Monthly Landlord Newsletters

Always look on the bright side of life

You'll already know that all of us here at Propertyscouts are a positive bunch. Life’s short right, so it pays to look on the bright side whenever you can. If you listen to the NZ media (less and less people seem to be these days) then you’ll be full of doom and dread about the housing market and, in particular, how house prices are falling. So, we decided to see if we could come up with a positive spin from all the negativity and by jingo we think we’ve found it. Did you realise that if your investment property falls in value your rate of return actually increases? True story. Take this example – two years ago the rental property was valued at $600,000 which was rented for $500 per week. The rate of return (ROI) is 4.3%. The same rental property valued today has a valuation of $550,000. $50,000 less than when it was last valued. It’s still rented (by a private landlord who forgot to carry out rent valuations each year) at $500 per week. Based on the lower valuation your rate of return is now 4.7%. Obviously, this isn’t a real scenario but we’ve used it to show that you don’t always have to buy into the doom and gloom. It pays to look on the bright side of life whenever you can. And that’s our motto here at Propertyscouts.

Property Investor Insights care of Tony Alexander and Crockers

Key points from this month’s investor insights are:

• There remains no indication that rising interest rates are causing extra acceleration of debt repayment plans.
• Net intentions of buying more property have eased in recent months but remain consistent with much of the period from June 2021 when the survey started.
• The average term investors are fixing their mortgage interest rate for continues to shorten.
• Landlords no longer on average consider it easy to find good tenants. The trend suggests that soon there will be more landlords finding it hard to get the good tenants they want than will find it easy.
• Intentions of buying a new build or undertaking one’s own development are declining.

You can read the full report here: https://www.crockers.co.nz/media/jnvezkfi/06-crockers-tony-alexander-investor-insight-june-2022.pdf

Property Investors Magazine ‘Ask An Expert’ column

Q: In March 2021 I signed a lease with my landlord for 12 months. When the 12 months was almost up the landlord asked if I wanted to stay on and I said that I did. The landlord said that I could have another lease at the property for 6 months. I thought that was a bit strange at the time but I agreed to a further 6 month fixed term lease. The landlord has now sent me a text saying that he wants me to leave at the end of the additional 6 month lease. I asked if I can stay on for another 6 months and he has said no because his girlfriend is going to be moving into the flat. I’m thinking about going overseas at the beginning of next year and I think it will be hard to get a flat for the length of time in between, not to mention the added cost of having to move. I guess it’s the landlord’s property and he can do this?

A: Well actually no, the landlord can’t do this based on the information you have provided. On the 11th February 2021, the law in relation to terminating tenancies changed. Prior to then what the landlord is suggesting in his communications with you would have been lawful but that’s not the case now. Because you signed your latest lease after the 11th February 2021 the landlord is only able to end your fixed term lease under certain criteria. The criteria for a landlord to give notice to end a fixed term tenancy, on its expiry date, is:

1. The owner or a member of the owner’s family intends to move into the property within 90 days from the end of the fixed term tenancy.
2. The property is normally used for employee accommodation and it’s intended to be used for that again.
3. The owner is putting the property on the market for sale within 90 days of the tenancy ending or the property has been sold and the new owner requires vacant possession.
4. The property was bought for the use of nearby land for a business activity and is required to be vacant for that purpose (this must be stated in the tenancy agreement).
5. The property is to be converted into commercial premises for at least 90 days.
6. Extensive renovations are to be carried out that would make it impractical for the tenant to live there (the landlord must take steps to begin this work within 90 days after termination date).
7. The property is to be demolished (the landlord must take steps to begin demolition within 90 days after termination date).

So, as you can see from the information you have provided the landlord doesn’t meet the criteria for ending your fixed term tenancy on the basis that his girlfriend is moving in. A ‘girlfriend’ is not a member of the owner’s family. Unless you and the landlord agree otherwise your tenancy will revert to a periodic tenancy when the fixed term tenancy ends. You may (or may not) wish to point out to the landlord that he commits an unlawful act by trying to terminate a tenancy when he/she is not lawfully able to.

When things get tough – people fall out!

