Monthly Landlord Newsletters

Christchurch Rental Woes: A Frustrating Search for Homes

Last month, we delved into the challenging rental market in Queenstown, and now it's Christchurch's turn to take the spotlight. Propertyscouts Director, Ryan Weir, recently shared with OneRoof that the city is grappling with a shortage of available properties, leaving property-hunters disheartened and leaving viewings in tears.

The article shed light on an interesting trend—while there seems to be an abundance of two-bedroom properties, favoured by property developers, families in Christchurch seeking three to four-bedroom homes are facing significant difficulties in finding suitable accommodations for their needs.

Questions Surrounding Pet Bans

The issue of no-pet clauses in tenancy agreements has recently been thrown into question by the Tenancy Tribunal, sparking some concerns. The New Zealand Herald reported on a couple of Tenancy Tribunal rulings that questioned restrictions on pets. In one case, a landlord sought to remove a tenant's guinea pigs, while in another, a landlord attempted to evict tenants for having a dog (as well as exceeding the permitted number of tenants). Both adjudicators noted that the Residential Tenancies Act is silent on the topic of pets. While one adjudicator said there was no justification for landlords to exclude pets under a tenancy agreement, the other simply said it left no-pet clauses "open to interpretation."

So, what does this mean for landlords wishing to maintain pet-free rental properties? The NZ Property Investors Federation is currently seeking legal advice on this matter, and they are likely not the only ones. It wouldn't be surprising if the higher courts eventually review this issue, providing much-needed clarity.

For now, it is still acceptable to include a no-pet clause in your tenancy agreement. It is worth considering that pets can potentially cause significant damage, and some properties are subject to body corporate rules that restrict pet ownership. However, there are also many potential benefits to allowing pets. 

Ultimately, it may come down to reasonableness, and engaging in a dispute over a goldfish may not be worthwhile. If you encounter any issues or have any questions regarding four-legged companions, it would be wise to discuss the matter with your property manager. Their finely honed diplomatic skills may help in finding a resolution without resorting to the Tenancy Tribunal.

When to Renovate Your Rental Property?

So your tenants have given notice and you’re wondering whether now might be a good time to renovate your rental property? There are pros and cons to renovating a rental property you need to consider carefully before making a decision.

On one hand, giving your property a face-lift can attract quality tenants and potentially increase rental income. You might also be more likely to find tenants who genuinely appreciate the property and will take excellent care of it. However, it is important to note that renovations often involve a significant upfront cost. Furthermore, considering the ongoing uncertainty surrounding skills and building supplies, you’ll need to factor in potential delays that can result in substantial rental income loss. Additionally, significant renovations require a building consent and you’ll  need to ensure you obtain a code compliance certificate (CCC) before re-tenanting the property - otherwise you will be breaching your obligations as a landlord.

Given the high demand for rental properties in most regions, it is ideal to renovate when the market is more competitive, thus increasing the property's value. However, if the property is in a significant state of disrepair and requires maintenance anyway, it may be worthwhile taking the opportunity to spruce it up whilst you’re at it. Before making any firm plans, make sure to have a chat with your property manager, as they possess valuable insights into what qualities tenants are seeking in a home.

Bond Claims and Betterment

One thing that is clear if you do decide to undertake renovations, even if it's just a quick paint job, is that it is crucial to keep thorough records! You might just need to call on those records for any future bond claims so you aren’t accused of claiming betterment.

Betterment refers to work that restores something beyond its previous state. Earlier this year, a tenancy adjudicator reprimanded a landlord for claiming betterment when replacing carpets and repainting and plastering, as there was no evidence of when the walls were last painted. In these circumstances, a full replacement cost cannot be claimed from the tenant's bond. However, it’s a different story if the carpet to be replaced was brand new or the walls have just been painted. In any case, it’s a good idea to keep receipts to substantiate any claims if proof is needed.

