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Here is a copy of our April newsletter.
Non members welcome to attend at no cost.
Our next meeting is being held at the Nelson Suburban Club, Tahunanui Drive on Tuesday 7th April. The meeting proper commences at 7.30 pm with the ever popular meal at 6pm when you will have the opportunity to chat to other investors. Liz Harris the owner of Franklyn Village (Nurses Home) is speaking. Liz comes to us from Christchurch where she runs a similar facility along with having a massive portfolio of residential properties. Terry and I were at a meeting recently where Liz spoke briefly. I instantly got the impression that she is a focused person who takes on big projects and knows how to achieve the impossible. RSVP Glenn for the meal please (Ph 03 547771
or better still email me.
As many of you will have noticed the selling side of the industry has had a fantastic month. Suddenly multiple offers have been flying around and sold signs have gone up on houses all over the country. From what I have casually observed many buyers have got a good deal. One property I was involved in managing perhaps tells what is possible. It was sold for slightly more than advertised asking price. (Multiple offers). I let it quickly to good tenants before possession date by getting the applicants to look through the windows. We achieved exactly 7% Gross return. ($320 rent on a purchase price of $236,000).
Obviously the sudden drop in interest rates has caused this surge. The downside is lots of empty houses now have occupants, be they owners or tenants. This surge has rippled through the rental industry and some properties are now struggling to find good tenants.
I wrote the following article for the NZPIF.
Most members have been through the tribunal process and know how to get a money order. But often at this point the trail goes cold and large numbers of debtors never pay the court awarded debt. Up until the tribunal hearing the friendly staff at DBH are there to help new and inexperienced landlords through the process of dealing with a tenant that does not pay. However from this point onwards you are on your own. It is really important for both your own bank balance and for the wider investing community to do these enforcements, otherwise the court process gets to be held in contempt encouraging more tenants to never pay their debts. I have a reputation amongst many bad tenants that I will always bring home my
man. This helps the process of managing many of the high risk tenancies that I handle.
If you have a termination order and money order from the Tribunal the best practice is to apply at the District Court for both a Distress Warrant (eviction) and the Order for Examination (OE). The OE is the process for enforcing the debt. The court bailiff serves a summons on the debtor that requires them to come to the court to organise the payment of the debt. If the debtor ignores the summons then an arrest warrant is issued and the bailiff can forcibly bring the debtor into the court, sometimes getting the police to assist with this process. The best time to catch the tenant in order to serve this summons is when they are still in your house. Sometimes you can even get the OE served before you evict the tenant. After they have departed from your house it gets harder.
The first step is to find out an address where the debtor lives to permit the bailiff to serve the summons. Often the summons can be served at their work address. Very occasionally the bailiff will serve the summons at court if the debtor is appearing for some other case or doing community service. Landlords need to collect up as much information as possible about parent’s addresses, vehicle registration and employment at the application time, during the tenancy, and at the end of the tenancy. Often when cleaning up after the eviction you find payslips and other correspondence that might be of help. The other major source of new addresses is the Veda monitor hit service. If you have done a credit check initially, go to the saved file on the Veda site, bring up the old saved report and click on the “Load Monitor” button at the bottom of the page. Then when the debtor gets a new credit check done on them for a new tenancy you will be emailed their new address. There are two choices under monitor loading; one is for “changes of address” and the other is “any activity”.
