Consultation on proposed RTA changes

[donna]

Maybe it's a clever strategy - to cause as much disruption as possible so if they loss the next election there won't be enough time to make inroads into righting the crap done in this term and that way this Gov't get another go at it, after only one term in opposition.

cheers,

Donna

[Perry]

"if they lose the next election?"

You are joking, right?

.........

[AlFa]

Anecdotal or not but I'll be selling 3 this year instead of growing portfolio.

[Sportsvee]

"if they lose the next election?"

You are joking, right?

.........

No, there are enough stupid people in this country for them to stand a chance at a 2nd term.

I really do worry about NZ now. Perhaps they should start tracking the country's IQ level, care to guess its general direction?

[Don't believe the Hype]

maybe Muldoon was wrong

[artemis]

.... Still, what was interesting there is both the actual number of rentals and the proportion of rentals of all dwellings continues to increase up to June.

So arguably if landlords are "getting out" of the business its so far been tiny and not reduced the absolute count or proportions at all by June. Then again it is an estimate too.

It's not completely straightforward as there are new builds coming on stream. Colliers was reported earlier this year that an extra 4000 apartments would be available this year and that is just for Auckland.

Quite a lot of building going on in Wellington, too, a lot of it social / council housing.

I am keeping an eye on new sale listings in a few Welly suburbs for a family member, first home buyer. Quite surprising how many are currently tenanted, and more look like recently vacated by tenants rather than owners.

[Don't believe the Hype]

In Porirua in the typical 'investor areas' of Cannons Creek, Ranui Heights, Porirua East, Ascot Park and Waitangirua there is a grand total of 6 properties for rent at the moment on TM. In Titahi Bay the next rung up the ladder there are a further 6 properties.

A total of 12 property options of which one is a room in a share house so 11 options - the lowest rent is $370/wk about $100/wk (37%) more than this time a year ago.

Total Porirua has 31 propeties for rent on TM (30 ex the 1 share house advert). Based on the 2013 census there were 18,000 dwellings and based on Porirua CC numbers about 250 dwellings a year built so even assuming some knock down and rebuilds there is 1000 more houses since the last census.

30 available rentals out of 19,000 dwellings is 0.16% of dwellings as available rentals. Assuming 40% of dwellings are rentals higher than the national average the vacancy is 31/7600 or 0.4%

From my monitoring of the market there are far fewer properties for rent and the prices continue to rise. LETS DO THIS!

[Don't believe the Hype]

Some ideas for the submission:

Accidental Damage - Damage is damage. If you or your guests cause the damage you are responsible for paying for the repair.

Non Payment of rent - This is theft. If you don't pay for something you use you're stealing. Unpaid rent should incur interest payments and or late fees like any other unpaid debt.

Tenant Insurance - Think of this as a risk based bond. An insurance company take the bond and guarantees payment for all things you can claim against the bond. Good tenants would have lower premiums therefore lower bonds over time. The process would be more efficient than the current system and there is a HUGE incentive for the tenants to look after the property they're in and pay rent on time.

Rent Guarantee Insurance - The government should initiate an insurance scheme where tenants pay an annual cover (maybe part of their bond) so the insurance will pay rent if the tenant stops paying rent. If a tenant doesn't pay their rent or pay back the insurance company they will be unable to get this insurance package. This will free up TT time to focus on other things.

Non Payment of Rent Tenancy Hearings - TT must have a maximum wait time to hear a case i.e. 2 weeks with an application made once rent arrears are 2 weeks. This means a decision is made

TT centralized collection of unpaid rent - Where TT agrees to a rental recovery program the TT could be the central collection for this would make the system more efficient as a result costing less.

Anti Social Behaviour - Need to make it easier to remove people who are antisocial or cause problems for neighbors. Burden of proof needs to be clear and actionable

Pet Bond - you want a pet, you need to be prepared to pay the cost of damage. An additional bond to cover common pet issues - scratched floors/doors, soiled carpets, damaged curtains etc. It should also be mandated that a professional clean at the end of tenancy.

Illegal activity (i.e. drug use) - Immediate eviction.

