New Tenancy Regulations Proposed By Government

photo of kitchen for connect realy tauranga blog about new goverment regulations proposed 2018.

 

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 –

https://www.hud.govt.nz/residential-housing/tenancy-and-rentals/changes-to-the-residential-tenancies-act-1986/reform-of-the-residential-tenancies-act-1986/

https://www.hud.govt.nz/residential-housing/healthy-rental-homes/healthy-homes-standards/

New Rules Proposed to Improve Health Standards of Rental Homes

house renovation. connect realty blog nz

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

HEATING
Indoor temperature:
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
Heating devices:
Option 1 – landlords required to provide fixed heating devices only
Option 2 – landlords required to provide fixed and portable heating devices
Heating locations:
Option 1 – Heating provided in living room
Option 2 – Heating provided in bedrooms and living room

INSULATION
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

VENTILATION
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)
DRAUGHT STOPPING
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.

Real Estate In The Bay – The Latest REINZ Figures For Tauranga

Image of Tauranga apartment

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.

Four Things To Consider When Buying An Investment Property

house image for connect realty blog

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 Your Next Tauranga Investment Property Hotspot

photo of mount maunganui for connect realty

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.

More 5-Star Reviews For Connect Realty Ltd

papamoa beach image for connect realty property managers blog

 

When it comes to small businesses, the success of the business depends heavily on word of mouth.  With Connect Realty Ltd being a local privately owned company we understand that positive reviews & testimonials from our clients help you make a decision about whether to use our services.  

Here are some of the more recent reviews we have received On Google:

Connect Realty Ltd team have managed my property in Greerton for 4 years now and I have found their service to be reliable and timely. They accommodate my out of town visits and requests for assistance without skipping a beat. Thank you Team Connect for making rental property ownership possible. Judith Hunter

Chris and her team have been a pleasure to work with, quality service and competitively priced. Thanks. Heath Coleman

We have thoroughly enjoyed working with Chris and her team and are very happy with the tenants that Connect Realty recommended for our property. They are very efficient and quick to respond on any of our queries and nothing is too much trouble. It has definitely taken the stress out of being a landlord . Diane Coates

Chris and her team have always provided great service for my rental property in Tauranga. Highly recommended! Sydney Crocker

Have had Connect managing my property for almost 3 years. Very efficient, regular updates, sourced good tenants and unlike other agencies do not try and make additional money from constant repairs, instead arranging quality maintenance as and when needed. I wish they had an operation in Wellington so I could move my business to them there. Stephen Davies

Connect Reality have managed a number of rental properties for us over the years and we could not be happier with the service provided. Chris and her team have years of experience and in depth industry knowledge. Exceptional high standards are maintained through clear and concise policy and practises. From vetting tenants, property inspections, maintenance, rent collection and insurance through to compliance issues. Highly recommended.  R. Bawden

I would highly recommend Chris and her business. Very professional and experienced staff and anyone I have mentioned it to has only got great things to say. They have an amazing commitment to property management and have high standards and attention to detail! Again would highly recommend:)  Sarah Pearson

Chris is lovely! I’ve had the opportunity to speak with her a few times and would recommend her without hesitation to anyone who needs property management services in her area! Todd Breen

Chris and her team have managed my rental property in Tauranga for five years. During that period the house was never empty, there were four changes of tenancy over the period and every time the new tenants moved in a day or two after the incumbents departed. I am in the military and am often overseas and un-contactable, Chris dealt with all tenant issues and arranged maintenance, and contractor access with minimal input from me, which was excellent. Chris managed steady rent increases and tenants were always vetted so no issues with missed rent or damage. Chris was also very helpful when it came time for me to sell the property, allowing access for estate agents and helping to smooth things over with the tenants during the sale process. I would highly recommend Chris and her team to any investors who need reliable management of their property with minimal input. Nick Foster

 

Positive testimonials and reviews strengthen our credibility and our business and I am grateful to all the clients that have taken the time to write kind words on our website, Google and Facebook.

 

If you have any queries about our services please do not hesitate to call.

First-home buyers borrowing deposit from parents

Shaking Hands for first home buyer borrowing money from parents connect realty blog

 

According to figures out from Australia this week, in 2017 over 55 percent of first home buyers sought help from their parents to fund their mortgage.  This is a huge leap from 3.3. percent in 2010, and experts say that New Zealand is likely to be the same or even higher. One mortgage lender even suggests that 60-70 percent of New Zealand first home buyers had parental help, and for those under 30 years of age this figure jumped to 80-90 percent because of small KiwiSaver investments.

These statistics really highlights the difficulty for young people to get on the property ladder.  When taking out a home loan to buy a house, it’s typically recommended that you borrow no more than 80% of the property’s value, which means having a 20% deposit.  With average house values in Tauranga sitting at $700,000 a first home buyer would need $140,000 for a deposit. A cheaper home, for example $500,000, will still need a deposit of $100,000.  Given these figures it is easy to understand why first home borrowers need to look to family to borrow their deposit.

The negative side to the story is that most of these loans are on a “pay it back when you can basis” and interest free, which can make it difficult for parents that are also moving onto the next stage of home ownership.  It is also highlighting the gap between the haves and the have-not. Given home ownership is falling in main centres, and many more adults are renting, there is going to be an even wider gap between those who can afford to own property in New Zealand and those who will have to remain renting through their life.