If you get a hit on ‘any activity” it supplies the name of the enquirer. You can then contact that enquirer. Often the enquirer will be pleased to hear from you because this will give them some more information about the person of interest. You can ask for an address and a phone number off the enquirer. Sometimes this hit process can take several years before you get a hit, so patience and tenacity is required. It can be a bit of a hit and miss process too, so do not get too excited when you get one. I must admit I get an adrenaline rush every time I get one just like you do when a decent bite comes on your fishing line. Another major source of addresses is the free data matching service offered by the DBH / Justice Department. You are permitted to apply for the address to be released confidentially from WINZ to the court, for enforcement purposes. The hardest part of this process is getting the forms to make your application. You can either get them down loaded from DBH web site or order them from their central office. For what ever reason the local DBH offices do not seem to have them available. Sometimes you need to make several attempts to get these addresses as people move in and out of jail or in and out of being on a benefit. There are several commercial operators who will find addresses for you in return for a reasonable fee; these fees are not recoverable yet. The RTA amendments are supposed to allow for this but how it will work is still a mystery. If the OE hearing is taking place in another city you will need to employ the services of a specialist lawyer to appear for you at the OE hearing. The courts will no longer let you use a friend or family member to appear for you. If a lawyer is used then the courts will let you add another $120 to the debt so eventually the debtor will pay for the lawyer’s fee. You of course are responsible for paying the lawyer regardless of the outcome. Most landlords hate paying for something they can do for themselves so they will often travel to the OE hearing in remote courts. This is an expensive soul destroying process if the debtor does not show. You are not permitted to add your costs for attending, so the use of a lawyer is a smart way to go.
When there are two people on a tenancy agreement / court order you are permitted to do an OE on both of them at the same time. Just do not forget to add the second $90 application fee to each separate application. I find going for the women is best because they are more likely to be beneficiaries. The court will award you an attachment order of say $20 against wages or a benefit. The benefit is best because even if the debtor comes and goes off a benefit you will generally get all of your debt paid. If the debtor is in paid employment then the debt can often be paid off quickly at say $50 per week. Your debt is court awarded so comes before finance company debts and other unsecured debts. Normally other court awarded debts will come first. Often employees will resign from a job rather than let you get your money. When this happens you are permitted to apply to the District court for a contempt proceeding. The cost of these hearings can be added to the debt. However they cost $350 so it is more cost effective to just apply for another OE at $90. Again do not forget to add the previous application fees and lawyers costs to the second OE application. I have had good success on second strikes; I guess the debtors get the message when their debts keep increasing. Remember the bigger picture when collecting; we all have a civic duty to enforce our debts. Readers are permitted to reproduce this article at no cost providing they give me a credit for it. (Used with permission by Glenn’s Vacancies, Property Management, Nelson.)
RTA AMENDMENT BILL BROUGHT FORWARD
UNEXPECTEDLY.
The act has been under review for years, but progress has been slow.
Housing minister Phil Heatley says the bill introduced to Parliament last year was “well-intentioned” in that it aims to encourage stable tenancies in homes which are well-looked after while enabling landlords to better manage them.
However, he says, concerns have been raised about some specific provisions and matters for which provision was not made, particularly: the absence of proposals allowing for decisive action to be taken to deal with assaults, or threats of assault, by tenants' guests or associates. Proposals that will ensure landlords are not hit with the costs of damages done by tenants and those they invite into their homes; ensuring that the Tenancy Tribunal doesn't become an uneven, expensive and time consuming forum through the introduction of professional advocates; clarity around the legal status of a tenancy once the original tenant passes on (inherited tenancies).
The proposed bill was also going to stop real estate agents charging letting fees. Heatley says this will be reconsidered.
Press Release on RTA Amendment Bill
The New Zealand Property Investors’ Federation (NZPIF) is extremely pleased that the Government announced changes yesterday to the Residential Tenancies Act Amendment Bill. We are particularly relieved to see two parts of the Bill looking to be changed, which were limiting tenant’s liability for damage and introducing Professional Advocates into the Tenancy Tribunal system. We have been particularly concerned about the introduction of these two schemes for some time.
However there are many things in the Bill, first introduced by Labour when they were in Government, that we are keen to see in place, such as using emails as an address for service, enabling
the recovery of expenses incurred in recovering overdue debts, and adding several new unlawful acts such as exceeding the maximum number of tenants allowed in a property or not leaving the property on the appointed departure date.
Probably the most welcomed part of the Bill is making “Abandonment of the premises without reasonable excuse” an unlawful act, where the landlord can receive exemplary damages of up to $1,000. Rent arrears is by far the main reason for applications to the Tenancy Tribunal and the leading problem for the entire industry. This is the first time that any deterrent has been applied to tenants who vacate the property owing rent. “I think it sends a message that paying your rent is important and there are now consequences if you choose to run away from your debts” says NZPIF President Martin Evans.
