider whether it could delay any rise further to give relief to those doing it tough financially as a result of the Covid pandemic. https://www.nzherald.co.nz/nz/auckland-mayor-phil-goff-proposes-a-rates-rise-of-5-per-cent/YYNIPBFCK2FVH3F5SAQQUYMW2U/ – 1 December

WINDOWLESS BEDROOMS ARE NOT LEGAL

Windowless bedrooms being rented out in Wellington City are not legal dwellings, according to Tenancy Services, and tenants who have lived in them could claim their money back for as many as six years after they’ve moved out. Landlords of rental properties must comply with all relevant legislation to building, health and safety, including the Residential Tenancies Act 1986 and the Housing Improvement Regulations 1947. The regulations state that every “habitable room” must be provided with one or more windows situated in an external wall so that there is adequate light. https://www.stuff.co.nz/life-style/homed/renting/123530562/hey-wellington-landlords-its-illegal-to-rent-bedrooms-without-windows – 1 December

IS AN EXTENSTION TO THE BRIGHT-LINE TEST IMMINENT?

Speculation is mounting that the government will extend the bright-line test beyond five years, capturing a greater number of investment properties for taxation. While Prime Minister Jacinda Ardern has ruled out a traditional capital gains tax on investment properties during her time in charge, the Labour Government is exploring ways to take the heat out of the investment market following a record year. There’s a growing belief that Finance Minister Grant Robertson will ask the Treasury about an extension to the bright-line test. Robertson has confirmed he asked Treasury to review the effectiveness of the current model. https://tmmonline.nz/article/976517902/is-a-bright-line-test-extension-imminent – 2 December: https://www.stuff.co.nz/business/industries/123564055/is-this-the-new-capital-gains-tax-speculation-mounts-over-brightline-test-changes – 1 December

SEPARATE DIVISION OF THE TENANCY TRIBUNAL ESSENTIAL

The latest figures for the Tenancy Tribunal have been released for November. The statistics show that the majority of applications to the Tribunal are made by landlords and are for rent arrears and bond refunds. “A separate division of the Tenancy Tribunal specific to rent arrears and bond refunds (and where there are no other issues), will speed up the process and eliminate the need for court time and costs,” says Sharon Cullwick, NZPIF Executive Officer. http://www.voxy.co.nz/business/5/378329 – 2 December: https://www.nzpif.org.nz/news/view/60864 – 3 December

AMALGAMATION OF PROPERTY INVESTORS’ ASSOCIATIONS IN WELLINGTON ANNOUNCED

The New Zealand Property Investors’ Federation (NZPIF) is delighted to announce the amalgamation of Capital and Wellington Property Investors’ Associations. The new association will continue under the name of Wellington Property Investors’ Association. “After months of consultation with members and the respective executive committees, it was decided that combining the associations was the best solution for property investors in the Wellington area,” said Sharon Cullwick, NZPIF executive officer. Tony Alexander will be the guest speaker at the first amalgamated meeting to be held on Tuesday 9th February 2021 at 7.15pm. More details about this event can be found at https://wellington.nzpif.org.nz/ https://pimms.nzpif.org.nz/news/edit/60865/ – 4 December: https://www.nzadviseronline.co.nz/news/nzpif-announces-amalgamation-of-two-property-investors-associations-274633.aspx – 6 December https://www.scoop.co.nz/stories/BU2012/S00104/amalgamation-of-property-investors-associations-in-wellington.htm – 6 December

WESTPAC BANK ASSESS EXPOSURE TO CLIMATE CHANGE

Westpac Bank has taken stock of its exposure to climate change with the issue of its first Climate Risk Report. The report follows one from the Ministry of Business, Innovation and Employment (MBIE) which found insurance premiums could increase five-fold for some properties due to sea-level rise and at-risk properties could be refused insurance in 20 years. Up to 3 percent of Westpac NZ’s lending was potentially subject to risk from sea-level rise, with two-thirds of the properties already susceptible to flooding, its customer experience hub general manager Karen Silk said. For the year ended September 2020 Westpac NZ had $88 billion in net loans. Three percent of that equates to $2.64bn in lending secured against risky assets. “Through risk-based pricing we anticipate that over the coming years many of these properties will see insurance premiums increase. In some cases insurance may become unaffordable or unobtainable. https://www.rnz.co.nz/news/business/432038/westpac-assesses-climate-related-lending-risks – 3 December : https://www.nzherald.co.nz/nz/climate-crisis-coastal-wellington-homes-could-lose-insurance-as-sea-levels-rise/FVBXDJIJNWCOYUT3YEKPNV2RMU/ – 2 December  :https://www.nzherald.co.nz/nz/climate-crisis-thousands-of-nz-homes-risk-pulled-insurance-cover/RN7QBBYT5MXHNJPIS2FFUZB5XA/ – 2 December

BUILDING CONSENTS UP.

