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NELSON PROPERTY INVESTORS ASSOCIATION
July 2014 NEWSLETTER
PO Box 198 Nelson
Our fourth meeting of the year is being held at the Nelson Suburban Club, Tahunanui Drive on Tuesday 8 July. 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. This meeting we have Hon Maryan Street, Labour List MP speaking. It is over a decade since we have had a Labour MP speak. Maryan has been working diligently in our community for a number of years now. I have been to a number of housing based meetings with her and have always found her easy to listen to and knowledgeable. She has a special interest in Housing having been a Minister in Charge of that portfolio. It matters little if you agree or disagree with Labour’s views on property investment. You need to know what they are up to and make your investment plans on that knowledge. If you are coming to the meal please email Glenn by return email. The Suburban Club reserves seats on the basis of my bookings.
THINGS HAVE CHANGED DOWN AT THE COURTHOUSE
Well we had our meeting last month with the lovely ladies from the court. Everyone enjoyed the evening and got lots from it. Isn’t it amazing what you can learn when you listen carefully with open minds and hearts. The message came through loud and clear that the staff is there to help you. Since the meeting my business encounters with the new collection system has been developing. I have encountered difficulties with the Central Processing unit and won after a help from the local staff. This related to a difference of agreement about the amount of money claimed.
Hint. Make sure you very carefully check the documents you get back after an attachment order has been made. Make sure you do not get caught up in a side alley in the Auckland call centre.
There seems to be a bewildering number of forms and procedures about how to collect your debts. There are a number of new ways and costs for carrying out the tried and failed order for examinations. Examinations certainly still exist.
Hint. Skip the examinations and just file directly for an attachment order asking for $10 or $20 per week. Note. If you ask for too much the chances of being challenged and failing is high.
The key to success is having the WINZ number and date of birth of the debtor.
Hint. The WINZ number is on the credit note that is given out for bonds. However if you fail to collect that vital information the number is placed on your bank statement for the initial payment. Not mind you for the weekly rent by redirections only the very first payment. Also DSW send out lots of letters to their clients. Most of the those letters have the magic number on them as well so check the rubbish at the flat after they leave. Dates of birth are harder for some people. Police documents usually have the date of birth on them so again check all infringement and other notices to your tenant. Of course all drivers licences have the DOB on them. It is considered acceptable practice to take a copy of identifications such as passports and cards. It is not unusual to find job and tenancy applications left in the rubbish so calm down when cleaning up and think of your future.
Applications for Attachment orders require the applicant to indicate that they have notified the debtor of the process. This can be by mail to the last known address or to an email address. So hint. Collect a email address if at all possible. Hint a place of employment is counted as an approved address for service so I add the address of the local DSW on all tenancy agreements as the alternative address for service. This procedure has been noted and accepted by the judiciary. They do not require success of serving just an attempt.
Confidential Address matches are still working. But you only need a confidential address in order to serve an Order for Examination summons. They are not needed for an attachment order. However they still are important. Many times collections fail because the debtor is in jail, mental institution, dead, overseas, or not on a benefit. I suspect and hope that the favourite excuses to avoid an attachment orders of bankruptcy, NAP, no means of income, excessive living costs, terminal sickness, and studying will be much less. Of course debtors will still be able to ask for a review but the onus of proof may be higher. So read the fine print on the returning letters from MBIE re address matching. “Cannot be verified or released” is bound to be AKA for in jail. Try latter. Even the worst criminals get out eventually. If however the letters say “Contact information of the debtors has been successful” that means they are alive and well living in the community and likely as not on a benefit. However readers must be aware that not all of my recent applications have been successful. It does happen unfortunately occasional that DSW come back and say the debtor is not on a benefit. In these cases you have lost $50. At least you are permitted to add those lost $50’s onto later applications and more importantly you hear back quickly what the outcome it.
OLLY NEWLAND’S NEWSLETTER
Olly’s May newsletter was topical and is good reading if you have a mind to read all you can about the market. Perhaps good reading before hearing Maryan speak.