With the withdrawal of these two controversial parts of the Bill, which were added after it was first muted back in 2003, there is a move back towards the original intention of achieving a balance of rights between tenants’ and landlords’. The idea of limiting a tenants liability for damage and passing it onto the landlord flies in the face of self responsibility. Apart from the absurdness of landlords having to pay for insurance that only benefit the tenant, the Insurance Council has said that this is the most expensive method of providing such insurance. If the beneficiary of the insurance does not have any cost applied to them for any of their actions, then this will lead to higher levels of damage. As a result of this, insurance premiums would need to be higher than if the tenant took out the insurance themselves.
We also believe that the initiative will lead to double insurance as the vast majority of tenants have contents insurance which gives them the same cover for accidental damage they cause to their rental property. The NZPIF has argued for many years that if Government believes that tenants need compulsory insurance protection then the cost should be applied to the tenant. After all, it is the tenant who is getting the benefit of the insurance. If they have contents insurance then they are already covered, if they don’t want or need contents insurance then they can take out the cheaper Third Party Liability insurance option instead. The landlord shouldn’t be involved as they are an independent third party.
We are also very pleased that the topic of Advocates in the Tenancy Tribunal is to be revisited. Through consultation with landlord groups in Australia, we have been made highly aware of the injustice that’s advocates can bring to the Tenancy Tribunal for landlords. Although originally advocates were to be just for tenants, the idea was watered down to make Advocates allowable for landlords as well. While this may appear fair, the experience of Australian landlords was that it was far from being fair and led to a lack of justice for landlords’. In Australia, tenant groups are granted millions of dollars every year for them to be able to supply tenants with free advocates. This effectively established an industry that was funded by public money, forcing landlords to either pay for their own lawyers, which was often cost prohibitive, or to argue their case against a trained professional who knew the law backwards and was handling tenancy cases on a daily basis.
We are extremely relieved that this issue is going to be looked at again before the Bill is past and congratulate the Government on their decision.
PS I hope you noticed that we have changed our meeting day to a Tuesday. This is at the suggestion of the Suburban Club. By meeting on Tuesday the Sandcastles Restaurant is quieter and the Rock and Roll club does not meet in the adjacent room.
Non members welcome to attend at no cost.
Our next meeting is being held at the Nelson Suburban Club, Tahunanui Drive on Tuesday 7th April. The meeting proper commences at 7.30 pm with the ever popular meal at 6pm when you will have the opportunity to chat to other investors. Liz Harris the owner of Franklyn Village (Nurses Home) is speaking. Liz comes to us from Christchurch where she runs a similar facility along with having a massive portfolio of residential properties. Terry and I were at a meeting recently where Liz spoke briefly. I instantly got the impression that she is a focused person who takes on big projects and knows how to achieve the impossible. RSVP Glenn for the meal please (Ph 03 547771
or better still email me.THE MARKET
Obviously the sudden drop in interest rates has caused this surge. The downside is lots of empty houses now have occupants, be they owners or tenants. This surge has rippled through the rental industry and some properties are now struggling to find good tenants.
COLLECTING YOUR DEBTS
Most members have been through the tribunal process and know how to get a money order. But often at this point the trail goes cold and large numbers of debtors never pay the court awarded debt. Up until the tribunal hearing the friendly staff at DBH are there to help new and inexperienced landlords through the process of dealing with a tenant that does not pay. However from this point onwards you are on your own. It is really important for both your own bank balance and for the wider investing community to do these enforcements, otherwise the court process gets to be held in contempt encouraging more tenants to never pay their debts. I have a reputation amongst many bad tenants that I will always bring home my
man. This helps the process of managing many of the high risk tenancies that I handle.
