Welcome to the June 2019 edition of the APM Client E-Newsletter.
A Word From Howard – Investing Free of a Capital Gains Tax
In our last newsletter I discussed the Capital Gains Tax and what was to be expected if the Government went ahead with the Tax Working Group’s suggestions. With Labour announcing in April they were not going ahead with the Capital Gains Tax, I think you could almost hear the collective sigh of relief from property investors around the country, myself included!
There is no question that there has been mixed reactions from not implementing a Capital Gains Tax, however as a business owner and property investor myself, I can understand the pressure and level of uncertainty the Capital Gains Tax would have created, and I am pleased that our clients now don’t have to worry about their portfolios being unfairly singled our for taxing.
Now that the uncertainty of a Capital Gains Tax is no longer, it’s cleared the way for people to get more involved in property investment by providing more certainty over what investors can expect from capital growth without taxation. With more certainty comes confidence in the market and investment decisions. It’s no secret New Zealand is currently short on rental stock, especially residential property in Auckland, and I believe the lack of supply of housing is a huge issue in the property industry at the moment. With the rising Auckland population, and a generation of longer renters with less housing to choose from, it’s Auckland Property Management’s role to see the opportunities around us. The growing population also means possible investment in other areas such as commercial property or Unit Titled buildings which seem to be popping up around Auckland everywhere.
If you are thinking about investing in property or adding to your portfolio, then head along to our upcoming free property investment seminar on ‘Insider’s Tips on Property Investment’. Even if you are a seasoned investor there is always something new to learn, and it’s a great opportunity to network with like-minded peers. More details on our seminar can be found on our website here.
As always, I welcome your questions or enquiries on the property management industry. At Auckland Property Management we have professionals in Residential, Commercial and Body Corporate Management, along with Holiday Home Management on Waiheke Island so we are equipped to handle anything!
Residential Property Management
Healthy Homes Standards
The Healthy Homes Standards are now in draft form with new requirements for Ventilation, Heating, Insulation, Moisture Ingress, Drainage, and Draught Stopping are all but established. The deadline for new standards to be met is two years away, 1 July 2021, however if a tenancy starts after that date, rental properties will have 90 days to become compliant, longer term tenancies have until 1 July 2024.
Today I’m going to look at two of these requirements, Ventilation and Heating, and share what you need to know now to get ahead of the game and confirm to you what is still to be released. This is information has been provided to date, but remember – we always advocate waiting until it’s all in set in concrete with the details finalised to avoid doubling up or taking unnecessary action.
Ventilation – New Upcoming Standards
New ventilation requirements state that the property must include openable windows in the living room, dining room, kitchen and bedrooms. The window area must be equal to at least 5% of the rooms total floor area, and an appropriately sized extractor fan must be in rooms with a bath, or a shower, or indoor cooktop. So what type of extractor fan is needed and how powerful will the airflow need to be? Read more on the Healthy Homes Standards here.
General Manager – Property Management
Auckland Property Management
Coming into winter we know that Insulation will be top of mind of many landlords. However, what about other repairs or areas of concern that may need attending to? A few articles lately have highlighted the importance of being prompt with maintenance that is needed on the property. The MBIE’s tenancy compliance team recently took a tenants case to the Tenancy Tribunal over a leaky roof that took over a year to repair, ending in a $2020.44 fine to the landlord and management company.
Market Rent Statistics
Did you know you can look up the market rent for your property at any time? Visit the Tenancy Services website, add the suburb your property is located in and view how many bonds have been lodged, the lower, median and upper market rent for that suburb, and details about the different housing in that area. Visit the Tenancy Services website for more details.
APM Property Investment Seminar
Join us for the free June Property Investment Seminar with speakers Galina Bell, Tax Principal Auckland at RSM Mew Zealand, and Andrew Nicol, Managing Partner from OPES where they will provide tips for property investment.
Trustpower Changes to reading meters
If you are a Trustpower customer you may have already received notice that from 4 June 2019 meters will be read every month rather than every second month. There will be no more estimated bills unless they have to do one while the changeover happens. Please contact Trustpower if you have any questions around your property’s meter readings.
Body Corporate Management
How the Governance of a Body Corporate Works
If our Cross Lease and Resident’s Society owners will forgive me, I would like to take this opportunity to provide our Body Corporate clients with a quick refresher on how a Body Corporate is structurally organised.
As the diagram below explains, there are some unique features that all owners need to know about.
