Property Investment in 2020

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:

Tips for Selecting a Property Manager

When selecting the right Property Manager to manage your investment property it’s important that you consider the following factors:

  • That your Property Manager accurately appraises your rental property to ensure you are getting the best return on your investment.
  • That the turn around time to rent your property to quality tenants is fast and efficient, keeping your vacancy period to a minimum.
  • That your Property Manager understands the importance of good service and presentation to attract the right tenant, who in turn will pay the rent on time and respect the property.
  • That your Property Management company knows the importance of thorough tenant screening and also induction processes, to ensure new tenants are well educated on expectations and tenancy laws.
  • That the Property Manager believes that the rent must be paid on time every time and educates the Tenant accordingly.
  • That all repairs and maintenance issues are dealt with promptly and effectively, as they are observed or reported by the Tenant.
  • The property is kept well maintained and that there is a high level of cleanliness at property inspections, and that they quickly follow up any issues with the Tenant.
  • That the Property Manager ensures the property is vacated satisfactorily to a high standard of cleanliness, comparing the property to a comprehensive written condition report and a variety of digital photos taken at the tenancy start.

If you feel your current Property Manager is not providing this service please feel free to contact our team at Connect Realty 0800 333 221. Our business and reputation are built on providing a professional, thorough, and accountable service. If you have a property in Tauranga or other parts of the Bay then we can offer all the management services you need.

Deadline extended for healthy homes standards compliance statement

The deadline for landlords providing a compliance statement for the healthy homes standards has been extended from 1 July 2020 to 1 December 2020.

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.

Alert Level 2 Guidance for Landlords and Tenants

On 14 May 2020, New Zealand moved to Alert Level 2.

What will change at Alert Level 2?

  • Tenants are able to move to a new rental property. Removal companies can assist with moving, with some conditions: movers will have to comply with physical distancing, personal hygiene and surface cleaning guidance and should keep records for contact tracing purposes.
  • Friends and family can help tenants move. If they are well known to the tenant, physical distancing procedures are not required. However, we recommend that personal hygiene and surface cleaning procedures are still adhered to and that those moving record the names and contact details of people who helped.
  • In-person inspections of occupied or vacant rental properties can take place. Landlords and tenants should adhere to physical distancing, personal hygiene and surface cleaning guidance and should keep records for contact tracing purposes.
  • Tenants cannot unreasonably refuse an inspection, however for those who are considered at risk of severe illness from COVID-19, that could be reasonable grounds for refusal. The list of people at risk of severe illness from COVID-19 can be found on the Ministry of Health website  .
  • Maintenance can be undertaken. Physical distancing and hygiene guidance should be followed when inside homes, including surface cleaning on the area that is being worked on. Records should be kept for contact tracing purposes.
  • Open homes are permitted under Alert Level 2 with the tenant’s consent as long as the guidance on physical distancing, personal hygiene and surface cleaning for Alert Level 2 is observed. Records should be kept for contact tracing purposes.
  • The Real Estate Authority has developed guidance for in-person inspections for properties for sale. These guidelines should be applied to rental viewings. Conducting real estate business during COVID-19 alert level 2 (Real Estate Authority)  

The Ministry of Housing and Urban Development has information on what it means for landlords and tenants to move from Alert Level 3 to Alert Level 2.

Landlords and property managers can find up-to-date information for businesses on the website  .

More information on safe practices at Alert Level 2 is available on the WorkSafe website  .

Alert Level 3 Guidance for Landlords and Tenants

The country has now moved into Alert Level 3. Find out what this new level means for owners and tenants. If you have any questions regarding your own rental property, please contact our team directly.

What will change at Alert Level 3?

  • Tenants are allowed to move to a new house and moving companies will be able to help tenants. Movers will have to adhere to physical distancing rules and should keep records for contact tracing purposes.
  • Routine inspections of rental properties cannot take place unless it is an emergency situation, such as a landlord needing to confirm that emergency maintenance is required.
  • Maintenance can only occur in emergencies or with tenant approval. This might include plumbers, electricians and tradespeople who can work on, and inside rental properties.
  • We recommend landlords arrange for professional services to clean or undertake maintenance of their vacant rental property.
  • Open homes where multiple people view a property cannot take place.
  • In-person viewings for rental properties can take place under Alert Level 3 with some restrictions. If the property is tenanted, landlords will need approval from the tenants and viewings should only occur when the tenants are not on the property.
  • During viewings, physical distance should be maintained and contact with surfaces kept at a minimum. Anything that is touched should be wiped with disinfectant. In-person viewings should be limited to two per day per property.

The Ministry of Housing and Urban Development has further information on what it means for landlords and tenants to move from Alert Level 4 to Alert Level 3.

Landlords and property managers can find up-to-date information for businesses on the website  .

More information on safe practices at Alert Level 3 is available on the WorkSafe website.  

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