If you have a termination order and money order from the Tribunal the best practice is to apply at the District Court for both a Distress Warrant (eviction) and the Order for Examination (OE). The OE is the process for enforcing the debt. The court bailiff serves a summons on the debtor that requires them to come to the court to organise the payment of the debt. If the debtor ignores the summons then an arrest warrant is issued and the bailiff can forcibly bring the debtor into the court, sometimes getting the police to assist with this process. The best time to catch the tenant in order to serve this summons is when they are still in your house. Sometimes you can even get the OE served before you evict the tenant. After they have departed from your house it gets harder.
The first step is to find out an address where the debtor lives to permit the bailiff to serve the summons. Often the summons can be served at their work address. Very occasionally the bailiff will serve the summons at court if the debtor is appearing for some other case or doing community service. Landlords need to collect up as much information as possible about parent’s addresses, vehicle registration and employment at the application time, during the tenancy, and at the end of the tenancy. Often when cleaning up after the eviction you find payslips and other correspondence that might be of help. The other major source of new addresses is the Veda monitor hit service. If you have done a credit check initially, go to the saved file on the Veda site, bring up the old saved report and click on the “Load Monitor” button at the bottom of the page. Then when the debtor gets a new credit check done on them for a new tenancy you will be emailed their new address. There are two choices under monitor loading; one is for “changes of address” and the other is “any activity”.
Disclaimer. Anyone stupid enough to act on advice or comments in this newsletter without thinking for themselves deserves to suffer the consequences.
If you get a hit on ‘any activity” it supplies the name of the enquirer. You can then contact that enquirer. Often the enquirer will be pleased to hear from you because this will give them some more information about the person of interest. You can ask for an address and a phone number off the enquirer. Sometimes this hit process can take several years before you get a hit, so patience and tenacity is required. It can be a bit of a hit and miss process too, so do not get too excited when you get one. I must admit I get an adrenaline rush every time I get one just like you do when a decent bite comes on your fishing line. Another major source of addresses is the free data matching service offered by the DBH / Justice Department. You are permitted to apply for the address to be released confidentially from WINZ to the court, for enforcement purposes. The hardest part of this process is getting the forms to make your application. You can either get them down loaded from DBH web site or order them from their central office. For what ever reason the local DBH offices do not seem to have them available. Sometimes you need to make several attempts to get these addresses as people move in and out of jail or in and out of being on a benefit. There are several commercial operators who will find addresses for you in return for a reasonable fee; these fees are not recoverable yet. The RTA amendments are supposed to allow for this but how it will work is still a mystery. If the OE hearing is taking place in another city you will need to employ the services of a specialist lawyer to appear for you at the OE hearing. The courts will no longer let you use a friend or family member to appear for you. If a lawyer is used then the courts will let you add another $120 to the debt so eventually the debtor will pay for the lawyer’s fee. You of course are responsible for paying the lawyer regardless of the outcome. Most landlords hate paying for something they can do for themselves so they will often travel to the OE hearing in remote courts. This is an expensive soul destroying process if the debtor does not show. You are not permitted to add your costs for attending, so the use of a lawyer is a smart way to go.
When there are two people on a tenancy agreement / court order you are permitted to do an OE on both of them at the same time. Just do not forget to add the second $90 application fee to each separate application. I find going for the women is best because they are more likely to be beneficiaries. The court will award you an attachment order of say $20 against wages or a benefit. The benefit is best because even if the debtor comes and goes off a benefit you will generally get all of your debt paid. If the debtor is in paid employment then the debt can often be paid off quickly at say $50 per week. Your debt is court awarded so comes before finance company debts and other unsecured debts. Normally other court awarded debts will come first. Often employees will resign from a job rather than let you get your money. When this happens you are permitted to apply to the District court for a contempt proceeding. The cost of these hearings can be added to the debt. However they cost $350 so it is more cost effective to just apply for another OE at $90. Again do not forget to add the previous application fees and lawyers costs to the second OE application. I have had good success on second strikes; I guess the debtors get the message when their debts keep increasing. Remember the bigger picture when collecting; we all have a civic duty to enforce our debts. Readers are permitted to reproduce this article at no cost providing they give me a credit for it. (Used with permission by Glenn’s Vacancies, Property Management, Nelson.)