Building consents for houses have hit their highest annual level in 46 years, raising hopes it may help deflate the housing bubble. Some 37,981 new homes were consented in the year to October, boosted by more townhouses, flats, and units, Statistics NZ data shows. That was up 2.8 per cent from last year, but still shy of the all-time annual high of 40,025 in February 1974. Construction statistics manager Michael Heslop said it was the first time in decades that housing consents had come so close to the 38,000 mark. https://www.stuff.co.nz/business/123588983/strength-of-building-boom-may-help-bring-house-prices-down – 3 December: Sharon Cullwick interview with Radio NZ – stats NZ data on building consents up – 3 December.

INCREASES IN HOUSE PRICES IN THE FIRST HOME BUYER SEGMENT ARE HIGHER THAN IN OTHER SEGMENTS OF THE MARKET

First-home buyers are facing faster price increases than people buying in other parts of the housing market, new data from Homes.co.nz shows. While median values across the board were up, Homes.co.nz’s first-home buyers estimate – which is calculated as the lower-quartile price for a city or town – shows price rises in that segment of market clearly outpacing the others in most centres. In Wellington the median value estimate was $886,000 in December, which was up by 12.6 per cent year-on-year, but the median first-home buyer value estimate of $720,000 was up by 13.8 per cent. This pattern was repeated in Tauranga, Hamilton, Dunedin and even Christchurch, with first-home buyer values up by 11.7 per cent (vs 11.3 per cent), 13.1 per cent (vs 11.6 per cent), 22.4 per cent (vs 21.2 per cent) and 8.1 per cent (vs 7.5 per cent) respectively. Auckland was the exception. Its median value estimate was $1.04 million in December, which was an annual increase of 15.1 per cent, while its median first-home buyer value estimate was up by 14.8 per cent to $799,000. https://www.stuff.co.nz/life-style/homed/housing-affordability/123590580/up-and-away-first-home-prices-outpace-rest-of-market – 4 December

LANDSLIDES A FORGOTTEN NATURAL HAZARD

A national landslide database has been established, designed to save lives, and help infrastructure and reliance planners understand New Zealand’s “forgotten natural hazard”. The Earthquake Commission (EQC) has established the catalogue to centralise landslide information from councils, Crown entities and geotechnical consultants. Commission chief resilience and research officer Jo Horricks said the project, initiated by Auckland Council, would become an important tool for future planning. GNS engineering geologist Dr Chris Massey said data from across the different institutions would be standardised and could also be used to predict landslides. Slips came in many forms, such as avalanche type events, rock falls and “big, slow, low angle plains [that could be] several kilometres across”. Napier artist Freeman White had a close brush with death last month when his home was hit by a landslide during a deluge. Just this week a slip in Porirua caused the evacuation of two houses following torrential rain. https://www.stuff.co.nz/national/123584266/landslide-database-established-to-save-lives-from-the-forgotten-hazard – 4 December

REPRESENTATIVES OF VARIOUS SECTORS OF THE HOUSING INDUSTRY GIVE THEIR VIEWS ON UNAFFORDABILITY OF HOUSING

Sharon Cullwick says – There is no easy answer to the question of how to improve housing affordability. Lack of supply, red tape, low bank deposit rates, low mortgage interest rate and FOMO are all contributing factors. However, put simply, the country needs to build more houses, not just to be owner-occupier homes but also to accommodate the large number of people wanting to rent, including the 23,000+ people living in emergency housing. At the moment, new houses are not being built fast enough to meet the demand. Everyone is keen to find a way to improve affordability of houses but the last thing the housing market needs right now are new ad-hoc law changes that would cripple the housing market and halt progress. Read the article to see what other industry representatives are saying about remedying the unaffordability of housing. https://www.stuff.co.nz/life-style/homed/housing-affordability/123597150/so-how-do-you-solve-a-housing-crisis – 6 December