Whether you are a Chairperson, a Committee Member, or a regular Body Corporate owner then it is important that you familiarise yourself with this diagram.
General Manager – Body Corporate
Auckland Property Management
Commercial Property Management
How is Commercial Property Management different from Residential?
Property investors are often faced with the decision on what type of property to invest in and whether to enlist the services of a professional management company. Investing in real estate is a good way to generate a stable return on investment and often the key to reaching this stable return on investment position is with the help of a professional management company and a knowledgeable property manager.
Most property investors would be aware that property management services cover both residential and commercial property management, but how much do they differ? To decide which property industry to invest in and to be successful, you must first understand how the needs of commercial and residential property management are different.
APM Staff News
Another few months of celebratory staff milestones here at APM. Property Manager Liz Davey celebrated her 15 year anniversary at APM and was gifted a travel voucher, and Property Manager Peter McDell celebrated his 5 year anniversary and was gifted a night’s stay in an Auckland hotel. Thank you Liz, and Peter for your continued support and dedication.
The last couple of months have also been busy with our team growing. We are delighted to welcome to the team Jack Malpass, Commercial Property Manager; Don Asalage, Commercial Accounts Administrator; and Tania Murphy, Waiheke Property Manager.
Meet APM’s Health and Safety Advisor Peter McDell
Did you know APM has a dedicated Health and Safety Advisor? We’d like you to meet Peter McDell, our knight in shining (fluro) armour. Peter holds a dual role of Property Manager and Health and Safety Advisor and ensures the company is compliant in all aspects of the Health and Safety at Work Act 2015. Read about what he gets up to, to make sure we are compliant here.
7 Questions With…Anita Menzies
Anita Menzies, Commercial Division Manager
Q. How long have you been in the Commercial Property Management industry?
I have worked in the commercial property project management for 7 years and in commercial property management since joining Auckland Property Management Commercial Division back in March 2018.
Q. What is a piece of advice you would give to an owner who has commercial investment properties?
The best advice I can give a Commercial property investor is to ‘get a commercially savvy property manager’. A commercial property investor has a lot of opportunity to have a high return on investment as long as the property’s capital and operational expenses are planned properly by someone who knows what they are doing. Plus, there is also a lot of financial, legal and health & safety related risks in commercial properties, so a financial and legal savvy commercial property manager who can reduce risk is really a must for success.
Q. What do you think owners should consider before they invest in commercial property?
When investing in commercial property, there are four areas you have to put some serious due diligence into:
The Title – Check for covenants and encumbrances that could inhibit later development and hence devalue the land. This is not to say that you will find commercial properties without covenants (very unlikely); but what I mean is consider if those covenants are unreasonably restrictive.
The Deed of Lease – The law says that the owner of the land owns the benefit of the Lease. When you buy a commercial property you will find that a new Lease with new terms is not issued so check that you are happy with the existing Deed of Lease. If you are not happy, then correcting or adding terms to the Lease should be a condition of the sale and purchase of the land and the Vendor will negotiate with the Tenant. Lookout for terms that dilute the operational expenses claimable by the tenants. Example – older Leases often do not allow for management fees to be recoverable under operating expenses.
Check out the tenants – If you can buy a commercial property with high value tenants (like big brand or government tenants), it actually adds to the value of the commercial property. A good example of this is the 1.7ha site at 9 Richard Pearse Dr, Airport Oaks which was recently sold for $17.386,960.00, which came with a Lease placing maintenance, repair and replacement of the fit out and equipment on the Tenant.
Check the health of the building – If it is leaky? Does it need asbestos remediation?
Q. What is happening in the commercial property industry you think Owners need to be aware of?
The good news for investors is that when looking around Auckland and the greater North Island, you see that Tenants are finding it difficult to find a suitable industrial property for their business. This means that it is a great time to invest in commercial property and benefit from the supply and demand of the commercial property sector.
The bad news is that health and safety regulations around property are constantly changing and the level of threshold of compliance required is increasing. The solution to avoid and reduce the risk is to find a commercial property manager who knows what they are doing.
Q. What is one of your favourite things to do in Auckland?
I love exploring the many second hand furniture shops around Auckland for unique interior design and furniture pieces from the 1960s.
Q. Who is someone that inspires you and why?
My daughter for her ability to step into adventure with an absolute lack of fear.
Q. What is your favourite thing to cook/eat?
Thai hot prawn panang.
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