Seven Reasons Why The Property Market May Get The Speed Wobbles This Year
Over the next few months much heat and light will be generated by the politicians from all sides and as usual the truth will be lost in the fog of battle.
It should come as no surprise then, that the property market ( and other markets ) may get a serious dose of the wobbles especially if the polls remain tight.
Investors, who can keep their cool, can do very well in these times, as those who panic may well offer up bargains to them.
Remember the GFC where the stock markets tanked to levels not seen in decades?
The canny investors who bought then have made a killing, and so it could be for our canny investors in the months to come.
Here are some of topics that may worry the market as we head towards the elections and the aftermath:
(1) Will interest rates go up, stay steady or maybe go down?
The Reserve Bank has made it clear that there is more pain to come with higher interest rates promised very soon.
This may well end up with the building industry stalling in its tracks.
On the one side we have those demanding more affordable houses while on the other side the goal posts have shifted by increases in interest rates.
First home buyers or those wishing to build or buy a new house may well cancel the idea when they calculate the interest they may be paying on their mortgage.
The result could shake the building industry, which in turn runs down through the suppliers, trades people and even the workers whose jobs get lost thus making the market even more nervous.
(2) Immigration is on the rise.
Once again we have the various factions demanding either full controls on immigrants, or an open door policy or something in between.
The number of immigrants expected to arrive over the next 12 months could be well over 40,000, a complete reversal of what was happening only 2 or 3 years ago. These immigrants will, in theory, require around 13,000 houses extra on top of the 30,000 odd thousand we are short of already.
What makes it hard to calculate is whether the immigrants are ex-pat Kiwis returning home, overseas families uniting with family here, or just plain immigrants looking for a better life.
What is not known is whether the extra houses will really be necessary for them, or whether they already own a home or, instead, plan to stay with Mum and Dad.
Popular belief thinks that Asians are the main source of immigrants when in fact most immigrants come from Australia, Europe, and the UK.
Whatever the truth is, the immigrant push will pressure house prices upwards as the majority of immigrants are unlikely to be poor.
Any control, or threat if control could have people considering immigration to New Zealand more quickly so as to get here before the door shuts.
If this occurs the calls for curbs will get louder leading to confusion in the market on whether to buy now or wait.
(3) The Reserve Bank LVR regulations
These rules require people to have 20% deposit before being able to buy a home and has been spectacularly successful to date
in cutting out swathes of first home buyers. It has put upward pressure on rents, and skewed the statistics towards an apparent lift in house prices
as the affordable ( i.e. cheap) end of the market takes a hit.
As the months pass the issue will become hotter and hotter as many see this rule as hurting the very people who need a leg up onto the property ladder.
We now have the bizarre situation where a young couple, setting up a home can go to and rack up tens of thousands of dollars of debt on no-deposit motor vehicles, or no-deposit, no-interest, no-payments for 24 months for household goods, appliances and furnishings, all of which will be nigh on worthless 12 months later-but can’t buy a house to put them in that will at least hold its value and make for happier families.
The heat and light the LVR rules have already generated will confuse the market even further over the months ahead.
Already there have been stories of young people forced out of the market by what seems unfair treatment and no doubt more of these stories will emerge in the near future.
(4) The introduction of a Capital Gains Tax
This is being heavily promoted by the Left and will be big issue as it is being touted as the means by which property speculation will be curbed and house prices lowered.
The mantra has been picked up by some respectable economists, few if any of which have ever owned investment property in their lives.
The fact that many other countries have a Capital Gains Tax has not stopped those countries having spectacular property bubbles despite the tax.
At this moment Sydney is experiencing one of it biggest house price bubbles and the usual clap-trap of an imminent bursting of the bubble is being forecast by the same types of academics as here:
link:
http://www.smh.com.au/business/the-e...331-35sg7.html
In the USA prices are firming rapidly despite the big downturn they had some years ago (caused solely by toxic mortgage securities)
and that country has an array of eye watering capital gains tax regimes.
England too, is in the midst if a “Super Bubble” with prices rising 20% on an annual basis and it has harsh Capital Gains restrictions
but that hasn’t stopped anything.
