Welcome to the October 2021 edition of the Client Newsletter
IMPORTANT: Our offices in Auckland and Waiheke Island are closed to the public during Alert Level 3 but our Managers are still working remotely should you need us.
Click here for Level 3 information for property owners and tenants, and for up to date information on the alert levels click here.
Stay safe, follow the guidelines, practice physical distancing, scan the QR codes, wear your mask and wash your hands to help keep everyone safe.
From the team at Auckland Property Management
A Word from Howard – Policy and the housing market
In recent times the housing market has been keenly focused on by investors, policy makers, governments, and developers. We now regularly see articles or commentary on the housing market from different parties in the media. It’s no secret that there is a housing issue in New Zealand and, in particular, in Auckland. Most commentators note this as a supply issue and so, while various things have been done by the Government with the aim to help the shortage of housing ( some might argue that Government actions have been a hindrance), it’s good to look to other countries in similar situations and see what they have been through.
A recent article I read in The Economist “Investing in Property – the new rent-seekers”, confirmed that rising house prices, badly planned Central Government “fixes”, shortage of rental housing, shortage of and increasing costs of building materials and rising rents are not just a New Zealand problem, but a world-wide issue. Some examples from the article are worth passing on.
Catalonia in Spain, put in place rent control regulations that failed to produce a more affordable housing market. The number of homes available for people actually reduced and house prices stayed the same.
In Berlin, a five-year rent freeze was put in place after rents doubled. Unfortunately however the new policy meant that the number of rental properties also reduced for those that needed them so the Berlin authorities quickly shut down this idea.
In the USA limits are placed on the sale of low cost homes to large investors. In Ireland property taxes were put in place to stop institutional investors buying family homes.
These are just a few examples where central housing policies have failed. There are other ways to encourage investment and property development.
According to the 2018 NZ Census, 1.4 million New Zealand people lived in houses they did not own, with the vast majority renting. In New Zealand we need rental stock to continue to grow in order to house the increasing population, and the increasing number of renters.
According to The Economist article, more housing is seen as the answer to the issues in the world, and more housing means the need for more investors/developers. In Auckland where housing is short, the housing stock for renters is limited and construction is slow. The problem with building material supply issues in the wake of the pandemic and other related delays, mean that delivery times will surely get slower and houses even more expensive. I think that changes need to be made or policy/regulations introduced to help the building industry. I know many would be encouraged by government initiatives that make it easier to build homes. Regulations controlling permits need to be streamlined and increased. Building of rentals needs to be encouraged and made easier for those who want to invest in property or develop property in New Zealand. We have the housing demand; now we just need the supply of properties to match that demand. The answer will be lower prices for home buyers and more affordable rents for those renting at some stages of their lives.
If you have rental homes and would like to discuss professional property management please give me a ring. We are here to help.
Until next time.
Auckland Property Management
An Update with Bill – One Business or Four?
As an employee, director and shareholder of Auckland Property Management I am very proud of the fact that over 340 of our clients have entrusted us with the management of their properties for over 10 years. Something we haven’t always done well though is to inform each client of the full range of services we offer. We have residential property management clients who don’t know that we can also manage their commercial properties and body corporate clients who don’t know that we can also manage their holiday rentals at Waiheke.
Hopefully this newsletter goes some way to broadening your knowledge of our services. We are taking significant steps to ensure we don’t have “silos” and that we operate as one business, not four. By changing to slightly smaller desks we have been able to move almost the entire team (other than our Waiheke-based people) onto one floor to facilitate better communication. This move was completed just before we went into lockdown and we were already seeing benefits before we all had to start working from home.
During lockdown we have maintained regular communication across the team with a weekly Company Zoom meeting attended by almost all of our 70 staff and recorded for viewing later by those with conflicting client commitments. These Zoom meetings have been an opportunity for all departments to share news of progress, opportunities and challenges – again helping to break down silos.
Our aim is to ensure that any member of our team can provide you with information about any part of our business. If you would like to consider having us extend the range of service that we offer you, please just talk to the member of the team you already deal with, or me, or Howard. If that person can’t answer your questions immediately they’ll know where to quickly get the answers.
Chief Operating Officer
Auckland Property Management
Residential Property Management
What’s happening to my routine inspections during lockdowns?
Most landlords are aware that routine inspections are legally off the table during Alert Levels 4 and 3, with some asking if a property manager can carry out ‘virtual’ property inspections during the lockdowns. Yes, virtual inspections can be carried out, but your tenant MUST agree to it and so far, we have noticed that hasn’t been the case. With the current ‘be kind’ approach to pandemic stress levels, we need to re-consider what really needs to be done during the lockdown.
