Monthly Landlord Newsletters
Propertyscouts

Monthly Landlord Newsletters

← Return to newsletters
November 2022

Propertyscouts Monthly Landlord Newsletter - November 2022

Whoop whoop, major Propertyscouts announcement  

As you know it’s our goal to rule the world in property management.  Ok, that’s not quite correct – but it is our goal to be the most trusted brand in property management in NZ, and we feel like we are making progress in achieving that goal.  In order for us to progress, we need to have a good presence throughout NZ, and we do that by adding new franchises in strategic locations whenever we can.  So, without further ado, we are excited to announce that we have a brand-new franchise located in Central Otago! Franchise owner, Ron Gloag, will be providing short & long-term property management services tailored to meet his client’s needs.

Ron’s a long-time property investor with rental properties in the region.  He knows the area incredibly well and understands the importance of ensuring properties are well and truly looked after through all seasons.

If you know anyone with investment property in the region, short or long-term, (anywhere from Alexandra to Queenstown, Arrowtown & Cromwell, through to Lake Ohau), please pass on Ron's contact details.

Are you interested in attending live, monthly webinars?

We’re excited to announce that we have a new initiative in the works. The Propertyscouts Scouting Space (‘The Scouting Space’ for short) is a space for developers and investors to connect via insightful monthly webinars - webinars that have been facilitated to provide you with insider knowledge on hot property markets around New Zealand and where the best property opportunities are.

We’re currently seeking expressions of interest from anyone interested in attending live monthly webinars.  Our webinars will bring you live interviews with property developers from around NZ and provide details of the projects they are currently working on.  If that sounds like a bit of you then you can register your interest by signing up to our dedicated mailing list below.

Alternatively, if you’re a developer or you know of someone who is then this may be a great way for you to get your development projects in front of astute property investors.  Please register your interest here.

Our interest in facilitating these webinars is simple. We want to help existing and future investors navigate the property lifecycle with as few problems as possible. 

Propertyscouts conference  

This year’s Propertyscouts conference was held last week in the sunny Hawke’s Bay.  Now we know what you’re thinking… just an excuse for a few days off and a whole lot of wine tasting.  OK there was a bit of wine tasting but not nearly as much as you would think.  The two days were fully utilised dealing with wide-ranging topics related to property management.  MC for the conference was Kyle Weir.  Kyle (the brother of Ryan Weir) is a franchise business manager for Laser Plumbing & Electrical.  As well as all the new stuff the franchisees learned there were the awards.  Always hotly contested, we think the NZ franchisees should all win the Supreme Franchise award but alas, it can only go to one franchise business.  This year’s Supreme Franchise winner was Duncan McLean and his great team from Hawke’s Bay.  Congratulations to the Hawkes Bay team. 

Other winners were:

Our Ask an Expert from the NZ Property Investor Magazine

Q:  Earlier this year I rented a three-bedroom, one bathroom house to a couple who were expecting a new baby.  The tenancy was a fixed term for two years.  I got a phone call from the neighbour telling me the couple were taken away by police. After maybe a day the woman was released but the man remained in custody.  I received no further rent from the couple.  I applied to the Tenancy Tribunal to terminate the agreement and get possession of the property. The female tenant has sent a txt message saying they’ve moved all their belongings out, put the keys she got on the table and moved to her parents. I have a hearing date from the Tenancy Tribunal but it’s not for two months.

My questions are:

  1. Do I have to wait for the tribunal order to take possession of the house back? Is there any quick way to get the possession of the property back?
  2. What’s the right process to deal with the situation of tenants being taken away by the police.
  3. How to contact the prisoner for the tenancy issues?

Thank you very much for your help! Looking forward to hearing from you.

