New Insulation Requirements For Rental Properties

image of wet window for connect realty blog about insulation

New legislation, introduced by the Government in July 2016, requires all residential rental properties in New Zealand to have insulation by July 2019.

The new Residential Tenancy Act regulations will require landlords to install insulation in accordance with the insulation standard NZS 4246.  There will be exemptions, such as where it is physically impractical to retrofit insulation due to limited space underfloor or inaccessible raked ceilings.

Landlords will also be required to provide an ‘Insulation statement’ on any tenancy agreement signed since July 2016.  This statement has to show location, type and condition of insulation in the rental home.  

To clarify, although landlords have until 1 July 2019 to bring all insulation to compliance, from 1 July 2016 ALL NEW tenancies entered into must include the state of the current insulation on the Tenancy Agreement  to help better inform tenants.

Connect Realty are currently in the process of checking the insulation of all our properties, starting with those homes coming up for tenancy renewal and working our way through our entire portfolio.

If you have any questions regarding the new legislation requirements, or if you want to check when we will be assessing your property, call us on 07 213 0826 or email info@connectrealty.co.nz.

Please note: A ban on retrofitting or replacing foil insulation in residential properties came into force on 1 July 2016 to reduce safety risks associated with installing this product.  Anyone who breaches the ban commits an offence and may be liable to a penalty of up to $200,000.  

Do not touch foil insulation without turning off the power at the mains first as there is an electrocution risk. If you have any doubts, contact a qualified electrician.  If you choose to remove foil insulation, hire a qualified professional.  Anyone who inspects foil insulation even after turning off the power at the mains must proceed with caution as in some instances the foil may still be live.

Rental Property Insurance – What Cover You Need

picture of house being held in a hand for connect realty blog about rental insurance

Property Insurance has been a hot topic in the news recently.  The conversation has mostly centred around flooding and meth related damage, but over the last few years we have also heard stories relating to earthquake damaged homes in New Zealand.  A report released by Treasury last year stated that 85% of New Zealand residential properties are under insured by up to 28%.

As property managers we can’t emphasis enough how important it is to have insurance for your rental property, and to make sure you have the right insurance.  In this blog we outline what we recommend to clients.

First you must take out a homeowners insurance policy, you then need to add ‘landlord extension’ cover.  While homeowner’s insurance covers owner-occupied homes, landlord’s insurance covers properties that are rented out.  This cover should insure your rental property against any damage, either accidental or otherwise. The Residential Tenancies Act 1986 requires you to pay the premiums charged for that insurance.

It pays to check exactly what your Landlord extension policy covers. Things to look for when shopping around for a landlords insurance policy include:

  • Property damage insurance
  • Liability protection
  • Loss of rental income
  • Guaranteed income insurance
  • Loss of rent caused by theft or malicious damage by tenants.

You may also choose to insure any chattels (such as furniture) that are listed in the tenancy agreement.  Note: any damage to them won’t be covered by the tenant’s contents insurance.  Also speak to your insurance company about their requirements for making claims on your rental property.

Clients of Connect Realty Ltd are able to access REAL Landlords Insurance.  REAL is one of New Zealand’s leading landlord insurance products currently on the market and the first specialist Landlord Insurance Policy provider. Their Landlord Preferred Policy was specifically designed to protect the interests of landlords and their investment properties.

REAL Insurance policies only cover landlords of residential rental properties that are managed by an approved Property Management Company, such as Connect Realty.  Their policy cover aims to complement your house insurance including:

  • Loss of rent (More than 97% of claims have been for loss of rent suffered by Landlords)
  • Intentional damage (your building insurance may not cover the entire loss caused by damage by the tenant)
  • Legal Liabilities, and more.

REAL offer a choice of three levels of cover (Traditional, Advantage, or Optimum), developed to protect your income and asset throughout the tenancy.  If you choose to use this cover your policy will be managed by us.

