It’s an interesting time for the property investment industry currently with many legislative changes in effect, and more proposed changes on the way.
In case you missed our APM Property Investment Seminar on 15 November 2018, where we discussed updates on property investment, have a read of the key points from each speaker below.
Toni Heath, Business Development Manager, Auckland Property Management
Toni discussed the Government’s new proposals and regulations, and the impacts they will have on landlords. Public submissions on these proposals closed for submission in late October of this year. There are eight proposed amendments to the Residential Tenancies act 1986 and five proposed standards for the Healthy Home Guarantees Act 2017.
Key take aways:
- We expect to hear back from the Government in the New Year on the outcomes of the proposals.
- There may be impending changes due to the proposals on heating requirements, insulation, ventilation, moisture control, and draught control that landlords will need to comply with.
- MBIE have a compliance and investigation team who will most likely be contacting property management companies come July 2019 to check compliance to the Healthy Homes Bill – they may likely contact tenants too.
- Tenants also have the right to inspect the homes to see if they are compliant, they can also check with third party professionals.
Lloyd Kirby, Partner, RSM New Zealand
Lloyd discussed property investment from an accounting perspective and outlined the different business structures needed for investments from Partnerships, to Company and Trusts, as well as discussed upcoming changes that could affect how landlords can claim against their properties.
Key take aways:
- Trust accounts are going to be more common with the proposal of the capital gains tax.
- Make sure you account for the difference between Repairs and Maintenance of a property. Replace like with like e.g. tin roof with tin roof, anything under $500.00 can be claimed against the property.
- Make sure you can account for your travel, keep a log book if needed – you can claim mileage for 76c for first 14,000 km then it’s tiered.
- If you buy a property, then decide to use it as a holiday home, make sure you are aware of the rules as holiday homes and baches are subject to mixed rules.
- Five year rule and bright line test – 2 year rule if purchased between 1.10.15 and 28.3.18, and 5 year rule if purchased on/after 29.3.18.
- Proposed rental loss laws commence in the 2019/2020 income year (rental losses will no longer be able to offset against other income). Only applicable to residential.
Linley Hawkes, Associate, Davenports Harbour Lawyers
When buying an investment property it’s best practice to do your due diligence. Linley highlighted the importance of consulting with legal advisors, and that you should know the difference between conditional and unconditional contracts.
Key take aways:
- Make sure you conduct due diligence investigations, anything from getting financial approval, to the building report, looking at the Body Corporate meeting minutes, and Council property files.
- Know the different purchasing structures – Partnerships, Company, Trust, and Individuals.
- Make sure you have a tenancy agreement in writing, that a bond has/will be lodged, and that if there is a change in landlord that all affected parties are notified.
- Landlords should seek assistance from property management companies to help comply with legislation.
Steven Garland, General Manager Body Corporate, Auckland Property Management
Steven discussed what to look for when you are buying into a Body Corporate. There are two types of Body Corporates – those who exist and those that do not. Those that do not exist are Body Corporates that are in development where there are only plans. According to Steve, these are far more risky to invest in compared to existing Body Corporates where there are people currently living, there is an active committee, and you can visit the building.
Key take aways:
- Speak to your advisors when purchasing a property in a Body Corporate.
- Find out the Body Corporate Manager for the building you are looking to purchase in and ask them to discuss the Body Corporate with you.
- Get at least 5-10 years committee minutes and look at the financial statements – this is where you can see if there are any issues going on in the Body Corporate.
- Think of all the common areas you will have shared access to e.g. footpaths, lifts, corridors, – do you know how they are managed?
If you have any questions relating to the topics outlined above then please email Toni Heath on [email protected].
APM will be holding more events like this in 2019. If there are specific topics you would like to hear about then we would love to hear from you. Email Lana on [email protected] with your suggestions.