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Our next meeting is being held at the Ocean Lodge Muritai St WEDNESDAY 1st November. We are flying in Mark Munro from Christchurch to speak to us. Mark is one of New Zealand’s major commercial investors with investments throughout NZ including Nelson. He is the past president of the NZPIF and is a very interesting, easy to listen to speaker. Mark has a story to tell about commercial property that you will not hear from anyone else. Do not miss this opportunity to learn about real property investing. Also speaking is Lindsay Hay local commercial real estate agent, investor, developer, syndicate guru, and writer of that informative newsletter that we send out to our members. 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. RSVP to Glenn for the meal please (Ph 03 547771
THE MARKET
Well folks it has happened. I have managed to let everything and currently have absolutely no vacancies. It sure is nice to have no advertisements in the newspaper. The phones have gone quiet compared with normal, apart from a few stragglers wondering where the flats have gone. I was recently wondering why we could not find good tenants for a very nice three-bedroom town house. I had put the rent of the last 6 months up from $250 to $260 just to test the market. In desperation I increased the asking rent to $270 and suddenly the good fish were biting. Many applicants said “Hey this is good value compared with what we have seen around town.” Clearly the market is moving both in percentage occupancy and rental level preparedness to pay. Now this comment is written the same day as the media report that intellectual market researchers from Massey report that average rent levels have dropped in Nelson. So whom does one believe? Firstly the Massey figures come from the lodgement of bonds with some sort of artificial average being arrived at. Secondly they are four to five months out of date when it is considered bonds are lodged one month after receipt and then have to be reported by tenancy services.
The other factor that is impacting on our market is the sales market. Have you noticed how few “for sale” signs are around, especially in places like Richmond? I asked an old agent today what was causing it, and he said, “people just do not seem to be moving, they are waiting for something.” Not having a decent selection of properties to buy, some prospective purchasers are choosing to rent. These are the people who have high expectations and the ability to pay higher rents.
ACCOMMODATION SUPPLEMENT REVIEW
Seddon Marshall and I recently attended a long consultation session concerning the AS. Nelson was one of a small number of places that were consulted. Nelson was included because of the high level of media interest in our housing issues. As is normal with these sorts of meetings discussing our industry we were the only landlords in attendance out of a room full of good people. Landlords that have to survive on the rents and the associated AS coming in, that is.
Some of the statistics on AS are mind numbing.
As of December 2005 there were 256000 people receiving AS, the biggest group of which were single people the rest being multiple people households like families.In the 2004-05 financial year $735 Million was provided with nearly $1 Billion this year.
As well as making our voices heard at the meeting I have made a two page written submission on your behalf. Fourteen identifiable issues / problems with the current scheme were identified. Four simple recommendations were made. Like paying the AS directly to landlords, making sure that double dipping did not take place, making the acceptance of AS voluntary subject to certain conditions, paying increased AS to those landlords dealing with difficult tenants.
My guess is that the Government is planning on a major change in order to reign in the ever increasing vortex of money down a black hole. We need to be prepared to adapt rapidly to any market changes in order to avoid painful consequences. Long term dependence on central government handouts is always a risky lifestyle.
This newsletter has been sponsored by SBS. Proud to be a Building Society not a Registered Bank.
As mentioned in the last newsletter I was included in the group of landlords consulted as important stake holders that were consulted for the new review. At that meeting we all had to undertake to keep all details confidential until the Minister of Housing had made the details public. Well this has happened now and I guess that embargo has lifted. This is what the DBH web site says about the review.
RTA Review terms of reference
It is intended that the Review will lead to a RTA that is characterised by: the minimal necessary impact on the operations of the rental market;
The following brief notes are what we were told.
Landlords are to be fined up to $3000 for breaches of health and safety regulations.
Prosecution of landlords who are deemed to be repeat offenders.
Various new offences are being created and the existing ones will have their penalties increased.
Landlords will be able to on charge debt recovery costs.
Tenants will be entitled to lay representation at mediation and tribunal but landlords will not.