More certainty for renters - If the government want to introduce caps on rent increases etc then all risks associated with ownership of the property move to the landlord ( If our costs go up we can't then recover these costs). They also say they want to create certainty of tenancy for long term renters. There might be a number of long term landlords who would prefer the option to rent their properties under terms more like commercial leases where a family can get a 10 year lease , responsible for outgoings with agreed renewal and rent increase agreed upfront and a make good clause as per commercial leases

One more addition:

Reinstate depreciation for items that depreciate and remove the Tax DISADVANTAGE for Landlords -
- Commercial properties can depreciate boundary fencing but residential cannot: What is this magical material that residential fence are made of that DO NOT ever need replacing?4
- Insulation: Now I've insulated my properties i should never need to redo the insulation because it never degrades (Accountants - is replacing insulation an expense?))
- Upgrades to properties - If i replace my single glazed windows with new single glazed windows it's an expense. If I improve the property by taking the opportunity to move to double glazed windows... that's an improvement so is treated as a capital expense = no incentive to improve
- Every dollar of maintenance requires me to pay GST on materials and labour - as a LL i can't claim this GST back which means I have a 15% disadvantage vs. other businesses who could claim the GST on these items

[Wayne]

- Commercial properties can depreciate boundary fencing but residential cannot: What is this magical material that residential fence are made of that DO NOT ever need replacing?4
- Insulation: Now I've insulated my properties i should never need to redo the insulation because it never degrades (Accountants - is replacing insulation an expense?))
- Every dollar of maintenance requires me to pay GST on materials and labour - as a LL i can't claim this GST back which means I have a 15% disadvantage vs. other businesses who could claim the GST on these items

Fence - you can depreciate them.
Insulation - if they need topping up (repair) it is claimable. If you have none the 1st install isn't claimable. Just the same as painting the new house is part of the structure and capitalised but a repaint is mainnance.
GST - do you want to pay GST on you incoming? Can't have one without the other. And try passing a 15% increase on.

[Don't believe the Hype]

Thanks Wayne - the GST one is tricky because of the non charging of GST but it still doesn’t change the point that LL’s can’t claim it because we can’t charge it. the no charging of GST is to benefit the tenants which puts us directly at a disadvantage. If the govt can exclude GST from rent the why not exempt it from wall work commissioned for a rental property?

My understanding is depreciation on fences is not allowed on rental properties. There is a very limited depreciation schedule on the IRD website for rentals and fencing is not on there. I’d be thrilled if you were right because I just capatialised about $35000 worth of fences.

insulation as an expense is an upside... I thought it should be the case but wasn’t sure

[Wayne]

Thanks Wayne - the GST one is tricky because of the non charging of GST but it still doesn’t change the point that LL’s can’t claim it because we can’t charge it. the no charging of GST is to benefit the tenants which puts us directly at a disadvantage. If the govt can exclude GST from rent the why not exempt it from wall work commissioned for a rental property?

My understanding is depreciation on fences is not allowed on rental properties. There is a very limited depreciation schedule on the IRD website for rentals and fencing is not on there. I’d be thrilled if you were right because I just capatialised about $35000 worth of fences.

insulation as an expense is an upside... I thought it should be the case but wasn’t sure

If you don't pay GST on your profit then you can't claim it as in input cost.
I wonder how banks get on - they are the other big class where GST isn't charged (on bank fees etc)?

Fences - I depreciate at 10%. Get an accountant (or a better one).

[Perry]

I really do worry about NZ now. Perhaps they should start tracking the country's IQ level, care to guess its general direction?

You're right to be worried.

"if they lose the next election?"

You are joking, right?

.........

No, there are enough stupid people in this country for them to stand a chance at a 2nd term.

It all depends on who is defined as "them." The present rag-tag mob is akin to Italian coalition comic-opera governments. Winston is not likely to be around for the next election and I can't see the Winston First party surviving his retirement/interment. One factor might be the current crop of loony RTA 'reforms' which may well hurt a few Tauranga voters who would punish Winston First accordingly. (I'm surprised Winnie is going along with the current anti-LL binge rage.)

The alternative to Labour new taxes and spend (sorry - increase existing levies, taxes, excise and duties and spend) is gNats borrow and spend. Either way, voters are screwed.


Red devils or the deep blue poo.

[Sportsvee]

"Either way, voters are screwed"
Yep, agree with you there. My voting criteria use to be - vote for those who would do the least damage. Even that is difficult these days.

And as for 'them', I wouldn't put it past winnie retiring after the next election, just to get his party in.

[Don't believe the Hype]

If you don't pay GST on your profit then you can't claim it as in input cost.
I wonder how banks get on - they are the other big class where GST isn't charged (on bank fees etc)?

Fences - I depreciate at 10%. Get an accountant (or a better one).

deloittes private our accounts say no depreciation - can you PM me your accountants details I’d like to have a chat to them.

[Wayne]

deloittes private our accounts say no depreciation - can you PM me your accountants details I’d like to have a chat to them.

Fences are clearly in the depreciation tables - both Building and fitout (BDFO) and Building and structures (BUIL)
Remember when building depreciation was removed it was done for commercial as well.
They are the same but the definition of 'fitout' was tightened a bit.