TONY ALEXANDER THINKS THAT THE RESERVE BANK’S ANALYSIS OF THE ECONOMY LOOKS OUT OF DATE

The Reserve Bank has invested a lot of credibility in its strong response to the Covid-19 shock. But that credibility is now eroding as it seems to have a blind spot regarding not just the hyperactive housing market, but the rapidly improving state of the economy and labour market. Its analysis looks out of date. For borrowers, this does not mean there is an imminent interest rates threat. But the writing is starting to take shape on the wall. For some that might mean forgoing some of the candy offered in the form of very cheap one-year fixed mortgage rates, and choosing to lock in some portion of one’s debt for a longer term – perhaps even five years at 2.99 per cent. https://www.stuff.co.nz/business/opinion-analysis/300172754/economic-models-no-longer-work-as-they-used-to – 6 December

AOTEAROA NZ HOMELESSNESS ACTION PLAN HAS A HOUSING BROKER SERVICE TO HELP OVERCOME BARRIERS TO OBTAINING PRIVATE RENTALS

MSD regional director Sue Rissman said there was a shortage of houses throughout New Zealand, and Southland was no different. “We are aware that it is often difficult for people on low incomes or in emergency housing to be chosen as tenants in the private rental market,” she said. In response, the agency has appointed 21 housing brokers throughout the country as part of its Aotearoa New Zealand Homelessness Action Plan (2020-2023). “The housing broker service is targeted at people in emergency housing or on the public housing register who could sustain a tenancy. They will talk to our clients and work with them to overcome these barriers by increasing connections and confidence with landlords, property managers and the private rental market,” Rissman said. Emerge Aotearoa provide similar support and navigation services for families living in emergency housing. https://www.stuff.co.nz/national/123614954/homelessness-is-growing-in-southland-but-theres-more-help-than-ever-before – 6 December

A TENANCY ADVOCACY SERVICE FOR WELLINGTON

Wellington City Council is considering a tenancy advocacy service in the capital to help those facing an increasingly volatile rental market. The council’s Grants Subcommittee has directed council officers to investigate an advocacy service, which would be run by Community Law. Community Law has already launched a specialist housing advice and advocacy service for people living in Lower Hutt. Specialist lawyers can help with legal problems relating to housing including evictions, rent increases, tenancy damage and repairs, disputes with landlords, and social and emergency housing applications. To expand this service, council officers have suggested Community Law could apply to the council’s social and recreation fund with a decision to be made on the application mid next year. The Citizens Advice Bureau (CAB) also already offers specialist support in the city for the preparation of claims to the Tenancy Tribunal and to support clients at hearings. The council’s move for a tenancy advocacy service in Wellington comes in the middle of the Government’s rental reforms to modernise the law and give appropriate protections for tenants.https://www.nzherald.co.nz/nz/wellington-city-council-considers-tenancy-advocacy-service-to-help-renters/B7KZMBBY742LECO5NP3DSNOU3I/ – 7 December

 

 

MARAMA DAVIDSON IS AGAIN CALLING FOR A WEALTH TAX

Greens co-leader and Associate Housing Minister Marama Davidson is yet again calling for the Prime Minister to consider implementing a wealth tax to cool down the red-hot housing market. This is despite the fact Jacinda Ardern shot the idea down during post-election negotiations between the Greens and Labour. She also spent weeks pushing back on National’s suggestions that Labour would adopt the Greens’ policy if Ardern was re-elected. “I have said the same thing on this policy no less than probably 50 times. I have ruled it out,” Ardern said on the campaign trail. This morning, however, Davidson said a wealth tax needed to be on the table or the “massive divide between the haves and the have nots” would only get wider. https://www.newstalkzb.co.nz/news/politics/associate-housing-minister-marama-davidson-calls-for-wealth-tax-to-cool-the-market/ – 23 Monday

GREEN PARTY ANNOUNCES WHO WILL HOLD PORTFOLIOS

Co-leaders James Shaw and Marama Davidson will only hold portfolios related to their ministerial positions, which they picked up as part of the Green’s co-operation agreement with Labour. Other key portfolios, including finance, have been piled on the rest of their caucus. Davidson holds prevention of family and sexual violence and housing, while Shaw has climate change and environment (biodiversity). Davidson said with a larger caucus this term, she and Shaw were able to “focus on those ministerial portfolios”. “You’ll see from my housing portfolio that while my associate minister delegation focuses on homelessness, my portfolio actually covers the whole issue and the big challenge of housing as a whole,” she said. https://www.rnz.co.nz/news/political/431247/green-party-reveals-portfolio-reshuffle-ahead-of-official-parliament-opening – 23 November