For the full article see the NZ Herald – 

Bank of Mum and Dad: Broker says first-home buyers borrowing $50k to $80K from parents

Top 4 Questions Landlords Ask Property Managers

Top 4 Questions Landlords Ask Property Managers blog title with image of house for connect realty

 

We have been in the Property Management business for many years, and over these years there have been some key questions that we get asked regularly by landlords and property investors.  So to make it easy for any potential investor or new Landlord, here are the top four questions we get asked:

1. What are your fees?

At Connect Realty we like to keep things simple by using one flat rate.  Traditionally other companies may charge you commission on: maintenance work, monthly admin fee, attending mediations, payment of insurance, completing inspections, payment of rates, advertising packages, credit checks, attending tribunal and payment of body corp fees.  Our rate includes everything and there are no extra fees for any of the above!

2. How Much Will My Property Rent For?

We offer a free Comparative Market Analysis report on the potential rental value of your property. Given our many years of experience in real estate and property management in the Bay of Plenty we know the market inside out.  We can advise you on current rentals for your property type and area.  Our experience has proven invaluable to our Landlords.

3. How Is Maintenance Handled?

We arrange regular planned maintenance, such as minor repairs and preventative maintenance, to minimise problems and ensure your property remains in peak condition.  To carry out this work we use a variety of contractors who are reliable, consistent and offer value for money.  Quotes can be obtained for most maintenance.  Clients can also stipulate a maintenance spending limit or choose to have no maintenance carried out without their approval.  In this case clients will be contacted for all maintenance issues.

The types of renovations, repairs and maintenance that should be carried out can generally be classified as urgent, short term and long term maintenance. Generally urgent and short term issues are those day to days issues which are essential for health and safety and to comply with provisions of the residential tenancies Act.

Long term issues are not considered urgent and clients can address and plan for these at some stage down the line, often between tenancies. These issues are generally communicated to clients after inspections.   Addressing these issues makes the property more tenantable and often improves the likely weekly rent. These issues might include replacing vinyl and carpet which may be damaged or old, repainting the home in attractive colours or patching a wall or room.

Our flexible property management service allows clients to have an agreement with us in advance with regards to who organises what maintenance when it is necessary.  This means you will always know where you stand and you will not have unnecessary costs that you were unaware of.   

4. How Do You Market My Property and How Soon Will It Be Rented?

Our marketing plans includes promoting your property on the main real estate websites www.trademe.co.nz and www.realestate.co.nz and our own website www.connectrealty.co.nz .

The average timeframe to secure tenants is 14-28 days. When tenants vacate they are required to give a minimum of 21 days notice and we begin marketing for new tenants immediately.  The majority of properties we manage have new tenants secured before existing tenants have vacated.  This is especially true in today’s market where there is a shortage of quality rental properties.

 

Hopefully these answers will help you with those key questions.  For any further property investment advice and/or information about the services we offer as Property Managers please call our office 0800 333 221.  We are always here to help.

Predictions for Tauranga Rental Prices For 2018

photo of tauranga for predictions of rental prices in tauranga connect realty blog

 

A question we often get asked, by both tenants and landlords, is will rents rise in the coming year?  The simple answer is yes, they will.  Here are some of the reasons why:

As you would have read over summer, Tauranga, just like Auckland, has a serious rental shortage, especially quality rental homes. The shortage is a simple case of supply and demand.  Our region continues to attract record numbers of new ‘migrants’ to our suburbs, but due to lending restrictions, increasing mortgage rates, and a significant increase in house prices, it is difficult for many of these people to buy a home in Tauranga.  Therefore, many families moving here are looking for short or long term rentals.  Their search is made even more difficult because many existing tenants are choosing to stay in their rentals long term, knowing that quality rental properties are hard to come by.  So the usual demand for quality properties is exacerbated by increased migration and fewer home buyers, and this situation will unlikely change in the foreseeable future.  

Other factors leading to rents rising include lending restrictions on investors and the new Government changes around rental property compliance.  The Labour Government will also be cracking down on so-called ‘negative gearing’, where costs such as interest payments on a residential investment property can be used to offset tax owed on income from other sources.

Additionally, over the last few years there have also been extra costs for landlords such as rates and insurance increases,  and costs associated with drug testing of properties.  These factors, combined with more landlords exiting or choosing not to enter the market, means demand is high and supply is low, which leads to increasing rental prices.

Of course rising rents isn’t something new, the Trade Me Rent Price Index (a monthly analysis of the rental property market across NZ) shows that between December 2016 and December 2017 average rent rose 7.3%  in the Bay of Plenty.  However tenants shouldn’t be alarmed, as per our tenancy contracts, rent cannot be increased for 180 days from the start of the tenancy and a landlord is required to give 60 days notice of any increase in rent.  Usually rent increases for our tenants are small and gradual.

If you are a Landlord in this turbulent property market, we are happy to discuss your options for a long-term strategy.  Having the right plan and processes in place will to enable you to get through the next few years’ challenges and come out the other end in a stronger position. Remember, property investment is a long game and short-term losses or gains should form part of your overall long-term strategy.

For any other rental investment advice please phone us for a chat, we are happy to work through any questions you have and we offer free rental appraisals for landlords.