If you have any questions regarding landlord insurance please give Chris Jenkins a call on 0800 333 221

Investment Property – Moving Into New Builds

This article written by Miriam Bell and posted on Landlords.co.nz is an excellent article for Landlords who have been put off by LVR restrictions recently introduced.  In the article Ms Bell explains why new builds are exempt from the restrictions and why they are a great option for investment property.

Image of house build for Why New Builds Are A Good Property Investment blog

“New build properties are exempt from the latest investor-directed LVRs and yet, to date, there has not been a big increase in investors taking up that option.

The Reserve Bank’s most recent round of lending restrictions mean that investors are required to have a 40% deposit in order to secure a loan for an investment property.

That requirement has stymied the goals of a lot of investors and, effectively, taken them out of the market.

However, there are still strategies investors can employ to continue building their portfolio in the face of the LVRs.

Perhaps the most straightforward of these requires a move away from investing in existing properties to investing in new build properties.

This is because lending for new builds is exempt from the latest LVRs for both investors and owner-occupiers – and that means investors only need a 10% deposit for a new build loan.

It sounds like a simple way to work around the LVRs and yet, to date, there does not seem to have been a significant groundswell of investors moving into new builds.

The Mortgage Supply Company’s David Windler said he has not seen a big increase of investor interest in new builds.

“This is a bit surprising as, purely from a lending point of view, new builds seem like a logical option because half the deposit is required.

“But maybe when investors start looking at what they can get for a sum of money, then the numbers just aren’t working for them.”

It was possible many investors are not that familiar with new builds and focused on reports of cost overruns and buildings delays, he said.

“I wonder if many investors are not confident enough with the product to move into new builds more.”

Windler’s observations are not isolated, with Property Institute chief executive Ashley Church also saying he is not hearing of big numbers of investors shifting into new builds at this stage.

He said that, given the current lending environment for investors, moving into new builds is counter-intuitive.

“Or you would think it would be. Relative to other options in the market, or other markets, at the moment you would think that new builds would be pretty attractive.”

Church said it was bizarre more investors weren’t taking up the new build option but possibly there was some, not immediately apparent barrier to it.

Traditionally, costs and time delays have been considered an impediment when it comes to investing in new builds.

But data released by homes.co.nz this week suggests that building a new property, rather than buying an existing one, can be more lucrative.

It found that, in hot markets like Auckland, Wellington and Queenstown, new properties typically sold for around $600,000 more than an empty section – which could equate to around $150,000 in capital gain on average.

Homes.co.nz spokesperson Jeremy O’Hanlon said the stresses of building new are not for everyone because of the additional variables including delays, unforeseen earthworks and the people involved in the build.

“But if you’re careful and do your diligence it looks like building new can be a financially smart approach.”

On the coalface, building companies indicate that factors like this, along with the LVRs, means there has been some increase in investor interest in new builds.

Keith Hay Homes’ national sales manager Barry Walker said they are seeing a reasonable number of investors buying new builds, particularly in the Auckland region.

But he thinks many investors don’t realise there is an LVR exemption for new builds, while others believe that the consent and building delays with new builds mean it’s easier to buy an existing house.

“Having said that, I think that we will see a big increase in investors buying new houses in the near future. That’s partly because more will become aware of the LVR exemption.

“Also, now that Auckland’s Unitary Plan is largely operative that will drive investors looking for opportunities to capitalise on their existing properties.

“People are learning what they can and can’t do and will start to move into the new build space increasingly.”

Signature Homes spokesperson Shaun Taylor agreed that investors’ interest in new builds is only likely to grow.

But he said they have already had significant interest from investors, particularly in Auckland, Hamilton, Christchurch and New Plymouth since the LVR’s were introduced.

“We are finding that once investors start the discussion with us they are keen to build when they realise how affordably they can build a new bespoke investment property to suit their needs.”

In his view, the current market and lending environment mean there has never been a better time to build.