BUILDING MORE HOUSES AND RAMPING UP SUPPLY WILL HELP THE HOUSING CRISIS

Building more houses and ramping up supply is needed to help fix New Zealand’s housing crisis, according to former Prime Minister Sir John Key. Last week, Auckland’s median house price reached $1 million, and median prices across New Zealand have spiked by nearly 20 percent since the same time last year. ANZ chairman Sir John, a former National Party Prime Minister who also presided over rapidly growing house prices and resisted calling Auckland’s housing situation a “crisis”, believes building more is the best way to solve the crisis. https://www.newshub.co.nz/home/politics/2020/11/building-more-will-stop-runaway-house-prices-not-crazy-and-wacky-ideas-sir-john-key.html – 23 November

LANDLORD COMPENSATED FOR DAMAGE TO RENTED HOME

An Auckland woman’s sons got angry and caused close to $4000 worth of damage to her rented home. Some 41 holes were put in the walls and doors of the Manurewa home. The damage to the walls and doors was more than fair wear and tear, Tenancy Tribunal adjudicator Gillian Guptill said. However, Guptill did not allow the landlords compensation for lost rent due to the repairs and dismissed their claim that damage to an electric gate was caused by the tenant. According to the landlords, the tenant had crushed the motor for the gate, but she said it continued to malfunction despite tradesmen looking at it. https://www.nzherald.co.nz/nz/auckland-tenants-sons-got-angry-putting-41-holes-in-the-walls-and-doors-of-a-rental/SDWZHBOZLJIM2O357QCGTY4JEM/ – 25 November

RBNZ LOOKING TO INTRODUCE LVRS AND DEBT TO INCOME RATIOS

Earlier in November the RBNZ announced a reintroduction of Loan to Value ratios (LVRs) next year to reduce the growth of low-deposit home loans. They were removed in May to encourage home-buyers and lending. RBNZ will consult on the changes next month. Orr told Morning Report on Thursday the level of LVRs would be consulted on. “We’ve announced what we will be talking to the banks about. We have not physically put the ratios in yet but the good news is the banks have moved in advance anyway. He said tougher LVRs would make people take pause, but it wasn’t obvious that they would impact the marginal price of housing. Orr said the RBNZ wanted to introduce debt to income ratios. A debt to income ratio means that the amount you can borrow is proportionally related to your income. The bank was “dusting off the research” on the ratios, Orr said. “Yes, would be the simple answer, if we are trying to have effective tools that can head off excessive borrowing then a debt to income ratio is one of those… https://www.rnz.co.nz/news/business/431487/adrian-orr-says-reserve-bank-wants-to-introduce-debt-to-income-ratios-to-nz – 26 November

https://www.newshub.co.nz/home/politics/2020/11/reserve-bank-wants-to-introduce-debt-to-income-ratios-in-new-zealand-governor-adrian-orr.html – 26 November

STRONG BOUNCE BACK IN THE RESIDENTIAL PROPERTY MARKET

There is growing evidence of a strong bounce-back in the residential property market, according to CoreLogic. CoreLogic’s Pain and Gain Report, compares resales to the original purchase price. The national trend of strong property ‘gain’ and minimal ‘pain’ was replicated in most of the main centres, consistent with the broad rebound CoreLogic has also seen for sales activity and property values. CoreLogic Senior Property Economist, Kelvin Davidson, says “This report really confirms what we know is going on in the housing market more generally. Prices have rebounded strongly from Covid-19 and are continuing the upwards trend they had before the pandemic hit.” Davidson predicts this positive trend will continue in the final quarter of 2020. https://www.landlords.co.nz/article/976517869/evidence-mounts-for-nz-property-market-rebound – 26 November

ANZ SEES SOME COOLING IN THE HOUSING MARKET IN TIME – November Property Focus

Housing demand has remained strong, spurred by low mortgage rates and a speculative dynamic. Added to that, a lagged response in new listings has meant that buyers are chasing relatively few properties – a perfect storm for house price rises. We are wary about the sustainability of the upturn, though. Low mortgage rates will provide ongoing support, but the market appears out of step with fundamentals. The RBNZ is planning to re-impose LVR restrictions, and banks have already signalled a tightening in credit conditions for investors. The outlook is uncertain, but on balance, we see some cooling in the market in time. https://www.anz.co.nz/content/dam/anzconz/documents/economics-and-market-research/2020/ANZ-PropertyFocus-20201126.pdf – 26 November