We prefer to be focusing firstly on helping tenants with arrears and today we are proud to advise that in this pandemic environment we are retaining our 1.85% arrears rate across the team, that’s a reflection of the property managers’ skill sets (industry standard has anything under 5% as excellent). We are also now conducting contactless move in and move outs that have been held up during Alert levels.
The big questions in property management are always around risk, and being unable to conduct in-person inspections has posed questions for the industry about meeting insurance requirements…Click here to read full article from Celia.
General Manager – Property Management
Auckland Property Management
Tax Changes for Landlords
Last month the Government released legislation outlining the regulations on deducting interest costs against income made from renting a property. These would come into effect from 1 October 2021 for residential property acquired on or after 27 March 2021. The following exclusions and exemptions are proposed:
- an exclusion for the main family home
- exclusions for several types of residential property, and exemptions for new builds and for property development.
Property development and new build properties are exempt to ensure that much-needed new housing continues to be built.
Body Corporate Management
Body Corporate Management in the Aftermath of a Pandemic
We are slowly being prepared by Government for the ‘new normal’ in the aftermath of the pandemic, and shared living communities will need to think carefully about the impact on Bodies Corporate, Resident Association and Cross lease properties.
The Government has now mandated vaccination for the health and teaching professions and companies are coming forward almost daily with their own similar mandates. Soon, those that are doubled jabbed will be able to provide evidence of this in the form of certification and will be allowed to travel, dine and frequent entertainment facilities. Those who are not vaccinated will not.
Our APM managers are already seeing some of our Committees begin the same process of introducing vaccination requirements to trades and general service providers that attend their properties.
General Manager – Body Corporate
Auckland Property Management
Commercial Property Management
Rent Relief: No two requests are the same
Through our extended lockdown our Commercial Property Managers have had a lot of experience with requests from tenants for rent relief, their key learning being that no two cases are the same and there is no one answer that fits every circumstance. There are three key factors to be considered every time:
- Tenant Circumstance. How has the lockdown affected them? Can they trade as normal, partially or not at all and at what levels of lockdown? Are there government support options available for the tenant and, if so, have they been successfully applied for? Note that some tenants in the business of providing essential services are actually trading better than normal at present – those are however a minority.
- Owner Circumstance. Our government tends to overlook the fact that many of our property owners are highly leveraged and dependent on rental income to meet their own commitments. Many are simply not able to provide significant rent relief without causing their own serious financial hardship. They may need to come to an arrangement with their bank before they can commit to any level of rent relief.
- Reasonableness. The law requires the parties to attempt to come to an agreement in good faith. 50% rent relief has been common but cannot reasonably be expected to be the right solution in every case. We have some owners who have been genuinely unable to offer any rent relief and others who have generously provided up to 100% rent relief (while still requiring Operating Expenditure to be paid).
Having a property manager as the mediator in these situations is certainly recommended. Our Commercial Property Management team are experienced in assessing the circumstances of owner and tenant and ensuring that reasonableness is applied in reaching an acceptable compromise solution. If you own a commercial property and don’t have it managed by us yet, now might be a good time to talk to us.
‘Shot’ to Clendon Shopping Centre
Clendon Shopping Centre, one of our commercial management properties, became a spot for the new vaccination buses last month. Thanks to Neil of Manurewa Town Centre for sharing some images with us.
Welcome to our new Holiday Homes ‘Bellbird Paradise’ that was recently added to our portfolio on Waiheke Island. If you are after a Waiheke getaway after lockdown then check out Bellbird Paradise.
7 Questions With…Claire Hewertson
Q 1. How long have you been working in the property management industry?
Around 25 years with a few breaks in between.
Q 2. What makes property management a great career?
The variety, no two days are ever the same and you meet interesting people from all walks of life.
Q 3. What do you think is an aspect of property management that often gets overlooked by private landlords?
In current times, compliance, compliance, compliance – that is why you have a property manager!
Q 4. What’s the best book/moview/TV show you have read or seen and why?
I have just finished watching the Spanish TV series “Money Heist” on Netflix. It’s a fast moving edge of your seat kind of show, well worth a watch.
Q 5. Where (in NZ or overseas) did you grow up?
I grew up in Torbay on the North Shore of Auckland by the beach.
Q 6. What is your favourite time of year and why?
Summer – I love the beach, swimming, water sports and lazy summer days.
Q 7. It’s been a crazy past year, what is something that helps you get through the crazy times?
Knowing that we will eventually get through this and hopefully return to the new normal soon!!!