This month saw new Government regulations proposed for two key issues that will have significant effects on the residential property rental sector. Submissions were called for on proposed changes to the Residential Tenancies Act and the Healthy Homes Guarantee Act.
The current Government says its proposed reform of tenancy laws aims to “make life better for renters” by:
- Improving tenants’ security and stability while protecting landlords’ interests
- Ensuring the law appropriately balances the rights and responsibilities of tenants and landlords and helps renters feel at home
- Modernising the legislation so it can respond to the changing trends in the rental market
- Improving the quality of boarding houses and the accountability of boarding house landlords.
Contentious proposals on which the Government is seeking feedback include:
- Ending no cause terminations while ensuring landlords are still able to end tenancies for justifiable reasons
- Increasing the amount of notice a landlord must generally give tenants to terminate a tenancy from 42 days to 90 days
- Whether changes to fixed-term agreements are justified to improve security of tenure
- Limiting rent increases to once a year
- Whether there should be limitations on the practice of ‘rent bidding’
- Whether further controls for boarding houses are needed to provide adequate protection for boarding house tenants
- Introducing new tools and processes into the compliance and enforcement system.
While some proposals are welcomed by landlords and property managers, some of the proposed changes, including increasing the termination notice period to 90 days would make problem tenancies significantly harder to deal with.
There has been a call from the New Zealand Property Investors Federation for stronger rules around rental payments to dissuade tenants from not paying.This could involve the ability to charge interest on outstanding rent, the ability to charge tenants’ credit cards or exemplary damages if they don’t pay their rent, and faster access to the Tenancy Tribunal for rent arrears cases.
Tony Alexander, Chief Economist at the Bank of New Zealand, predicts the regulations will make property owners more selective about who they allow into their properties, and rent rises when tenants change will likely increase while demand for state housing also rises. He said some investors would sell, worsening the housing shortage.
To find out more about the proposed changes visit the Ministry of Housing & Urban Development site –
Housing and Urban Development Minister Phil Twyford has issued a consultation paper on minimum standards proposed under the Healthy Homes Guarantee Act, which the Government says must be in place by July 1st next year.
The proposed standards will set minimum requirements for heating, insulation, ventilation, moisture and drainage, and draught stopping in residential rental properties. The public consultation paper examines issues and suggests options for each category.
The Minister said the proposed standards were “designed to eradicate the tens of thousands of health complaints resulting every winter from “damp, cold and mouldy” rental homes”. He also stated that the current Government is “committed to improving the quality of rental properties so that families living in rental properties are happier and healthier”.
The proposals come on the back of the Government’s Healthy Homes Guarantee Act passed in December. They will require all landlords to bring their rental properties up to the new health standards, except where those improvements are not practical.
Landlords who did not comply with the new standards could face a $4000 fine issued by the Tenancy Tribunal. It was unclear how many of the country’s rental properties would need to be modified, Twyford said.
PROPOSED RENTAL HOUSING STANDARDS
Option 1 – heaters able to maintain a temperature of at least 18 degC in applicable rooms
Option 2 – heaters able to maintain temperature of at least 20 degC
Option 1 – landlords required to provide fixed heating devices only
Option 2 – landlords required to provide fixed and portable heating devices
Option 1 – Heating provided in living room
Option 2 – Heating provided in bedrooms and living room
Minimum ceiling and underfloor insulation level:
Option 1 – no change from 1978 standard for existing insulation and 2008 Building Code standard for new installations
Option 2 – 2001 Building Code standard for existing insulation and 2008 Building Code standard for new installations
Option 3 – 2008 Building Code standard for existing and new insulation
Insulation degradation levels:
Option 1 – 30 per cent reduction classed as unreasonable
Option 2 – 10 per cent reduction classed as unreasonable
Appropriate ventilation method:
Option 1 – No change: At least one window in all bathrooms, sufficiently-sized windows in other habitable rooms and adequate ventilation in non-habitable rooms
Option 2 – Openable windows in living room, dining room, kitchen, and bedrooms – unless exemption applies and bathrooms have extractor fan
Option 3 – Same as option two, plus extractor fan in rooms with indoor cooktop
MOISTURE AND DRAINAGE
Option 1 – No change: efficient drainage for removal of stormwater, surface water and ground water; gutters and drains to remove roof water; adequate ventilation to prevent floor dampness
Option 2 – addition of subfloor ground moisture barrier (81 per cent of rental homes do not have these)
Option 1 – No change: Walls and ceilings sheathed, plastered, rendered and maintained; no crevices, holes or depressions in floor
Option 2 – Unused fireplaces and chimneys and gaps or holes bigger than three millimetres to be blocked
The discussion document and an online survey are available at www.mbie.govt.nz/healthy-homes Consultation is open for seven weeks with submissions closing at 6pm on Monday 22 October.
The Real Estate Institute of New Zealand (REINZ) has released their latest figures today and, according to the new data, Tauranga house prices have jumped 4.5 per cent.
The latest data shows the median house price in Taurangas jumped to $635,000 in July 2018 from $607,500 in July 2017. Interestingly though, However, the median house price dropped 3.1 per cent from $655,000 in June 2018 to $635,000 in July 2018.
According to the REINZ regional director Philip Searle, as quoted in the Bay of Plenty Times, the Bay of Plenty market was still seeing low stock levels with a number of new listings attracting multi-offers.
“Investor numbers are jumping and are up to 60 per cent of the total buyer interest, and most of the investors are locals who know the area well.”
Searle said the low listing numbers were keeping the prices strong with vendors’ expectations remaining at the same levels.