RENTS ON THE RISE OVER SUMMER

The national median weekly rent could crack the $550 mark next year as growing demand for rental housing continues to outstrip supply around the country, Trade Me Property says. The national median rent advertised on the site jumped to $520 a week in October, up 4 per cent on the same month last year. Almost every region had exceptional demand last month. Three regions – Bay of Plenty (at a median $520 a week), Canterbury ($430) and Manawatū/Whanganui ($430) – had the highest increase year on year, with each rising more than 30 per cent. https://www.stuff.co.nz/life-style/homed/renting/123513475/expect-record-rents-over-summer-trade-me-data-suggests – 26 November

RENTALS NEED TO BE UP TO STANDARD

A renters’ advocacy group is calling the current state of the housing market a “disgrace”, something highlighted by cases of flats acknowledged by the renters as substandard. Advocacy group Renters United is concerned about those dropping standards, particularly in Wellington where another renter told 1 NEWS you “take what you can get”. Zoe Woodfield says finding flats advertised that don’t appear to be up to standard isn’t surprising but is disappointing. On its side, Tenancy Services’ Steve Watson says its investigative team does act proactively, but it also relies on reports from tenants or third parties. It doesn’t have to be your home for you to report it if you have concerns. That means if you view an advertised flat and have concerns, you can report it to the tenancy compliance and investigations team without having to move in first, Watson says . https://www.tvnz.co.nz/one-news/new-zealand/doesnt-have-way-stretched-rental-market-labelled-disgrace – 27 November

https://www.stuff.co.nz/life-style/homed/renting/123514829/students-say-its-no-trouble-to-find-new-tenants-for-dungeonlike-bedrooms-on-marion-street – 26 November

HOUSING WAITING LIST CONTINUES TO GROW IN QUEENSTOWN LAKES DISTRICT

The waiting list for assistance from the Queenstown Lakes Community Housing Trust is continuing to grow, despite Covid-19 finally bringing rocketing rental prices back to earth. A year ago, the Queenstown Lakes Community Housing Trust had some good news: its waiting list was finally decreasing after climbing to more than 600 families in need of affordable housing. Before Covid-19, the waiting list was holding steady at 591 households. But over the past nine months it has been climbing again and now sits at over 630 households. That was despite a drop in rents, the trust’s executive officer Julie Scott said. https://www.odt.co.nz/regions/queenstown/housing-waiting-list-continues-grow – 27 November

SALES OF UNMAINTAINED HOUSES WILL HAVE AN IMPACT LATER ON.

The sale of unmaintained houses poses a risk for buyers once the market slows down, a Wellington real estate agent says. CoreLogic data released this week shows 99 per cent of Wellington houses sold in the third quarter, sold for more than the original purchaser paid. Sales Director at Tommy’s Real Estate Nicki Cruickshank said that because there’s such a high demand for houses, people aren’t doing as much work on them to get them sale-ready. “People are doing less than they did in the past simply because they don’t need to in order to sell them.” Although houses are now selling easily without work, a lack of maintenance will impact the property market down the line, she said https://www.nzherald.co.nz/property/wellington-house-sales-lack-of-maintenance-poses-future-risk-when-market-slows/TOM6PBF6C3WNYBODP7VOLMOGSA/ – 27 November

DON’T CHASE RAINBOWS ADVISES SHARON CULLWICK

Investors thinking of selling up and reaping big money because of the high prices being paid for property could find themselves in a Catch-22 situation, says Sharon Cullwick, executive officer of the New Zealand Property Investors’ Federation. Where else are they going to put their money, with returns from the banks so low and the share market so up and down, she asks. Of around 290,000 property investors in the country, 90 per cent are mums and dads, so any changes to the LVR, which are being mooted by the Reserve Bank to dampen soaring house prices, won’t make much difference, Cullwick says. Cullwick thinks there will be an even higher percentage of mum and dad investors coming into the market because they are only getting a maximum of 1.5 per cent return in the banks and property is an alternative which might give a higher return. But she cautions would-be investors against getting too swept away with the idea of high returns. With rents so high, people might expect to get a good return but not only have house values gone up so much, making an buying an investment property much more expensive, so has upkeep. Cullwick says she buys for returns but is not buying right now, and she advises people to look carefully at where they might still get good returns. One way is to buy two houses on the same site and some investors are looking at infilling houses rather than buying another house, although there can be significant costs associated with building. https://www.oneroof.co.nz/news/38722 – 27 November

