Housing New Zealand Rental agreements

[Phant]

Just wondering if anyone can help me with a few questions, currently looking at a house with a rental agreement to housing NZ for another 5 years.

I was told they look after all the maintenance in the house and will leave it in a decent condition when the agreement finishes, is this true?
Does a house price increase in value when the agreement finishes, or does it normally have the HNZ stigma?
Do the banks look at it the same way as any other property?
Do these properties include GST and if so does that make me a trader for tax purposes?
Is there anything I should be aware of with looking at a housing NZ rental property?

Thanks in advance

[PukekoManukau]

Hi Phant,

I looked into investing with an HNZ house a while ago and turned it down. You really need to have a lawyer look at it before deciding. Further complicating the situation is that HNZ offered a new lease to existing landlords a while ago where part of the water rates would be covered along with all damage, however they also inserted a clause where rent increases were limited to inflation. Only some landlords accepted these new leases so now there are two versions active.

In theory the value of the house should increase back to normal after the lease expires, however this would be a different story if it was a HNZ block and you owned one unit out of twelve. The type of property would also be a key consideration when you make your decision.

Hope this helps

Jimmy Ho
Pukeko Rental Managers

[artemis]

Not much help from me but I have read on this Forum back in the day that Housing NZ repair damage at the end of the lease but not wear and tear. Which is fair enough, as the rent should cover that, but something to be aware of.

A family with several children can create a lot of wear and tear over several years.

[ripeka]

we have one which is a standalone house and which has done very well for capital gains. HOWEVER, rent has pretty much been static since June 2010 and is only increased on the basis of CPI. It used to be based on market rental valuation but they offered us a new lease 5 years ago which had some sweeteners in it (a minor work threshold of $5000 which HNZ says they will do the minor repairs to the property as they are needed - however, we basically argue with them and they get to decide whether or not to do the minor work!). The negative tradeoff was the changed conditions as to how the rent was calculated. We have kicked ourselves since (were overseas for a year at the time so didn't get the lease checked over by a lawyer).

Eventually, the property will be work out fine as an overall investment owing to the area it is in, BUT I dislike the lack of control. Dealing with HNZ is PAINFULLY slow. A tenant busted a glass stove top. Took months to get it sorted and it was only finally actioned by them when I threatened them with a breach of their duty under Health & Safety laws. When dealing with them, I feel as though they are in the category of an incompetent insurance company. SLOW, and always trying to find a way to wiggle out of their obligations. I am not holding my breath as to getting the place back in very good condition and imagine we will need to spend $40k before sale.

I also dislike never knowing whether they will exercise their right of renewal or not. The first one (at 10 years) is on the horizon and they can choose to roll it over for a further 5 years (and then another 5 years after that I think). So again, a complete lack of control. We could try and sell it BUT the capital gains make it a poor investment for another investor so it will just sit there and we will have to continue to prop it up because rents still don't cover the mortgage repayments after 8 years. I would never do it again.

[Anthonyacat]

Do these properties include GST and if so does that make me a trader for tax purposes?

Off the top of my head I don't know whether the rental stream includes GST - this should be obvious in the agreement. But even if it did this would not make you a trader.

[Minz]

I have one and THANK GOODNESS there is only 14 months left on the lease. HNZ are dreadful landlords. For me at the end, all will be good but they DO NOT do the annual inspections without HUGE pressure and do not fix issues inside the property (to make the tenants life better) as they say they will do it at the end of the lease. Overall, the investment has been good, rent is way below market now but 52 week rent for 5 years. I have preferred the new lease compared to the previous ones as contractors would rip-off the HNZ prior to that. I have documented evidence of horrendous roof repairs and quotes for complete repainting from what I assume were crooks - HNZ charged me $12,000 for the work 8 years ago, within three days, they reversed the charges when they got a copy of the email trail!

I will definitely not be getting the lease renewed for a further five years as I have an ethical approach to being a landlord and want good conditions for any tenant in one of my properties.

[ripeka]

I have one and THANK GOODNESS there is only 14 months left on the lease. HNZ are dreadful landlords. For me at the end, all will be good but they DO NOT do the annual inspections without HUGE pressure and do not fix issues inside the property (to make the tenants life better) as they say they will do it at the end of the lease. Overall, the investment has been good, rent is way below market now but 52 week rent for 5 years. I have preferred the new lease compared to the previous ones as contractors would rip-off the HNZ prior to that. I have documented evidence of horrendous roof repairs and quotes for complete repainting from what I assume were crooks - HNZ charged me $12,000 for the work 8 years ago, within three days, they reversed the charges when they got a copy of the email trail!

I will definitely not be getting the lease renewed for a further five years as I have an ethical approach to being a landlord and want good conditions for any tenant in one of my properties.

Minz - is it your option though whether the lease renewal is activated or not? My understanding is that it is not my choice but that HNZ have a right to roll it over for a further 5 year period and I don't have a choice in the matter. Maybe I am not reading the lease properly or perhaps your lease is different to mine?

[Minz]

Minz - is it your option though whether the lease renewal is activated or not? My understanding is that it is not my choice but that HNZ have a right to roll it over for a further 5 year period and I don't have a choice in the matter. Maybe I am not reading the lease properly or perhaps your lease is different to mine?

Possibly different lease: but mine does allow me to terminate on my "Final Expiry" date subject to Clause 45 in Schedule 2.....(b) by the Lessor serving on the Lessee not less than three months' notice (blah blah blah..to enable the Lessee to give notice to terminate any sub-tenancy and comply with its corresponding obligations to its sub-lessee under the act) in writing at any time.

[sidinz]

I inspected over 1000 of their houses about three years ago and based on that I would never lease a property to them. I certainly wouldn't trust them to repair damage in a timely and workmanlike manner.
the only type of property I'd consider leasing to them would be an over-60s unit. The old ladies in these tend to keep them immaculate.

[Tonih]

I would strongly recommend AGAINST renting your property to Housing NZ. HNZ charge the same as a commercial property manager, but do not offer the same services. HNZ claim on their website that they do annual inspections, but in fact they do not do any inspections, which leaves owners very vulnerable to damage by tenants. Owners have to do their own inspections to satisfy the requirements of their insurance policies - in my case, this is every 3 months. This is extremely time consuming and frustrating. HNZ need to review their property management services and start providing the services that any commercial property manager provides.

[Don't believe the Hype]

Sounds like there is grounds for a class action agains HNZ - any of the lawyers on here want to come t?