RTA AMENDMENT BILL BROUGHT FORWARD
UNEXPECTEDLY.
The act has been under review for years, but progress has been slow.
Housing minister Phil Heatley says the bill introduced to Parliament last year was “well-intentioned” in that it aims to encourage stable tenancies in homes which are well-looked after while enabling landlords to better manage them.
However, he says, concerns have been raised about some specific provisions and matters for which provision was not made, particularly: the absence of proposals allowing for decisive action to be taken to deal with assaults, or threats of assault, by tenants' guests or associates. Proposals that will ensure landlords are not hit with the costs of damages done by tenants and those they invite into their homes; ensuring that the Tenancy Tribunal doesn't become an uneven, expensive and time consuming forum through the introduction of professional advocates; clarity around the legal status of a tenancy once the original tenant passes on (inherited tenancies).
The proposed bill was also going to stop real estate agents charging letting fees. Heatley says this will be reconsidered.
Press Release on RTA Amendment Bill
The New Zealand Property Investors’ Federation (NZPIF) is extremely pleased that the Government announced changes yesterday to the Residential Tenancies Act Amendment Bill. We are particularly relieved to see two parts of the Bill looking to be changed, which were limiting tenant’s liability for damage and introducing Professional Advocates into the Tenancy Tribunal system. We have been particularly concerned about the introduction of these two schemes for some time.
However there are many things in the Bill, first introduced by Labour when they were in Government, that we are keen to see in place, such as using emails as an address for service, enabling
the recovery of expenses incurred in recovering overdue debts, and adding several new unlawful acts such as exceeding the maximum number of tenants allowed in a property or not leaving the property on the appointed departure date.
Probably the most welcomed part of the Bill is making “Abandonment of the premises without reasonable excuse” an unlawful act, where the landlord can receive exemplary damages of up to $1,000. Rent arrears is by far the main reason for applications to the Tenancy Tribunal and the leading problem for the entire industry. This is the first time that any deterrent has been applied to tenants who vacate the property owing rent. “I think it sends a message that paying your rent is important and there are now consequences if you choose to run away from your debts” says NZPIF President Martin Evans.
With the withdrawal of these two controversial parts of the Bill, which were added after it was first muted back in 2003, there is a move back towards the original intention of achieving a balance of rights between tenants’ and landlords’. The idea of limiting a tenants liability for damage and passing it onto the landlord flies in the face of self responsibility. Apart from the absurdness of landlords having to pay for insurance that only benefit the tenant, the Insurance Council has said that this is the most expensive method of providing such insurance. If the beneficiary of the insurance does not have any cost applied to them for any of their actions, then this will lead to higher levels of damage. As a result of this, insurance premiums would need to be higher than if the tenant took out the insurance themselves.
We also believe that the initiative will lead to double insurance as the vast majority of tenants have contents insurance which gives them the same cover for accidental damage they cause to their rental property. The NZPIF has argued for many years that if Government believes that tenants need compulsory insurance protection then the cost should be applied to the tenant. After all, it is the tenant who is getting the benefit of the insurance. If they have contents insurance then they are already covered, if they don’t want or need contents insurance then they can take out the cheaper Third Party Liability insurance option instead. The landlord shouldn’t be involved as they are an independent third party.
We are also very pleased that the topic of Advocates in the Tenancy Tribunal is to be revisited. Through consultation with landlord groups in Australia, we have been made highly aware of the injustice that’s advocates can bring to the Tenancy Tribunal for landlords. Although originally advocates were to be just for tenants, the idea was watered down to make Advocates allowable for landlords as well. While this may appear fair, the experience of Australian landlords was that it was far from being fair and led to a lack of justice for landlords’. In Australia, tenant groups are granted millions of dollars every year for them to be able to supply tenants with free advocates. This effectively established an industry that was funded by public money, forcing landlords to either pay for their own lawyers, which was often cost prohibitive, or to argue their case against a trained professional who knew the law backwards and was handling tenancy cases on a daily basis.
We are extremely relieved that this issue is going to be looked at again before the Bill is past and congratulate the Government on their decision.