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NELSON PROPERTY INVESTORS ASSOCIATION
FEBRUARY 2011 NEWSLETTER
Don’t forget to book that meal in advance by emailing me.
THE MARKET
Residential investors rarely build new rental units they act like bed bugs scurrying about buying up properties others want to exit and move up the scale or completely out of it. They perform the essential task of mopping up used-by-date owner occupier properties. When the source of demand for yesterdays loved homes dries up, it is a brave man that builds a new mansion intending to fund it with the proceeds of his old home. Add to that reason other things going on in our economy and is there any wonder that the number of houses being build is tracking downward. The media reports that the Minister of housing is worried about the drop of house building and is blaming local body red tape and other guesses. This government came in claiming legislative obstacles to efficient building would be improved. I have not noticed things getting better on that count. Perhaps I should give him a mirror so he can figure out what is causing the problem. Despite the contracting number of rentals in Nelson evidenced by only two columns compared with the normal four of classified in Saturdays newspaper it is still hard work finding good tenants for some properties. Turn over of tenants is way down with tenants remaining in their rentals longer than normal. My own business is letting less and I suspect over all, the average net occupancy rate is increasing. This of course means that the 10,000 rental properties in Nelson are being used more efficiently and this reduces the number of tenants needing to look for a new property. Of course all that is happening is tenants are putting off moving. Many of them know that where possible we need to increase rents by about $30 per week to cover the depreciation tax and GST increases. A common time to increase rents is between tenancies so moving tenants suddenly discover bigger or better properties are perhaps $50 more which might explain why moving is not taken lightly. Putting off the time to move causes pain and creates a bubble of desire ready to burst out onto the market at an unpredictable moment. When that time comes, and our ship breaks through the narrow confines of the dangerous harbour entrance is dependent on things beyond our control. Do we jettison a few properties to lighten the load and increase speed, or do we just wait until the tide turns and get a push from behind. I think that once people believe we are again in calm waters the rush will be on. You property investors will have to figure out if it is better to buy whilst in the calm of the harbour or out here where things are rough and uncertain. Just remember inner harbour properties with a sea view always cost more but do not always earn more. Happy sailing my hearties, I will meet you at the bar.
BRING BACK THE GALLOWS
I have just got back from a holiday in Tasmania visiting many convict sites. Wandering around Port Arthur and Macquarie Harbour and seeing where they hanged the lucky ones focuses ones mind on the justice system. The guides were eloquent in describing the brutal conditions of the justice system with the last of the horrible spectacles like the prisoner’s chapel and courts in Hobart having finished public service only 40 years ago.
Seeing many beautiful and some horrible buildings built at the expense of others misery brought to question the whole justice system in the past and at present.
The RTA has just ramped up the penalties for tenants for a wide range of unacceptable actions. A few weeks ago the Tenancy Adjudicator forced me to listen to a long rambling explanation for her actions in setting various fines. I have been at the forefront in Nelson and perhaps in New Zealand seeking fines for abandonment, assignment, and what ever. She asked me to state the scale of wrong doing for a recent abandonment but then kept on speaking. Obviously no one making any application to the court is going to belittle their own application. It is most unusual for a tenant to turn up at an application re abandonment so the norm is for the landlords case only to be presented in such events. In one case my tenant abandoned the flat and left her friends there who proceeded to damage it. In the most recent case the tenant locked up and thoughtfully left the keys with the neighbour but left their rubbish and some personal possessions behind. Jeanette pointed out she sees more of me than any other landlord and she sort of expected me to pass on the word! Well her reasoning was she was awarding fines against tenants at the lower end of the scale. Like $300 to nil as apposed to provided for maximum of $1000. The reason for this was these fines are new and in the past when it was only the “bad” landlords who were able to be fined then she rarely if ever (never) awarded the maximum fine permitted against landlords. Just as well I thought because I would not have wanted to serve three months jail that some actions (as apposed to crimes) provided for. She says she thinks the purpose of the $1000 fines is to serve as a deterrent. Well this long explanation brings me back to my thoughts about the “convict times.” The argument in those “misguided” days as apposed to our current “enlightened” days is if the punishment was as severe and as harsh as possible then it would serve as a deterrent to others contemplating such evil actions.
Reading the sad stories recorded at the various sites leaves everyone aghast. A few tears came to my eyes when reading the insignificant crimes and the resulting harsh unjust punishments inflicted on the young ladies interned at the women’s jails in Hobart and Oatlands. I shook my head at the stupidity of turning men mad by brutalizing and locking them in dark solitary confinement then have to pay the price of interning them in recycled jails converted to mental asylums.
So I wonder how future societies will judge our new tenancy laws. Is if fair to fine solo mothers or intellectually disabled tenants with a $1000 fine if they ignorantly behave. Will it make good tenants out of bad if we keep threatening them with terrible retribution?
Is the provision of income related rent by the Government sending the right message to the public as apposed to rent adjusted incomes when renting off the private sector?
Somehow we need to change the message and society we all live in before we all go mad and bad again. Have a go at bringing up your own children by increasing the number and size of the threats against them or giving them confusing messages. Least of all never expect them to act like you do.
Your committee met recently for the first time this year to set out the year’s program of events and discuss the necessary matters of organisation. I won’t bore you with the details but we are looking to increase our membership this year to ensure we have a strong voice nationally and to support and educate as many local property investors as we can. There are plenty of challenges to come for property investors in the political arena. The stronger we are the better we can face these challenges. If you know of someone who is not a member but would benefit from joining why not have a chat to them and get them to come along to a meeting.
This year we will be running a tenant of the year competition to acknowledge the best of our customers and raise the profile of the Nelson PIA. More on this at a later date.
Remember there are some serious tax changes looming and many of you will need to make some decisions before the 31st March. Don’t put off those decisions and end up rushing things. Get some professional advice and get it sorted as soon as you can.
Happy Investing
Please note. NPIA is a voluntary support organisation by landlord for landlords. Any ideas advice or suggestions obtained at our meetings or from our newsletters is not intended to replace professional legal, accounting, or valuation advice
Anyone stupid enough to act without thinking for themselves, deserves to suffer the consequences.