For any such tax to work it must apply to all property, private and investment or not at all. Over 80% of the market consists of private sales
so trying to control a small part of the market while the rest of the market goes free, is futile.
The fact the speculators are already taxed seems to have been over looked in the reasoning why such a tax would be needed.
For some reason- no doubt political- only the property market has been singled out to be punished by such a tax.
What hasn’t been pushed is the fact that any capital gains tax would also apply to the sale of shares, inherited property, the sale of businesses, farms and even on any part of your home should it be used for business purposes.
A Wealth Tax In Disguise:
What a GCT is really a rebranded “Wealth Tax” combined with a dash of “Death Duties
Tax” dressed up for public consumption as a tax on property speculators.
What this “Wealth Tax” would do is take more off the hard working top to give away to others lower down whether deserving or not.
It is proposed at a 15% tax rate but who says it would it would stop there? Any hungry Government could increase it to 20% 30% or 50% at a stroke of a pen.
Read the policy here:
https://www.labour.org.nz/sites/defa...uly%202011.pdf
What is also interesting is the notion of “grandfathering” assets such as property which means that assets purchased or held before the enactment of a CGT will not be taxed while those purchased after enacted will be taxed. When this becomes well known it is likely there will be a rush of buyers into the market to “grandfather” as many assets as possible before it is too late.
What that will do to the market can be imagined. We shall have a split market of “before” and “after” and the distortions will be horrendous and lead to some nervousness when the downstream effects are analysed.
(5) Politics:
As the elections approach, and the various political parties ramp up their promises and threats, it is very likely that the residential property market may experience some serious wobbles.
Prices could rise and fall, statistics may go all over the place and commentators from the Left and Right will be pushing biased agendas so as to influence voters.
And they will have plenty of agenda to push.
Every Poll which shows this or that party making gains or losses will add to the wobbles.
The influences that now push and tug the market this way and that, give the different factions more opportunity to create uncertainty and confusion as we head towards the polls.
(6) WOF for Rentals
Recently a report came out that stated that the vast majority of rental homes were not up to standard, and straight away the call is for regulation and warrants of fitness for private rentals was called for.
Apart from slum landlords who deserve a thrashing, any upgrading of rental homes will be a cost on the landlords and must push up rents.
How to decide why this or that property would fail its WOF is still a mystery and begs the question that if a rental home is no longer up to standard, then maybe the Local Council should bear the cost, as it was they had signed the property off as fit for habitation at some time in the past. (Shades of leaky homes)
This subject will no doubt be raised again in the near future as a part of the whole “Housing Crisis” debates so it will add another layer of stress into the investment market.
(7) The Likelihood of Rents Rising
As interest rates rise and the rhetoric gets louder many investors will be looking hard at their rents and be raising them at the first opportunity.
The thinking will be “if there will be a capital gains tax, plus higher interest rates, plus a WOF regime then I might as well get a return from the property that makes it worthwhile to keep it”
Andrew King, the very well informed and sensible New Zealand Property Investors Federation executive officer summed it up nicely in this article
which was – as is usual- buried in yet another “shock horror” headline.
The growth in value may still continue, but the vast majority of investors will not sell if they face taxes and other punishments.
Rents have lagged behind property values for years and a catch-up is due any time soon.
The catalyst could well be the unholy brew of higher interest plus all the other factors outlined above.
Should rents rise you can just see the clamour from the Left with calls for yet more controls and regulations to be imposed on the “rack-renters” which will put even more pressure on landlords to “get in” before the axe falls.
Is there is a housing shortage at all what is what is driving all the arguments?
It is this constant drum beat that there is a “crisis” that is whipping the screamers into hysterics.
In actual fact there is no shortage of houses in Auckland or the rest if the country for that matter – with parts of Christchurch maybe being the exception.
For the record there are over 1500 2-3 bedroom affordable houses for sale today on Trademe and other websites under $400,000 in the greater Auckland area.
These would house up to 5000 people immediately.
This includes apartments and units, but not sections on these websites.
And –wait for it- there is around 25,000 more such affordable houses for sale throughout the country.
So the two questions that need to be asked are:
What shortage and why the fuss?