You can read the full Bay of Plenty Times article Here.
If you are thinking of buying an investment property in Tauranga, Connect Realty Ltd can provide local expertise and advice about the current housing market. We also have in place highly effective systems that set us apart from traditional real estate agencies. We offer a results driven solution for the management of your property investment. When we speak with you about your portfolio, we will discuss the now, the near future and the long term picture. As part of this we are able to discuss development plans to ensure you maximise the potential value of your investment portfolio.
Property is often the largest investment many of us will make, so it is worth the time to ensure you have the right team of industry professionals supporting you in reaching your goal, giving independent advise on where best to invest your money.
With the Tauranga property market doing so well over the last few years, more people are interested in getting into property investment. Of course, property investment is not something to consider lightly and is not always smooth sailing for Landlords. There are some key things you should consider when buying an investment property and to help you on your journey here are four questions you should think about:
1. What are you trying to achieve?
Is it money? Is it wealth? For most people, the answer is financial freedom. The actual bricks and mortar of your property probably isn’t your end goal. Rather, it’s the vehicle to get you to where you want to be. Therefore, treat property investment as a journey, and don’t get lost along the way.
2. What strategy are you going to use to get you there?
For some investors, their preferred strategy is high growth properties. For others, it is a consistent cash flow. If you are in the first camp, you need to look for properties priced below their intrinsic values in areas that are going to perform well in the long term. Look for something that is a bit unique, a bit different or special, and add value. Look for a property that’s going to be in strong demand by owner-occupiers rather than just tenants.
If cash flow is your main driver then consider investing in either established or growth suburbs. Buy property that is near schools and shops, is easy to maintain and will be easy to rent out.
3. What can you afford?
We recommend visiting a proficient finance strategist, either your bank or a professional financial advisor or accountant who understands how to set your finances correctly. Also, always get your loan pre-approved, because that is going to be one of the factors that affect where you buy and the sort of property you can buy.
Before you purchase your property, talk to our team for a free market appraisal of the property to make sure you are realistic about what you will achieve.
4. Who do you ask for advice?
As stated above, you should always talk to your bank and accountant for professional advice about your finances/costs. We also recommend using a good lawyer to get the right ownership structures, the right entities etc.
Next, you should speak to a certified Property Manager for independent property advice. This can help protect you from investing in the wrong type of property or paying too much for an investment property.
If you are thinking of purchasing an investment property in Tauranga, give Chris a call. Chris has many years of real estate and property management experience and will give you the best advice for your property investing goals.
Finding the next property hotspot is important for many property investors and especially for those entering the investment market for the first time and/or hoping to get a capital gain on their investment. Of course, finding that hotspot is like finding the golden egg, it requires a keen eye and an expert team on your side. Besides finding the right neighbourhood, you also need to find the right street and the right house. Read some tips below on what to look for when searching for a new property investment in Tauranga and then give Chris a call to get things started.
Tauranga Real Estate Trends & The ‘Ripple Effect’
While it is not always easy to predict the next property hotspot, often the latest high growth area creates what is called the ‘ripple effect’, where buyer demand and capital growth ‘ripples’ outwards from one suburb to the next. Simply, as prices increase in the ‘hot’ suburb buyers tend to look for ‘the next best thing’ that falls within their budget; in adjoining, lower-priced suburbs. This ‘ripple effect’ in capital growth most commonly moves from the inner suburbs outwards, and along or away from the coastline.
For example, Papamoa has seen a huge increase in new housing stock and house prices over the last few years, as well as new roads, new schools and new shops. Due to this growth, there has been a huge increase in demand for housing and rentals in Papamoa which has resulted in many families having to look further afield for a home to surrounding suburbs. As a result, areas such as Welcome Bay and Te Puke have also started to see signs of growth in both population, house prices and rental prices.
So take a look at websites such as interest.co.nz and see what trends are taking place in Tauranga this year. Take note of how the surrounding areas of these growth suburbs are performing, is there infrastructure spend happening, new roads, proposed new schools, etc?
In general, New Zealand town planning has a sprawl mentality rather than a build-up focus, so look at fringe areas that have good access to key roading routes and land where possible new subdivisions could happen. Also, take a look at Council long-term plans. These documents outline future growth areas and where new development will take place. You may find that an existing neighbourhood borders on a new subdivision, which will then benefit from new infrastructure.
Go To The Streets
It may sound fairly obvious but it really is important that you get a feel for the streets within a suburb. By walking/driving around the neighbourhood, you can rule out those streets that are just too run-down or too far away from schools, bus routes etc. Also, there can be sunny sides of the street or reserves and walkways that could add or detract from properties. Don’t rely on Google Maps to do the walking, get out there and get a feel for the place.
Our team at Connect can also provide you with a market analysis of the area and give you some feedback from our real estate knowledge of different Tauranga neighbourhoods.
What Type Of House
For some areas in the Bay, building a new home may have better returns and long-term capital gain than older housing stock. Look at house and land packages in new subdivisions and consider solidly built insulated homes that are close to schools, have a garage, are fenced etc. These homes are generally easier to maintain, attract quality tenants and have good capital gains.
If you are buying an older home, look for one that you can easily add value to. Changes we recommend are insulating, updating bathrooms and kitchen, new carpet and curtains, and a fresh paint job. Tenants also prefer a garage or off-street parking, fenced properties and warm, dry homes.
We are happy to provide a free rental appraisal for any home you purchase or are considering purchasing.
Good luck with your hunt and when you are ready, call Chris and the Connect Realty team for some professional, experienced property investment advice.
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