He said investors find that building with building companies, which offer independent guarantees, eliminates the risk.

“It also enables investors to build in cities they don’t live in to diversify their portfolio geographically. Plus they get a brand new home which will have higher resale value and reduced maintenance costs.”

Landlords.co.nz

Why You Should Use A Property Manager

connect realty tauranga property manager blog image of mount apartment

Thanks to new legislation introduced over the last few years there has been increasing costs for landlords.  As a result, many landlords often wonder if they’re doing the right thing using the services of a Property Manager, and think they can save money by carrying out the service themselves.  However, we believe that one of the main reasons for using our services is because of all the new rules and legislation.  In fact, in New Zealand the use of property management firms is increasing due to the complexity of owning rental properties.

The Ministry of Business, Innovation and Employment (MBIE) recently published an article on the responsibilities of landlords – MBIE Article.  This is a very important article for landlords to read and is a great reminder that rental property ownership is the same as running a business, and like all businesses there are rules and regulations to adhere to.  Failure to comply with the rules may result in hefty fines.

In fact, landlords can be fined up to $4000 for failure to comply with the Residential Tenancies Amendment Act 2016.  Here are some examples

  • smoke alarms are now compulsory in your rental home and you must fit the right type in the right places,
  • all your new tenancy agreements must now include an insulation statement disclosing if there is insulation, where, what type and its condition – you must make all reasonable efforts to provide this information so tenants know what to expect,
  • you will need ceiling and underfloor insulation, where reasonably practicable, by July 2019, though some exclusions could apply.

One of our services is keeping our landlords informed about current and new legislation, and managing the process of compliance.  We use a variety of contractors who are reliable, consistent, and offer value for money. We also carry out regular inspections so items such as smoke alarms can be checked.

We also ensure our landlords are fully aware of their rights and responsibilities. We pride ourselves on managing quality homes to quality tenants, and we have Landlord Insurance available to help protect your investment.  We also have market leading software systems that deliver up to the minute reporting so you can have peace of mind that your investment is being looked after.

Our experience is that landlords are less likely to go it alone as soon as they read the new Tenancies Act and get a true taste of what’s required of them.  We believe that owning a rental property is not a passive investment and using the services of a property manager is the wisest move.

Tauranga Rental Properties

Here are our current Mount Maunganui  & Tauranga rental properties as of March 2017:

Central Mount Home

Recently redecorated in a super location close to beach and shops. 3 bedrooms – Master bedroom upstairs with a walk-in wardrobe and ensuite, and 2 bedrooms downstairs. The living area has a wood fire and the kitchen is near new. This home boasts great outdoor living with entertaining areas in a private back yard and a large single detached garage.

connect realty rental property

4+ Bedroom Welcome Bay Home

A great property in as new condition. Consists of 5 bedrooms or 4 plus office. 2 bathrooms. Open plan living with heatpump. Single garage and off street parking. Partially fenced. Would suit a family.

connect realty rental property manager welcome bay

Two Bedroom Unit in Greerton

Two bedroomed unit brick and tile. Pemberton Crescent is a very popular location, close to the Greerton shops and to public transport. This middle unit is neat and tidy with raked ceilings in the living and kitchen, making it stand out from the crowd. The gardens are easy care with a pleasant outside area for entertaining or sitting out to soak up the sun. You can benefit in the colder months from the sun room which leads off from the dining area. A single garage with internal access completes this desirable package.

connect realty property managers rental property march 2017

For more information visit our properties for rent page.

OUR CONDITIONS: All prospective tenants must fill-out an application form before they can view the property. Application forms can be found on our website www.connectrealty.co.nz . Click on Tenancy Applications Apply Online. PLEASE PHONE if you require the address to drive by the property (07) 213 0826. Under no circumstances must the property be entered. OUR COSTS: 4 weeks bond, 1 weeks rent, letting fee: 1 weeks rent plus GST. This must be paid prior to moving in.