Olly Newland
20 May 2014
July 2014 NEWSLETTER
PO Box 198 Nelson
Our fourth meeting of the year is being held at the Nelson Suburban Club, Tahunanui Drive on Tuesday 8 July. 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. This meeting we have Hon Maryan Street, Labour List MP speaking. It is over a decade since we have had a Labour MP speak. Maryan has been working diligently in our community for a number of years now. I have been to a number of housing based meetings with her and have always found her easy to listen to and knowledgeable. She has a special interest in Housing having been a Minister in Charge of that portfolio. It matters little if you agree or disagree with Labour’s views on property investment. You need to know what they are up to and make your investment plans on that knowledge. If you are coming to the meal please email Glenn by return email. The Suburban Club reserves seats on the basis of my bookings.
THINGS HAVE CHANGED DOWN AT THE COURTHOUSE
Well we had our meeting last month with the lovely ladies from the court. Everyone enjoyed the evening and got lots from it. Isn’t it amazing what you can learn when you listen carefully with open minds and hearts. The message came through loud and clear that the staff is there to help you. Since the meeting my business encounters with the new collection system has been developing. I have encountered difficulties with the Central Processing unit and won after a help from the local staff. This related to a difference of agreement about the amount of money claimed.
Hint. Make sure you very carefully check the documents you get back after an attachment order has been made. Make sure you do not get caught up in a side alley in the Auckland call centre.
There seems to be a bewildering number of forms and procedures about how to collect your debts. There are a number of new ways and costs for carrying out the tried and failed order for examinations. Examinations certainly still exist.
Hint. Skip the examinations and just file directly for an attachment order asking for $10 or $20 per week. Note. If you ask for too much the chances of being challenged and failing is high.
The key to success is having the WINZ number and date of birth of the debtor.
Hint. The WINZ number is on the credit note that is given out for bonds. However if you fail to collect that vital information the number is placed on your bank statement for the initial payment. Not mind you for the weekly rent by redirections only the very first payment. Also DSW send out lots of letters to their clients. Most of the those letters have the magic number on them as well so check the rubbish at the flat after they leave. Dates of birth are harder for some people. Police documents usually have the date of birth on them so again check all infringement and other notices to your tenant. Of course all drivers licences have the DOB on them. It is considered acceptable practice to take a copy of identifications such as passports and cards. It is not unusual to find job and tenancy applications left in the rubbish so calm down when cleaning up and think of your future.
Applications for Attachment orders require the applicant to indicate that they have notified the debtor of the process. This can be by mail to the last known address or to an email address. So hint. Collect a email address if at all possible. Hint a place of employment is counted as an approved address for service so I add the address of the local DSW on all tenancy agreements as the alternative address for service. This procedure has been noted and accepted by the judiciary. They do not require success of serving just an attempt.
Confidential Address matches are still working. But you only need a confidential address in order to serve an Order for Examination summons. They are not needed for an attachment order. However they still are important. Many times collections fail because the debtor is in jail, mental institution, dead, overseas, or not on a benefit. I suspect and hope that the favourite excuses to avoid an attachment orders of bankruptcy, NAP, no means of income, excessive living costs, terminal sickness, and studying will be much less. Of course debtors will still be able to ask for a review but the onus of proof may be higher. So read the fine print on the returning letters from MBIE re address matching. “Cannot be verified or released” is bound to be AKA for in jail. Try latter. Even the worst criminals get out eventually. If however the letters say “Contact information of the debtors has been successful” that means they are alive and well living in the community and likely as not on a benefit. However readers must be aware that not all of my recent applications have been successful. It does happen unfortunately occasional that DSW come back and say the debtor is not on a benefit. In these cases you have lost $50. At least you are permitted to add those lost $50’s onto later applications and more importantly you hear back quickly what the outcome it.
OLLY NEWLAND’S NEWSLETTER
Olly’s May newsletter was topical and is good reading if you have a mind to read all you can about the market. Perhaps good reading before hearing Maryan speak.
Seven Reasons Why The Property Market May Get The Speed Wobbles This Year
Over the next few months much heat and light will be generated by the politicians from all sides and as usual the truth will be lost in the fog of battle.