A:  Even though you had a fixed term tenancy with the tenants it seems that their circumstances have changed, and they have now abandoned the tenancy.  This seems apparent from the text message that the female tenant has sent to you.  It may pay to contact her and have her confirm that she has returned possession of the property to you, although on the basis that the tenants have stopped paying rent to you AND notified you that they have moved their possessions out and left the keys for you to uplift you would be entitled to believe that the tenancy has been abandoned. Provided you are satisfied that this is the case you should carry out an exit inspection and make a note of any damage or missing items.  You should advertise the property as soon as possible for replacement tenants.  The tenants who have abandoned the property will be responsible for the rent until a new tenancy has commenced.  Once you have a new tenancy in place calculate what you have lost in rent and any other issues (damage etc.) and write to the tenants advising them of what they owe.  If they don’t pay you, provide this information to the Tenancy Tribunal when you have your hearing. If for some reason you are not completely satisfied that they have abandoned the property you can apply to the Tenancy Tribunal for an expedited abandonment order.  Provided the Tenancy Tribunal are satisfied with the information you provide that the property has been abandoned it should be returned to you within 10 days.

Your tenancy agreement should record that all tenants are jointly and severally liable.  That means that both tenants are responsible.  Provided you get confirmation that the property has been abandoned and possession handed back to you, you don’t need to worry about dealing with the male tenant if he is still in custody.  It’s an unlawful act for a tenant to abandon a tenancy without a reasonable excuse so you should ask for compensation along with the rent arrears when you have your Tenancy Tribunal hearing.

Side note:  Our ‘ask an expert’ questions come to us via the editors of the NZ Property Investor magazine.  The questions and our replies are printed on a monthly basis in the NZ Property Investor magazine in the expert advice section.

Property Investor Insights care of Tony Alexander and Crockers

Key points from this month’s investor insights are: 

  • High volatility and uncertainty regarding interest rates and the economy have had little impact on investor plans for their properties.
  • Interest in purchasing a new townhouse is waning marginally.
  • Desires to increase rents have risen over the past two months.
  • There has been a slight shift in mortgage interest rate fixed term preference away from one year towards two years.
  • Concerns about rising interest rates have increased slightly.
  • It has become less difficult this month to find good tenants.
 

Full results can be found at this link: 10-crockers-tony-alexander-investor-insight-october-2022.pdf

Property Investors Federation criticises social housing fairness

The Property Investors Federation (PIF) says there are people and organisations that would prefer rental properties were in the hands of social landlords, such as Kainga Ora or Community Housing Providers (CHPs) and that the Government is actively trying to dissuade private landlords by instigating tax changes. The effect has been an increase in the demand for social housing. That list has grown from 5,000 in 2017 to 27,000 now! The Government is also encouraging private rental property owners to provide their properties to Kainga Ora and CHPs for them to run as rentals.  We have previously outlined some of the pitfalls for private landlords providing their properties to Kainga Ora or CHP’s so if you are considering it, be careful. 

So how does social housing work? Social landlords offer tenants cheaper rent than their private counterparts through Government funding under the Income Related Rents (IRR) programme. This subsidy allows social housing providers to charge tenants just 25% of their income for rent, with the Government topping this up to market rent level, paid directly to the social housing provider.  This keeps social housing providers’ rents artificially cheap, says the federation. It says who a tenant’s landlord is should not determine how much Government assistance is given. Charging a tenant less doesn’t make the rental cheaper to provide, but it does mean the cost has to be met somewhere else and PIF claims that the social housing model actually means that under Kainga Ora, the Government not only pays the higher rent subsidy but also supports Kainga Ora for the losses it makes, meaning that in actual fact state rental properties are often the most expensive for taxpayers.  The full article on this can be found here.

Five warning signs that your property manager may be dropping the ball 

Recently Propertyscouts HQ put together a list of warning signs that your property manager might be under performing. Here’s what we came up with – based solely on our experience with other property management companies obviously.  

1. Your tenants are calling you instead of your property manager

If you have hired a property manager, you have hired them to act on your behalf and handle the day-to-day business of owning an investment property. This includes fielding calls from tenants and addressing their concerns in a professional and timely fashion.