A special new form of extended tenancy will be available. Tenants will be able to break these with 3 months notice, landlords with 12 months notice and 6 months if the property has sold.
Section 56 notices will change from 10 working days to 10 actual days.
Fixed term tenancies are to be restricted to 90 days or greater. Trial tenancies are no longer permitted.as per section 7.
If a fixed term tenancy tenancy is to be “not renewed” then the tenant must be notified not less than 21 days before its expiry or else it is deemed to have been granted. The conversion to a periodic as at present after 90 days will end.
They are looking at 6 week’s bond maximum.
Changes are proposed to rights of entry and rent increases.
Absent landlords overseas for more than 3 weeks must appoint a NZ agent. Failure to do this will become an unlawful act.
The following are to become unlawful acts.
Using the premises for unlawful purposes.
Interfering with the peace of neighbours.
Exceeding the number of occupants.
Failing to vacate.
Intentional damage.
Assult of the landlord.
Inducing a tenancy by fraud or misrepresentation.
Abandonement of a property.
Taking possession without a tribunal order.
Despite what the DBH website states about the existing RTA review (that is on the parlimentary order paper) still proceeding DBH staff indicated that the removal of section 17 (4) (c) concerning letting fees by real estate agents will not now proceed. In other words nothing changes in this respect.
I was disappointed to hear that my submissions on the following is not being addressed.
Handling abandoned goods and methods of disposal.
Breaking of fixed term tenancies by tenants and the proposal to introduce an insurance policy to cover tenants liability under these circumstances.
No special thought had been given to housing high risk disfunctional tenants perhaps with mental issues.
No provision was made for guarantors under the act.
A deep ominous silence existed re the DBH alledged incompetence of landlords and how they propose to punish or restrict who can be manage a rental property. This interesting political PC talk flys in the face of the fact that HNZ has the honour of making the highest number of applications to the tribunal in Nelson. What right has a government to say we are incompetant. Surgeon heal thy self, get the log out of your own eye, is what I say to that.
Earn yourself $40 by referring your tenants to Mr Rentals for their appliances and gym equipment.
Disclaimer. Anyone stupid enough to act on advice or comments in this newsletter without thinking for themselves deserves to suffer the consequences.
THE MARKET
Well folks it has happened. I have managed to let everything and currently have absolutely no vacancies. It sure is nice to have no advertisements in the newspaper. The phones have gone quiet compared with normal, apart from a few stragglers wondering where the flats have gone. I was recently wondering why we could not find good tenants for a very nice three-bedroom town house. I had put the rent of the last 6 months up from $250 to $260 just to test the market. In desperation I increased the asking rent to $270 and suddenly the good fish were biting. Many applicants said “Hey this is good value compared with what we have seen around town.” Clearly the market is moving both in percentage occupancy and rental level preparedness to pay. Now this comment is written the same day as the media report that intellectual market researchers from Massey report that average rent levels have dropped in Nelson. So whom does one believe? Firstly the Massey figures come from the lodgement of bonds with some sort of artificial average being arrived at. Secondly they are four to five months out of date when it is considered bonds are lodged one month after receipt and then have to be reported by tenancy services.
The other factor that is impacting on our market is the sales market. Have you noticed how few “for sale” signs are around, especially in places like Richmond? I asked an old agent today what was causing it, and he said, “people just do not seem to be moving, they are waiting for something.” Not having a decent selection of properties to buy, some prospective purchasers are choosing to rent. These are the people who have high expectations and the ability to pay higher rents.
ACCOMMODATION SUPPLEMENT REVIEW
Seddon Marshall and I recently attended a long consultation session concerning the AS. Nelson was one of a small number of places that were consulted. Nelson was included because of the high level of media interest in our housing issues. As is normal with these sorts of meetings discussing our industry we were the only landlords in attendance out of a room full of good people. Landlords that have to survive on the rents and the associated AS coming in, that is.
Some of the statistics on AS are mind numbing.