RESEARCH SHOWS THAT A POSSIBLE CAPITAL GAINS TAX ALREADY ON THE BOOKS

Prime Minister Jacinda Ardern might have ruled out bringing in a capital gains tax, yet there is already a tax on the books that could do the job instead. That’s according to two University of Auckland researchers, who say section CB6 in the Income Tax Act has existed since the 1970s but was little-known because it was rarely enforced. And rather than considering new taxes, section CB6 already stated that anyone buying land with the intention of profiting from its resale should pay income tax on the gains, Rehm said, Governments had not enforced this in the past because they argued it was too hard to know a buyer’s intention at the time of a purchase. Yet Rehm said his decade-long analysis of Auckland rental home purchases showed nearly all made initial losses and relied on a profit at resale to be considered wise financial investments. That meant investors could safely be said to be acting as speculators hoping for house prices to rise – and that had wider ramifications for society, Rehm said. Rehm acknowledged that – while section CB6 already existed – enforcing it politically was another matter. He said enforcing section CB6 would be more thorough than the brightline test because it had no time limit and also argued the analysis behind his paper was thorough. https://www.nzherald.co.nz/business/new-zealand-already-has-a-capital-gains-tax-you-probably-just-didnt-know-it/JQM7EMHWCFFG2LXJWNCMH7IXDE/ – 28 November : https://www.newshub.co.nz/home/politics/2020/11/housing-bright-line-tax-on-property-actually-an-income-tax-labour-mp-david-parker.html – 27 November

SECOND HOUSE ON THE PROPERTY BREACHED TENANTS’ USE AND ENJOYMENT OF THE PROPERTY

Two tenants and their flatmate were forced to sleep elsewhere due to noise from a house build, and the smell of a workers’ portable loo on the property. “The tenants were angry as they were renting a place with one parking space and they did not have that,” adjudicator Toni Prowse noted. Prowse said she felt Kasmin did not take basic steps to mitigate any interference, such as introducing the tenants to the project manager and explaining to them the work being carried out and its likely impact. She found the landlord’s breaches to the tenants’ use and enjoyment of the property, privacy and peace were “stressful, annoying, frustrating and constant”. Kasmin was ordered to pay the tenants $5,560.44 in damages and compensation.https://www.stuff.co.nz/business/property/123527601/noise-and-builders-toilet-smell-like-a-living-hell-for-auckland-tenants – 29 November

ANDREW KING OUTLINES WHY HE IS PROUD TO BE A PROPERTY INVESTOR

There is a good reason why privately owned rentals make up around 85 per cent of all rental properties. It is because we do a pretty good job of it. I’m proud to be a rental property owner, and I think all rental property owners should be proud as well. To the few that are not proud, because their rental is not up to scratch, they should do something about it or get out of the business. We all want people to have the ability to own their own home if they choose to. While quick “solutions” like hitting rental providers are tempting, they do not address the real problems we face. The two key problems are that housing costs too much, and takes too long to build to meet changes in demand. These are the areas we should be looking at solving. People providing rental property are not causing housing problems. They are a critical part of the housing solution. https://www.stuff.co.nz/business/property/123538204/why-im-proud-to-be-a-property-investor – 30 November

 

PROPERTY INVESTORS NOT TO BLAME FOR RECORD HOUSE PRICES

Property investors are not to blame for record house prices or the reason first home buyers in Taranaki are struggling, experienced investor Colin Comber says. In an emailed statement, Real Estate Institute NZ (REINZ) chief executive Bindi Norwell said it was the third month in a row a new record had been set and first time buyers and investors were especially active in the market. But former Taranaki Property Investors’ Association president Colin Comber believed it was the demand from first home buyers and owner-occupiers that was causing the increase in house prices. Comber said property investors typically avoided multiple offer situations and looked to buy at or below market value. “Experienced property investors are not chasing the market and typically residential property investors are not price makers. It’s the first home buyers I believe and others that are looking to be owner-occupied. “When the market is moving as rapidly as it has you’ll find investors will be very cautious and tend to be sitting on the sidelines.” https://www.stuff.co.nz/business/property/123080125/owner-occupiers-and-first-home-buyers-pushing-up-property-prices-long-time-investor-says 17 October

