Monthly Landlord Newsletters

The Green Party's Rent Control Proposal

Let's take a moment to reflect on the ongoing controversy surrounding the Green Party's persistent push for rent controls. They're determined to limit rent increases to 3% per year, but this proposal hasn't been well-received by landlords and economists, to say the least. Many critics argue that history has shown us the pitfalls of rent controls, both here in New Zealand and abroad. When tried in the past, these controls led to a reduction in rental housing stocks as private investors opted to sell their properties. It's no wonder why there's so much opposition to this policy stance.

Despite the criticism, the Green Party seems unwavering in their commitment to this approach, perhaps aiming to secure support from extreme left-wing voters. However, property investors are feeling the heat as they face increased costs and challenges, prompting some to exit the market altogether. This, in turn, only adds more pressure to an already strained rental demand situation.

But let's not jump to conclusions just yet. It's essential to have an informed and nuanced discussion about the rent control debate. Yes, critics bring up past failures of "first-generation" rent controls, but, according to Tom Baker in an article written for Interest.co.nz, there's a lot more to explore here. Research suggests that "second and third-generation" rent controls, which allow for limited rent increases under specific circumstances, might hold more promise and could be better tailored to fit the unique contexts of different localities.

Advocates of the Green Party's proposal argue that it falls under the umbrella of second-generation controls, and we should carefully examine its potential benefits. Rental affordability and wealth distribution disparities within New Zealand's housing system are legitimate concerns that need addressing.

So, as the debate rages on, let's seek a deeper understanding and consider the nuances. Only through informed discussion can we find the best solutions to tackle rental affordability and create a fair housing landscape for all.

National Party's Uncertainty on Scrapping Foreign Home-Buyers Ban Raises Questions Ahead of Election

As the upcoming October election draws nearer, the National Party has left everyone guessing about their stance on the foreign home-buyers ban. Introduced by the Labour Government in 2018, the ban was intended to curb demand from foreign speculators and alleviate the heat in the property market.

However, despite its significant impact, National has yet to reveal whether they plan to keep or scrap the ban if they come into power. This uncertainty has sparked calls for more transparency and clarity on their housing policy.

On one hand, Associate Finance Minister David Parker has argued that removing the ban might lead to a surge in market demand from overseas investors. On the other hand, statistics show that the ban has indeed helped ease pressure on the housing market, with fewer homes being bought by individuals without New Zealand citizenship or resident visas.

It's worth noting that the ban does include exceptions, allowing overseas investors to participate in developments that would increase housing supply. Some see this as a successful and necessary policy to protect the local housing market from excessive foreign speculation.

The New Zealand Property Investors Federation, while remaining neutral on the ban, believes that lifting it could lead to increased competition for properties between local investors and foreign buyers, potentially affecting housing availability and prices.

As the election draws closer, many are eager to see a clear stance from the National Party. The future of the foreign home-buyers ban is a topic of intense interest and speculation, and we'll have to wait and see how it all unfolds.

July 2023 Property Investor Insights by Tony Alexander

Stay informed with the latest property insights provided by Tony Alexander. Learn about the developments and trends shaping the New Zealand property market in July 2023.

• Landlords are finding it easier than ever to find good tenants (based on information from the two years the survey has been running).

• Desired rent rises sought by landlords are increasing.

• The proportion of investors planning to hold their properties for longer than ten years or indefinitely has declined further.

• Despite the presence of high interest rates, there is no evidence of investors moving towards accelerating debt reduction.

The Latest Ask An Expert from Within the NZ Property Investor Magazine | August 2023

Question: I recently let my rental property and shortly afterwards the new tenants shared concerns about the textured ceiling. Their friend is an asbestos sampler and they've tested it and shared the results with me, confirming the ceiling contains asbestos. The tenants are worried about their health. What should I do?

Answer: It's not uncommon to find asbestos in older properties, and it's understandable that your tenants may feel worried upon learning about it.

Firstly, it's important to educate your tenants about the realities of asbestos. Living in a property with asbestos-containing material (ACM) does not necessarily pose a health risk if the material is in good condition and undisturbed. The danger arises when asbestos fibres become airborne and are inhaled.

To determine if the asbestos poses a risk, assess the condition of the ceiling. If it is flaking or deteriorating, there is a higher likelihood of ACM becoming airborne and posing a risk to the tenants' health. In such cases, it is crucial to promptly engage the services of a professional asbestos company to remediate the issue and minimise health risks.

Preventative measures can also be taken to reduce the risk associated with the textured ceiling. Encapsulation, for instance, involves covering or preventing access to exposed asbestos fibres, preventing them from shedding and becoming airborne.   

Make sure to inform your tenants about activities that may damage the ceiling, such as drilling holes or attaching items to it. Also, remind them to be cautious if using a bunk bed as it could easily disturb the ceiling due to its proximity. Additionally, advise against allowing children to play indoors with objects like balls that could potentially damage the ceiling.