The Latest Ask An Expert from Within the NZ Property Investor Magazine

Question:

I have a tenancy agreement with two tenants named on it. I have discovered that those two people have moved out of the property, and two other people who are not named on the agreement currently live there. These individuals are relatives of the named tenants who have moved out. I conduct an inspection of the house every 6 months, but as no one was home during inspections I hadn’t become aware of the change in occupants. I have noticed a drop in the condition of the house and the property isn’t being well kept. I am not comfortable with the current occupants living there and I’d like to know my options for evicting them. What is the legal standing regarding eviction in this situation?                        

Answer:                        

When tenants vacate a rental property without the landlord's consent, this is known as a "parting with possession." This act is considered unlawful and can lead to legal action being taken against the tenants.                    

In order to address the issue of unauthorised occupants in your rental property, there are specific steps that you, as the landlord, can take. Firstly, you can issue a 14-Day Notice to the tenants, requesting that they return to the property as per the terms of their tenancy agreement. It's important to check if the tenants have returned and are staying at the property, and if they leave again, you can issue a new notice.            

If the tenants fail to return to the property at all, or leave a second time, you can take further action by applying for termination of the tenancy. It's important to follow the correct procedures and requirements outlined in the RTA to ensure that the termination of the tenancy is lawful and effective.                    

The application for termination of the tenancy is based on Section 56 of the RTA, which identifies the breach of a 14-Day Notice. Section 44 of the RTA establishes the legal authority for the "parting with possession". 

Homeowners Feeling the Pressure of Increasing Interest Rates

Mortgage affordability has well and truly entered the danger-zone, with interest rates now exceeding the 6-7% level at which many homeowners are stress tested at. Unfortunately, it appears unlikely that we will see any relief in interest rates anytime soon.

Writing for One Roof, Tony Alexander said that the state of jobs market released last month combined with (still high) monthly spending data suggests that inflation is not going to ease up anytime soon.  According to Alexander, that means it is even less likely that the Reserve Bank will put an end to their interest rate hikes, and even if they did, it may take a while before that translates into a decline in mortgage floating and one-year rates. 

That view was backed up by last month’s budget announcement, where the Treasury projected “higher for longer interest rates” that will continue to drive house prices down.

Investor Insights by Tony Alexander - May 2023

In addition to the above observations, Tony Alexander has shared some notable investor insights from the last month:

• Access to bank credit has improved significantly in recent months.
• Landlords are experiencing greater ease in securing good tenants, possibly assisted by the migration boom.
• A growing proportion of investors who are selling their properties attribute their decision to the removal of interest expense deductibility.
• The average duration for which investors plan to retain their properties is decreasing.
• Concerns about falling house prices are subsiding, and fewer investors are citing expectations of price drops as a motive for selling.

Seasonal Update

Winter is here. Hopefully you already have a maintenance regime for sweeping your properties’ chimneys and cleaning heat-pump filters.  If not, it’s a good idea to get that sorted now.

Winter also brings closer the date for filing your income tax return – 7 July.  If you have an accountant, you may have an extension, but  to avoid any issues, it’s wise to check they have everything they need.

Quote to Ponder

"Find out where the people are going and buy the land before they get there." - William Penn Adair

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.  

Propertyscouts NZ (2020) Limited, trading as Propertyscouts, and its associated parties (including directors, agents, employees, officers or otherwise) have attempted to provide   this information to the best of their ability but do not make any representations or warranties of any nature (intended or implied) as to the accuracy of the information on this communication. All recipients of this communication should conduct and rely on their own enquiries in relation to the information on this communication.

The information available on the properties listed for sale, rent or otherwise, has been obtained from the vendor or landlord of the property and the appropriate professional service providers. We do not and cannot verify or guarantee the accuracy of the information obtained in relation to the properties.

The information and/or materials available in this communication are intended to be general information only and may be changed at any time, without notice to you. The information and/or materials in this communication should not be relied on under any circumstances as a substitute for legal, financial, real estate, or other professional and/or expert advice. To the maximum extent permitted by law, Propertyscouts and its associated parties disclaim all liability, responsibility, and negligence for any direct or indirect loss or damage suffered by any person arising from the information and/or materials presented in this communication or any information and/or materials that arise from it.