It should come as no surprise then, that the property market ( and other markets ) may get a serious dose of the wobbles especially if the polls remain tight.
Investors, who can keep their cool, can do very well in these times, as those who panic may well offer up bargains to them.
Remember the GFC where the stock markets tanked to levels not seen in decades?
The canny investors who bought then have made a killing, and so it could be for our canny investors in the months to come.
Here are some of topics that may worry the market as we head towards the elections and the aftermath:
(1) Will interest rates go up, stay steady or maybe go down?
The Reserve Bank has made it clear that there is more pain to come with higher interest rates promised very soon.
This may well end up with the building industry stalling in its tracks.
On the one side we have those demanding more affordable houses while on the other side the goal posts have shifted by increases in interest rates.
First home buyers or those wishing to build or buy a new house may well cancel the idea when they calculate the interest they may be paying on their mortgage.
The result could shake the building industry, which in turn runs down through the suppliers, trades people and even the workers whose jobs get lost thus making the market even more nervous.
(2) Immigration is on the rise.
Once again we have the various factions demanding either full controls on immigrants, or an open door policy or something in between.
The number of immigrants expected to arrive over the next 12 months could be well over 40,000, a complete reversal of what was happening only 2 or 3 years ago. These immigrants will, in theory, require around 13,000 houses extra on top of the 30,000 odd thousand we are short of already.
What makes it hard to calculate is whether the immigrants are ex-pat Kiwis returning home, overseas families uniting with family here, or just plain immigrants looking for a better life.
What is not known is whether the extra houses will really be necessary for them, or whether they already own a home or, instead, plan to stay with Mum and Dad.
Popular belief thinks that Asians are the main source of immigrants when in fact most immigrants come from Australia, Europe, and the UK.
Whatever the truth is, the immigrant push will pressure house prices upwards as the majority of immigrants are unlikely to be poor.
Any control, or threat if control could have people considering immigration to New Zealand more quickly so as to get here before the door shuts.
If this occurs the calls for curbs will get louder leading to confusion in the market on whether to buy now or wait.
(3) The Reserve Bank LVR regulations
These rules require people to have 20% deposit before being able to buy a home and has been spectacularly successful to date
in cutting out swathes of first home buyers. It has put upward pressure on rents, and skewed the statistics towards an apparent lift in house prices
as the affordable ( i.e. cheap) end of the market takes a hit.
As the months pass the issue will become hotter and hotter as many see this rule as hurting the very people who need a leg up onto the property ladder.
We now have the bizarre situation where a young couple, setting up a home can go to and rack up tens of thousands of dollars of debt on no-deposit motor vehicles, or no-deposit, no-interest, no-payments for 24 months for household goods, appliances and furnishings, all of which will be nigh on worthless 12 months later-but can’t buy a house to put them in that will at least hold its value and make for happier families.
The heat and light the LVR rules have already generated will confuse the market even further over the months ahead.
Already there have been stories of young people forced out of the market by what seems unfair treatment and no doubt more of these stories will emerge in the near future.
(4) The introduction of a Capital Gains Tax
This is being heavily promoted by the Left and will be big issue as it is being touted as the means by which property speculation will be curbed and house prices lowered.
The mantra has been picked up by some respectable economists, few if any of which have ever owned investment property in their lives.
The fact that many other countries have a Capital Gains Tax has not stopped those countries having spectacular property bubbles despite the tax.
At this moment Sydney is experiencing one of it biggest house price bubbles and the usual clap-trap of an imminent bursting of the bubble is being forecast by the same types of academics as here:
link:
http://www.smh.com.au/business/the-e...331-35sg7.html
In the USA prices are firming rapidly despite the big downturn they had some years ago (caused solely by toxic mortgage securities)
and that country has an array of eye watering capital gains tax regimes.
England too, is in the midst if a “Super Bubble” with prices rising 20% on an annual basis and it has harsh Capital Gains restrictions
but that hasn’t stopped anything.
For any such tax to work it must apply to all property, private and investment or not at all. Over 80% of the market consists of private sales
so trying to control a small part of the market while the rest of the market goes free, is futile.
