The following article is copied from the Bayleys newsroom, published in 3rd July 2020:

“Where to for property investors?”

Where the effects of border closures on rental demand are offset by record-low interest rates, Bayleys property reporter Katharina Charles investigates what the new ‘sweet spot’ for investors looks like in a COVID-19 economy.

Fears New Zealand’s COVID-19-related border closures would have a disastrous effect on our rental market are beginning to abate as latest data from Statistics New Zealand shows residency visa approvals are returning to normal numbers.

The news is positive for property investors that have endured an uncertain few months given rising unemployment, the introduction of emergency regulation, and ongoing compliance relating to the Healthy Homes Bill and proposed changes to the Residential Tenancies Act.

While an increase of policy targeting property speculation has given some investors pause for thought, investment into residential property remains the favoured mode of wealth creation for Kiwis attracted by long-term capital gains and the tangible nature of residential assets.

Influence of COVID-19

Trade Me Property spokesperson Aaron Clancy told Good Returns that the company’s latest rental data indicated the wider New Zealand rental market was beginning to return to pre-COVID levels, despite of continued restrictions at our borders.

“Kiwis returned to their new normal in May, and we saw both supply and demand for rentals bounce back after a turbulent few months,” Clancy told the publication.

Where vacancy rates hit double digits across areas like Auckland’s central city, Rotorua and Queenstown, the rental picture has become a little brighter following renewed business confidence and further financial relief announcements by the government.

“So far it looks like both tenants and landlords have confidence in the market,” Clancy said.

Tenant preferences drive rental decisions

Where the absence of international students and short-term travellers has hit the apartment sector particularly hard contributing to temporarily higher vacancy rates, the trend toward owner-occupied stock has offered a cushion for the blow.

Attractive rental yields are still being achieved across the country, aided by the long-term trend of rising weekly rents and record low interest rates which have made borrowing for a mortgage more affordable than ever before.

For investors, a property that attracts quality tenants is the most desirable attribute, and today, tenants are searching for modern properties in well-located areas with access to amenities and transport routes.

Home sweet home

Where presently there is a shortage of residential property on the market for sale, property owners are likely to hold on to quality assets. However, as rental returns and the possibility of capital gains are more attractive than bank deposit rates, we expect to see a good appetite for continued investment.

The consensus across the investment market-place appears to be that the loss of specific tenant groups such as short-term holiday renters and international students are being offset by returning expatriate Kiwis searching for rental properties, and movement of New Zealand residents seeking employment and lifestyle opportunities.

As these New Zealanders return home and displaced employees move locations in search of job opportunities, Bayleys expects that well-positioned one-bedroom apartments in suburban and city-fringe locations across main centres, as well as three-bedroom homes, will yield the best rental results for property investors over the next 12-months.

This article can be found at the following link:

https://www.bayleys.co.nz/news/residential/where-to-for-property-investors

The compliance statement is an addition to tenancy agreements that provides detailed information about how a property meets the healthy homes standards. It helps tenants to see how their landlord is working towards being compliant.

The healthy homes standards became law on 1 July 2019. The standards require landlords to meet new rules in relation to heating, insulation, ventilation, moisture ingress and drainage, and draught stopping.

The deadline was extended in response to COVID-19, which impacted landlords’ ability to access their properties and allow tradespeople to carry out inspections required to complete the compliance statement.

The extended deadline will not affect any of the dates by which rental properties have to comply with the healthy homes standards. The delayed deadline refers only to the inclusion of a detailed statement of current compliance. The remaining deadlines are not being changed.

The compliance timeline for the healthy homes standards remains the same:

• 1 July 2021 – private landlords must ensure that their rental properties comply with the healthy homes standards within 90 days of any new tenancy.
• 1 July 2021 – all boarding houses must comply with the healthy homes standards.
• 1 July 2023 – all Kāinga Ora (formerly Housing New Zealand) houses and registered Community Housing Provider houses must comply with the healthy homes standards.
•  1 July 2024 – all rental homes must comply with the healthy home standards.

The template for landlords to use for their healthy homes standards compliance statement is available on this website. [PDF, 766 KB]

Tenancy Services will continue to produce information and tools to assist landlords to comply with the healthy homes standards.

The free downloadable residential tenancy agreement template and boarding house agreement templates will also be updated and published before 1 December 2020.

For more information call our office during business hours.