RENTING TO A FAMILY MEMBER OR FRIEND – THE ISSUES

Landlords are often faced with an awkward decision – whether to rent an investment property to a family member or friend. Is it a good idea or a potential problem? Andrew King, the president of the New Zealand Property Investors’ Federation, says many landlords avoid it because it can sour relationships. And it often comes down to expectations. “People live in different ways. As a landlord you might think your family tenants are being disrespectful of your property, but they feel it’s their home, and they may not see it that way,” King says. There is often an expectation that family members or friends might receive a discount. But there are a couple of points to consider first, including the fact that it could affect your tax return. https://www.stuff.co.nz/life-style/homed/renting/122861730/landlords-what-are-the-pitfalls-of-having-family-or-friends-as-tenants – 17 October

FIRST HOME BUYERS AND PROPERTY INVESTORS ARE A SIGNIFICANT PART OF THE BUSY PROPERTY MARKET

The property market has heated up significantly since the end of the alert level 4 coronavirus lockdown, thanks in part to low interest rates, the temporary removal of loan-to-value ratio (LVR) restrictions, and a lack of homes for sale. The economy is in recession, but many parts of the country are seeing record high median prices with people flocking to buy properties. First home buyers made up a record high portion of the market over the last three months, and property investors are busier than last year, according to CoreLogic. https://www.stuff.co.nz/life-style/homed/real-estate/123107799/bnz-warns-overzealous-investors-will-push-house-prices-to-unsustainable-levels – 16 October

RENTING AND PETS

Most renters know and dread the process of finding a flat. Viewings on top of viewings, rushed walkthroughs that give you 10 minutes to imagine the space as a home. There are sometimes dozens of potential tenants hoping to impress the landlord. But for some, the most disheartening part of the process is the “no pets” caveat on every listing. In the past, renting was mostly a temporary situation, said Renters United representative Anna Mooney. But these days, some people would be renting for the rest of their lives, putting pet-lovers at a disadvantage. “Hundreds of people apply for property. Landlords advertise with the criteria of ‘No pets’ as an easy way to screen people, but immediately discount potentially great tenants,” Mooney said. A new law in Victoria and New South Wales in Australia prohibits blanket pet bans. Some advocates want a similar law in New Zealand. https://www.stuff.co.nz/life-style/homed/renting/122992463/no-pets-allowed-wellingtons-secret-animals – 16 October

EXPANSION OF HEALTHY HOMES PROGRAMME ALSO INCLUDES MORE FUNDING FOR MORE INSPECTORS TO ENSURE COMPLIANCE

Labour has just announced a plan to tackle what it’s calling ‘a national shame’. If elected, the party wants to expand the Healthy Homes programme for housing basics like heaters, curtains, and bedding. It would also boost funding for Tenancy Services to monitor compliance of Healthy Home Standards – which start coming into effect from July 2021
https://home.nzcity.co.nz/news/article.aspx?id=319847 – 4 October
https://www.rnz.co.nz/audio/player?audio_id=2018766805 – 4 October – – Labour to roll out more rental inspectors to ensure that landlords are meeting requirements at a cost of $16million.

LABOUR’S PLAN TO EXPAND THE HEALTHY HOME INITIATIVE AND TO INCREASE TENANCY SERVICES COMPLIANCE AND ENFORCEMENT TEAMS

Labour wants rheumatic fever to “vanish from New Zealand,” and has promised to expand the Healthy Homes initiative to help rid the country of the illness. Ardern has promised to pour more money into efforts to eliminate the illness – an extra $55 million over four years on a number of initiatives. According to researching unit Branz, 22 per cent of New Zealand rental homes have no fixed heating. That figure is 7 per cent when it comes to owner-occupied properties.
“It is unacceptable that poor-quality housing is causing lifelong heart damage, as well as swelling and pain in joints and skin, and increased risk of asthma and other respiratory illness,” Ardern said. She added that the problem is much worse for Māori and Pasifika children. “We want this disease to vanish from New Zealand.” The remaining $16m will be put towards beefing up Tenancy Services compliance and enforcement teams to ensure rental accommodation meets standards. That funding, also split up over four years, allows inspectors to target high-risk areas sand communities. https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12370122 – 4 October