2. Your property manager is missing in action (MIA)

As a landlord, you might want to be completely hands-off, meaning you only want your property manager to touch base with you when it is absolutely essential. Alternatively, you might want them to keep you informed every step of the way.  Regardless of your preferences, your property manager should be proactive in keeping you as informed as you want to be. You shouldn’t have to manage your property manager and they should be easy to contact should you wish to get in touch with them.

3. You’ve had a string of bad tenants

Another key part of a property manager’s job is to thoroughly vet tenants to reduce the risk of placing troublesome tenants in your rental property.

Whilst the recently released privacy guidelines have made it harder for landlords and property managers to assess a tenant’s suitability, a string of bad tenants could be a sign that your property manager isn’t even trying to screen prospective tenants. A good property manager will have robust processes in place for screening and securing high-quality tenants who won’t cause many (if any) issues once they settle in.

4. Property inspections are few and far between

Routine property inspections are usually conducted every three months and once completed, your property manager should provide you with a report that details the condition of the property and if there are any issues or repairs that need to be addressed.

Routine property inspections are important for ensuring your property is kept in good condition and that the tenants are looking after it and to ensure that you are eligible for insurance cover.  Insurance providers often require evidence of inspections conducted at specific intervals (usually once per quarter).

5. Compliance issues

As an investment property owner, you’re legally required to know and comply with the RTA, Healthy Homes Standards, Privacy Act, Human Rights Act, Building Act, and other relevant legislation. However, if you enlist the help of a property manager, they are responsible for staying up-to-date with law changes and ensuring your property, and the management of your property remains compliant.

Property manager regulation is still on the horizon, but don’t hold your breath

It’s a well-known fact that property managers carry a great deal of responsibility.  After all, any one property manager will be responsible for looking after millions of dollars of investors' assets.  So, it makes sense doesn’t it that not just any Tom, Dick or Harry can set themselves up as a property manager.  We certainly think so and we know the Government tends to agree but regulation isn’t happening anytime soon.  You’re probably sick of us banging on about it but the sooner regulation of property managers is introduced – the better!  Why do we think it’s so important?  Well, firstly 1 in 3 New Zealanders identify as a renter so that’s a fair chunk of the population who interact with either property managers or private landlords. Presently there is no test of a property manager to ensure that they are a fit and proper person and the property managers out there doing a good job are seriously undermined by the ‘Toms, Dicks and Harrys’ who aren’t. And we haven’t even mentioned audited trust accounts and appropriate business insurance which we understand may be mandatory when regulation finally becomes compulsory.  So come on Government, pull your fingers out and let’s get it sorted ASAP for the good of renters, landlords, tenants and the good property managers out there trying to do the best they can. 

Give us a fair go, 'Fair Go'

Recently the Propertyscouts team in Dunedin received a phone call that all property managers never want to receive.  It was from a Fair Go presenter advising that they were doing a story on a university flat that Propertyscouts Dunedin manages.  Fair Go undertook an independent Healthy Homes assessment of the property and wanted comment on why it had failed in a number of respects. In principle, we agree with the concept of Healthy Homes, so it came as a bit of a shock to Rebecca Harris (Dunedin Propertyscouts co-owner) that a property they manage had failed a Healthy Homes assessment.  According to the assessment carried out on behalf of Fair Go, the property failed for heating, drainage, and draught stopping. 

Now we certainly aren’t backward when it comes to being critical of the NZ media and their dogged adverse commentary of property investors and landlords.  It’s fair to say the property in question was your true student party house rental.  Rebecca undertook to look into Fair Go’s claims.  She put her detective hat on and started digging.  Records showed that an earlier Healthy Homes assessment conducted by an independent contractor engaged by Propertyscouts Dunedin showed that it passed its assessment. 