As of December 2005 there were 256000 people receiving AS, the biggest group of which were single people the rest being multiple people households like families.In the 2004-05 financial year $735 Million was provided with nearly $1 Billion this year.
As well as making our voices heard at the meeting I have made a two page written submission on your behalf. Fourteen identifiable issues / problems with the current scheme were identified. Four simple recommendations were made. Like paying the AS directly to landlords, making sure that double dipping did not take place, making the acceptance of AS voluntary subject to certain conditions, paying increased AS to those landlords dealing with difficult tenants.
My guess is that the Government is planning on a major change in order to reign in the ever increasing vortex of money down a black hole. We need to be prepared to adapt rapidly to any market changes in order to avoid painful consequences. Long term dependence on central government handouts is always a risky lifestyle.
This newsletter has been sponsored by SBS. Proud to be a Building Society not a Registered Bank.
.RTA REVIEW
RTA Review terms of reference
It is intended that the Review will lead to a RTA that is characterised by: the minimal necessary impact on the operations of the rental market;
- an appropriate balance between the needs and obligations of landlords and tenants;
- high levels of compliance with the RTA and easily enforceable rights and obligations (in-so-far as this is within the scope of the Residential Tenancies Act);
- an appropriate level of flexibility in regulation to accommodate the variety of residential rental transactions and relationships, and the development of future trends; and
- a style that is easy to understand, communicate and implement.
The following brief notes are what we were told.
Landlords are to be fined up to $3000 for breaches of health and safety regulations.
Prosecution of landlords who are deemed to be repeat offenders.
Various new offences are being created and the existing ones will have their penalties increased.
Landlords will be able to on charge debt recovery costs.
Tenants will be entitled to lay representation at mediation and tribunal but landlords will not.
A special new form of extended tenancy will be available. Tenants will be able to break these with 3 months notice, landlords with 12 months notice and 6 months if the property has sold.
Section 56 notices will change from 10 working days to 10 actual days.
Fixed term tenancies are to be restricted to 90 days or greater. Trial tenancies are no longer permitted.as per section 7.
If a fixed term tenancy tenancy is to be “not renewed” then the tenant must be notified not less than 21 days before its expiry or else it is deemed to have been granted. The conversion to a periodic as at present after 90 days will end.
They are looking at 6 week’s bond maximum.
Changes are proposed to rights of entry and rent increases.
Absent landlords overseas for more than 3 weeks must appoint a NZ agent. Failure to do this will become an unlawful act.
The following are to become unlawful acts.
Using the premises for unlawful purposes.
Interfering with the peace of neighbours.
Exceeding the number of occupants.
Failing to vacate.
Intentional damage.
Assult of the landlord.
Inducing a tenancy by fraud or misrepresentation.
Abandonement of a property.
Taking possession without a tribunal order.
Despite what the DBH website states about the existing RTA review (that is on the parlimentary order paper) still proceeding DBH staff indicated that the removal of section 17 (4) (c) concerning letting fees by real estate agents will not now proceed. In other words nothing changes in this respect.
I was disappointed to hear that my submissions on the following is not being addressed.
Handling abandoned goods and methods of disposal.
Breaking of fixed term tenancies by tenants and the proposal to introduce an insurance policy to cover tenants liability under these circumstances.
No special thought had been given to housing high risk disfunctional tenants perhaps with mental issues.
No provision was made for guarantors under the act.
A deep ominous silence existed re the DBH alledged incompetence of landlords and how they propose to punish or restrict who can be manage a rental property. This interesting political PC talk flys in the face of the fact that HNZ has the honour of making the highest number of applications to the tribunal in Nelson. What right has a government to say we are incompetant. Surgeon heal thy self, get the log out of your own eye, is what I say to that.
Earn yourself $40 by referring your tenants to Mr Rentals for their appliances and gym equipment.
Disclaimer. Anyone stupid enough to act on advice or comments in this newsletter without thinking for themselves deserves to suffer the consequences.