We read recently about a spat between two of the bigger NZ property investment advisory companies – OPES Partners and Propellor Property, owned by Nikki Conners. OPES and Propellor deal with property developers by finding investors for the properties the developers are building and ‘clip the ticket’ along the way. Nothing wrong with that, it’s a system that been around for years and has made a lot of money for a lot of people. But it’s only as good as the market is so don’t be surprised to see companies like these doing everything they can to attract and keep customers. And as the market continues to retract don’t be surprised to see that Real Estate agent who showed you through the open home you went to a couple of months ago driving a council bus. According to a recent Stuff article as at May 31 there were a record 16,809 real estate agents, salespeople and branch managers in the market, up from the previous high of 15,848 at the end of last year. Those agents are competing in a market where 17,000 fewer sales are expected this year compared to last according to CoreLogic.

Social Housing provider ordered to pay for not evicting loud partying tenants

A social housing provider, the Tāmaki Regeneration Company, has been ordered to pay $1,500 in compensation for failing to evict tenants who disturbed a neighbour’s peace with loud parties and foul language. The company is jointly owned by the government and Auckland Council. The tribunal heard the neighbours, who were also tenants of the company repeatedly disturbed another of the tenants with “partying and drunken behaviour”. We agree with the Adjudicator’s comments that he didn’t underestimate the challenges for the landlord in administering multiple adjoining tenancies for high need clients. As Property Managers we can relate to how hard it is dealing with unruly tenants, especially given recent changes to the RTA around evicting troublesome tenants. But there can’t be rules for some but not for all which is obviously the Adjudicator’s view as well when he said “if the tribunal were to find that in such tenancies a lower standard was required of the landlord in protecting tenants’ right to quiet enjoyment, it would amount to finding that social housing tenants have lesser rights than other tenants. That cannot be right.” We have already seen this Government give itself ‘longer’ to comply with its own rules in relation to the Healthy Homes Standards so any other ruling than the one above would have been a ‘kick in the guts’ to all private landlords. The ruling could have a significant impact on social housing providers. We have noted in previous Landlord newsletters that the Government’s social housing provider Kāinga Ora seems to have little or no sort of stringent evictions policy which often impacts negatively on neighbouring properties.

Crystal ball gazing – the housing market

We make no secret of the fact that pretty much the only housing commentator we listen to is Tony Alexander. In a recent article Tony discussed the ‘falling’ housing market and where in the cycle house prices may be. Here’s what he had to say. “The view I am running with is that we are half-way through the decline in house prices”. In discussing why, he believes we are already half way through the price declines Tony says that everything has moved much faster than the ‘experts’ predicted. When it comes to when he thinks the ‘low-point’ in prices might come he says this: “It will vary from region to region but on average for the country I expect it before the middle of next year. That is, it might come at the end of this year or one year from now”. And would Tony buy a house now? Well, here’s what he said “I would be actively looking rather than joining the frightened herd more fearful of paying 10% too much for the property they plan holding for 10-20 years. Perspective on one’s life goals can easily get chucked out the window when asset prices are falling and FOOP (fear of over-paying) takes over just as FOMO (fear of missing out) did on the way up. Control your emotions, step away from the herd, and you can get on with your life”. Thanks Tony we couldn’t have said that last part better.

Don’t let winter weather catch you out

We are now past the shortest day but experience tells us that the worst of the winter weather is still to come. Hopefully you will have ticked off all the maintenance on your rental property but here’s a reminder of some things you may want to check up on:

• Gutters and downpipes. Make sure they are free of debris.
• Roofs. Just because they haven’t leaked during the summer doesn’t mean they won’t in winter with heavier rain and sleet, snow or hail. Check roof flashings especially in roof valleys.
• Trees. Cut back overhanging trees or trees with dead branches. Remove trees that have grown too big for their location at the property.
• Service fires, chimneys, heatpumps and dehumidifiers.
• Check and service home ventilation systems
• Ensure paths and steps are clean with no mould or lichen build up that will make them slippery and dangerous when wet.

Whose responsibility is it to check on these issues and remedy them as necessary we hear you ask? All the above-mentioned issues are the responsibility of the landlord. Please get in touch with your property manager if you require any of the above-mentioned items seen to. We’ll be looking out for them as well during our regular routine inspections. Learn more about winter rental property maintenance responsibilities, here. 

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.

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