So why the discrepancy? Well firstly the flat, and in particular its tenants, were well known to Rebecca and the rest of the Propertyscouts team.  A plumber who had visited the property a couple of weeks earlier had highlighted that a downpipe at the property had been broken and that the drains appeared to be blocked, or partially blocked, with broken beer bottles.  The plumber refused to return or have any of his staff return until the outside of the property was cleared of all the broken glass and other hazards.  The broken downpipe may have been accidental but certainly wasn’t as a result of wear and tear.  The grounds were cleaned up, the cost of which will be taken from the tenant’s bond at the end of the year, but within a couple of weeks, the grounds were back to where they had been before the clean-up.  And in the middle of this, Fair Go had their assessment done and recorded their story.  With the grounds tidied enough for a contractor to attend the downpipe was repaired and the drains cleared.  The drains were found to be full of broken glass but the main offending item causing the blockage was a beer can.  And as for the failure of the property to meet the heating standard, Rebecca was able to show that the tenants had removed a door from the lounge to the hallway.  Fair Go still ran their story but it’s fair to say Rebecca’s detailed response to them took the wind out of their sails a bit.  Sometimes things aren’t what they appear and all we ever really want as property investors is a fair go.  

National confirms it will roll back the extension to the Bright Line Test  

Last year the Labour Government doubled the bright line test which is effectively a capital gains tax on certain properties sold within 10 years of them being purchased. Profits for houses sold within the 10-year period and captured by the bright line test are taxed at 33%.  National has confirmed that if they form the next Government, the extension to the bright line test will be rolled back, which is good news for property investors.                    

Tenants have responsibilities too you know

Some tenants take the signing of a tenancy agreement very seriously while others can be pretty blasé about it.  The fact of the matter is that by signing the tenancy agreement they are entering into an enforceable contract governed by the Residential Tenancies Act.  Of course, a landlord can’t have clauses in a tenancy agreement contrary to the RTA and landlords and tenants can’t ‘contract out’ of the act.  Generally speaking, tenants have the following responsibilities:

  • They must pay their rent on time.  Tenants can’t decide that because they are a ‘bit short this week’ that they will pay their rent at some later date.  They must pay their rent on the due date – otherwise, they are in breach of their tenancy agreement and the RTA.
  • They must use the premises primarily as their home.
  • They must notify the landlord as soon as they notice any damage at the property.  Tenants may be held liable for damage at the property (even if they didn’t cause it) if they fail to notify the landlord and as a result of that failure the damage worsens. 
  • They are not allowed to use the premises for anything unlawful. 
  • They must keep the premises clean & tidy during the term of the tenancy and that extends to the grounds (if they are responsible for the upkeep of the grounds during the tenancy).
  • They must vacate the property on the day the tenancy ends and remove all of their belongings.  They must leave the property in a reasonably clean and tidy condition – and this extends to the grounds of the property (if they were responsible for them as part of their tenancy agreement).

Interested in other types of property investments?

Then get in touch with these nice people:  Black Robin Equity are an up-and-coming residential developer who are offering investors shares in the development of three alpine villas in the majestic and very sought-after Queenstown location of Jacks Point.  Now we can’t give investment advice and we certainly aren’t intending to here but what’s on offer is an opportunity for investors to invest a minimum of $50,000 for which (according to the company website) investors will receive their original investment back along with a return of 9.95% p.a. quarterly dividends in arrears plus a share of the potential development proceeds once the project is complete.  Do your own due diligence on this one folks.  Want to learn more? Here’s a link to an ODT article on the company, and, here’s a link to the particular investment opportunity.

Ponder this 

The only bad time to buy real estate is later.    

Are you thinking of selling your investment property – or buying another? 

If so, please get in touch with your local Propertyscouts office as it’s possible we will know of someone looking for a new investment property or know of one for sale.  And remember, with Propertyscouts offices throughout NZ you no longer have to buy local.  Chances are wherever you buy we’ll have an office and ‘star performing’ property manager to look after your investment as if it was their own.

Disclaimer

Given the opinions expressed in parts of the email it’s important that we make it clear that the contents are opinions and observations and made in good faith.  We suggest that in all cases independent legal and financial advice is sought.  

Property Owners

Tenants