The fact the speculators are already taxed seems to have been over looked in the reasoning why such a tax would be needed.
For some reason- no doubt political- only the property market has been singled out to be punished by such a tax.
What hasn’t been pushed is the fact that any capital gains tax would also apply to the sale of shares, inherited property, the sale of businesses, farms and even on any part of your home should it be used for business purposes.
A Wealth Tax In Disguise:
What a GCT is really a rebranded “Wealth Tax” combined with a dash of “Death Duties
Tax” dressed up for public consumption as a tax on property speculators.
What this “Wealth Tax” would do is take more off the hard working top to give away to others lower down whether deserving or not.
It is proposed at a 15% tax rate but who says it would it would stop there? Any hungry Government could increase it to 20% 30% or 50% at a stroke of a pen.
Read the policy here:
https://www.labour.org.nz/sites/defa...uly%202011.pdf
What is also interesting is the notion of “grandfathering” assets such as property which means that assets purchased or held before the enactment of a CGT will not be taxed while those purchased after enacted will be taxed. When this becomes well known it is likely there will be a rush of buyers into the market to “grandfather” as many assets as possible before it is too late.
What that will do to the market can be imagined. We shall have a split market of “before” and “after” and the distortions will be horrendous and lead to some nervousness when the downstream effects are analysed.
(5) Politics:
As the elections approach, and the various political parties ramp up their promises and threats, it is very likely that the residential property market may experience some serious wobbles.
Prices could rise and fall, statistics may go all over the place and commentators from the Left and Right will be pushing biased agendas so as to influence voters.
And they will have plenty of agenda to push.
Every Poll which shows this or that party making gains or losses will add to the wobbles.
The influences that now push and tug the market this way and that, give the different factions more opportunity to create uncertainty and confusion as we head towards the polls.
(6) WOF for Rentals
Recently a report came out that stated that the vast majority of rental homes were not up to standard, and straight away the call is for regulation and warrants of fitness for private rentals was called for.
Apart from slum landlords who deserve a thrashing, any upgrading of rental homes will be a cost on the landlords and must push up rents.
How to decide why this or that property would fail its WOF is still a mystery and begs the question that if a rental home is no longer up to standard, then maybe the Local Council should bear the cost, as it was they had signed the property off as fit for habitation at some time in the past. (Shades of leaky homes)
This subject will no doubt be raised again in the near future as a part of the whole “Housing Crisis” debates so it will add another layer of stress into the investment market.
(7) The Likelihood of Rents Rising
As interest rates rise and the rhetoric gets louder many investors will be looking hard at their rents and be raising them at the first opportunity.
The thinking will be “if there will be a capital gains tax, plus higher interest rates, plus a WOF regime then I might as well get a return from the property that makes it worthwhile to keep it”
Andrew King, the very well informed and sensible New Zealand Property Investors Federation executive officer summed it up nicely in this article
which was – as is usual- buried in yet another “shock horror” headline.
The growth in value may still continue, but the vast majority of investors will not sell if they face taxes and other punishments.
Rents have lagged behind property values for years and a catch-up is due any time soon.
The catalyst could well be the unholy brew of higher interest plus all the other factors outlined above.
Should rents rise you can just see the clamour from the Left with calls for yet more controls and regulations to be imposed on the “rack-renters” which will put even more pressure on landlords to “get in” before the axe falls.
Is there is a housing shortage at all what is what is driving all the arguments?
It is this constant drum beat that there is a “crisis” that is whipping the screamers into hysterics.
In actual fact there is no shortage of houses in Auckland or the rest if the country for that matter – with parts of Christchurch maybe being the exception.
For the record there are over 1500 2-3 bedroom affordable houses for sale today on Trademe and other websites under $400,000 in the greater Auckland area.
These would house up to 5000 people immediately.
This includes apartments and units, but not sections on these websites.
And –wait for it- there is around 25,000 more such affordable houses for sale throughout the country.
So the two questions that need to be asked are:
What shortage and why the fuss?
Olly Newland
20 May 2014
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