To safeguard against future asbestos-related risks, I would recommend you have an Asbestos Management Plan prepared by a licensed asbestos remover. This plan will help address potential issues, particularly when contractors are involved in repairs or renovations that could potentially disturb materials containing asbestos.

The Surging Demand for Luxury Cars in New Zealand: A Reflection of Growing Wealth and Changing Trends

Have you noticed an increase in the number of luxury cars rolling around New Zealand? We're talking about top-notch brands like Ferrari, Lamborghini, Aston Martin, McLaren, and Maserati - apparently they're flying off the showroom floors!

Well, it turns out the increasing wealth of the rich is a major driving force. Thanks to soaring property prices and a thriving stock market, the affluent crowd is going all out for these high-end wheels. And it's not just limited to a specific model; the luxury car market has diversified to include SUVs, attracting a diverse range of buyers, including self-employed folks and property developers.

What's even more interesting is how various factors have come together to fuel this trend. Falling interest rates (up until recently), a booming population, and better construction quality have all contributed to the flourishing housing market, and that, in turn, has boosted luxury car sales. Oh, and let's not forget the pandemic's role in all this. With international travel restrictions in place, people have been splurging on luxury cars as an alternative to indulging in overseas vacations.

Now, you might think that luxury cars are just flashy and extravagant, but for many buyers, they're more than that. These cars are seen as both a source of enjoyment and a smart economic investment. And it's not just happening in New Zealand; this luxury goods boom is happening worldwide!

How to Beat Rising Insurance Premiums as a Property Investor or Tenant

Rising insurance premiums pose challenges for property owners and tenants due to changes in the property market and inflationary pressures. Here are some tips to minimise their impact:

For Property Investors:

• Adjust your insurance excess to find the right balance between coverage and affordability.

• Shop around for the best insurance options and compare quotes from reputable providers.

• Seek guidance from an insurance broker to navigate the complexities of the insurance market.

• Perform proactive risk management through regular property maintenance and safety measures.

For Tenants:

• Understand your responsibilities as a tenant and report maintenance issues promptly.

• Document damages and communicate effectively with your landlord or property manager during insurance claims.

• Consider tenant insurance to protect personal belongings and provide liability coverage.

The Power of Crunching Numbers: Your Path to Successful Property Investment

As a savvy property investor, you know that running the numbers is vital for making informed decisions and maximising returns. By assessing affordability, conducting stress tests, and monitoring key indicators like market rent, occupancy, and maintenance costs, you can set yourself up for success in the competitive property market. Stay proactive in the face of legislative changes and external factors, and be prepared for potential risks. Crunching the numbers is essential for ensuring the success and sustainability of your property investments. To learn more, check out our recent article about the importance of running the numbers and key indicators to watch out for.

Highlights From the Propertyscouts Rental Market and Investment News Roundup (up to and including, 12th July)

And of course, no newsletter is complete without a quick recap of recent news. We don't want to bore you, but here are some key updates in the New Zealand property investment landscape. If you want to dive deeper, head over to our blog and check out the full roundup: Scouting the Market: July 12th, 2023. 

Green's Rent Control Proposal:

• The Green Party has pledged a comprehensive Renters' Rights Bill, including rent controls, Rental Warrant of Fitness, and a national landlord register. The aim is to improve living conditions for renters and address the housing crisis. However, the ACT Party and National Party criticised the proposals, arguing that they may discourage investment in housing and lead to other unintended consequences. The Green Party's proposed 3% rent increase cap also drew concerns from the Property Investors Federation, fearing it could worsen the rental property shortage and lead to more informal rental agreements.

National Party's Housing Policy:

• The National Party has unveiled a housing strategy for Greater Christchurch, focusing on incentivizing housing targets, infrastructure funding, and protecting productive land.

Property Investment Updates:

• Valocity reported a significant rise in cashflow-negative investment properties, prompting some smaller investors to exit the market. The situation may not improve immediately, even if investor-friendly policies are reintroduced.

• ANZ Bank predicts rising house prices and rents in New Zealand, indicating a tightening housing market. However, investor activity may be subdued pending clarity on tax policies.

Celebrating National Property Managers’ Day

On July 19th, we joined the nation in acknowledging and appreciating the hard work and dedication of property managers like us. As your trusted partners, we take pride in managing your properties and ensuring that everything runs seamlessly. Our mission is not just about handling the day-to-day operations of your properties; it's about building lasting relationships. We strive to create a harmonious environment where tenants feel at home and landlords can rest easy, knowing their investments are in capable hands.

As property managers, we tackle various challenges head-on, from finding reliable tenants to overseeing maintenance and repairs promptly. We navigate the ever-changing real estate landscape with expertise and ensure compliance with regulations to protect your interests. We know that owning and managing rental properties can be demanding, and that's why we're here – to take the weight off your shoulders and provide you with peace of mind. 

So, on this Property Manager's Day, we want to express our gratitude for entrusting your properties to us. We're committed to continuing our excellent service and exceeding your expectations in every way. Thank you for being an essential part of our journey, and we look forward to achieving even greater success together.

Quote to Ponder

"Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful." - Albert Schweitzer

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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.