Report Looks at a Capital Gains Tax (AGAIN)

THE RENTAL PROPERTY MARKET IN NEW ZEALAND IS DUE FOR A BIG SHAKE-UP

Most of us are probably aware of this.  For months now the government’s focus on Healthy Homes and some of the likely changes to the laws governing rental properties, have been reported across various media.

But what seems to have slipped under the ‘big news’ radar is the interim report released on 20 September by the government’s Tax Working Group.  Headed by former Labour deputy prime minister, Sir Michael Cullen, this group has been tasked with reviewing New Zealand’s tax system, including its structure, fairness and balance as it applies to wealth generally, and to capital income specific ally.  This includes looking at the merits of extending the taxation of capital income to asset classes previously exempt from capital gains, including paying tax on profits when selling properties. On a brighter note, increasing the income tax rate, or the rate of GST, implementing an inheritance tax or any changes that would apply to the taxation of the family home or the land underneath it, are outside the Tax Working Group’s mandate.

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The Tax Working Group have considered 6,700 submissions lodged between 1 March and 30 April 2018, and the report notes that many submitters have been concerned that tax-free gains on houses encourages New Zealanders to place a high proportion of savings in land and housing, leaving lower New Zealand savings for other forms of investment.

Is any of this relevant to rental property investors and to the rental market?

It might well be.  Although the report did admit it was difficult to quantify the impact of the New Zealand tax system on house prices and rents, mainly because the housing market was subject to many different influences and there is very little definitive evidence available regarding the tax impact on house prices and rents in New Zealand.  However, the Tax Working Group did agree that some features of the current tax system – such as the inconsistent treatment of capital income – have probably exacerbated the house price cycle (even if the tax system is not the primary cause of unaffordable housing).  This means that any extensions to capital income taxation, such as the introduction of a new tax on capital gains from residential property investments, will likely impact the housing market, including probably putting upward pressure on the ratio of rents to prices – in other words, it’s likely to cause rents to rise.

Taking a lead from across the Tasman hasn’t been ruled out either.  The interim report lists examples from Australia, which could herald the development of similar taxes in New Zealand,including ‘vacant land’ and ’empty house’ taxes.  These are seen as one way of improving housing supply and affordability, but the report also notes that the introduction of a tax on vacant residential land, or on empty homes in residential areas, would likely intensify the use of existing urban areas – thereby creating another set of problems.

The interim report stops short of making a definitive recommendation on the introduction of a broad-based capital gains tax on property and sharemarket investments, but it is still early days.  Sir Michael says they know that extending the taxation of capital income will have a range of advantages and disadvantages, but that the group is still weighing up all the issues.

The final report will be published in February 2019, and the government has promised several more rounds of reports and public consultation before the final decisions are made by cabinet. However, as the appetite for any proposed changes is likely to be tested at the 2020 election, it would appear that the implementation of any new tax laws is unlikely to happen before the start of the 2021 tax year.

Our best advice is to get the best advice. There are some very skilled tax accountants and tax lawyers who specialise in the residential property marketplace; make sure you are working with experts.

We started off this article by talking about the new ‘Healthy Homes’ legislation. If you are a residential rental property owner and you’re not aware of how this could affect you and your rental investment – then you need to know now!

Talk to the experts. For free, informed and practical advice on any aspect of residential property management, including Healthy Homes, given Quinovic Parnell in Auckland a call.

 

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A Tide of Change is Coming for Landlords. Are You Ready?

Our government’s first-year anniversary is approaching.  Tenancy reform announcements are more frequent as Phil Twyford’s master plan starts to take shape.

Between now and Christmas, there are a few possible and proposed changes coming:

  • Proposed reforms to the Residential Tenancies Act announced.  In particular, reforms will be around ‘security of tenure’, rent bidding and allowing tenants to have pets.
  • Stricter rules and regulations for operators of boarding houses and the likely introduction of a Warrant of Fitness.
  • Standards and time frames around the implementation of the Healthy Homes Guarantee Bill criteria.
  • The Residential Tenancies Amendment Bill No 2 and Abolishment of Letting Fee Bill will become law.
  • An announcement about the possible regulation of our industry.
  • The possibility of tenants having right of renewal of their tenancy after a fixed term.
  • Tenants may have the right to a minimum length of tenancy.
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We have to ask:
  1. Will tenancies become periodic tenancies?
  2. Will landlords only have the opportunity to give a 90-day notice (with valid reason) to end a tenancy?
  3. Will tenants have the right to have pets?
  4. Will tenants be able to make alterations to the rental property without their landlord’s agreement?
 We are of the belief that warrants of fitness will come, and it will be a good change.  At Quinovic Parnell, 99% of the rental properties we manage would meet the proposed changes.  We would be active in guiding owners to ensure their rental properties comply.
It has never been more important that landlords realise they are running a business.  As such property owners need to educate themselves on the changes, and ensure they abide by the law.
We would like to thank Real-IQ for some of the comments for this blog post.
If you’re looking for expert help or guidance, get in touch with Quinovic Parnell in Auckland.  We can assist you in managing your property business. We can ensure your investment or portfolio of rental properties are well managed:

FAKE News? Even the Rental Market isn’t Immune

Do you believe everything you read about the Auckland rental property market?  It might be correct, but could be out of date, incorrect, or even worse – it could be fake news!
 
We have all seen the attention-grabbing headlines.  Here are some recent samples:
  • Landlords worried as government moves on compulsory heating in rental properties
  • It was like being in a coffin – Aucklander shares experience renting in NZ’s most expensive city
  • Landlords welcome new meth report: money on problem that doesn’t exist
  • Property predictions for 2018
  • Meth-testing in homes – don’t bother
  • Rental home heating regulations should be in force
  • $1.3 million spent on meth clean up in state houses – just $3,000 on mould
  • What’s squeezing the life out of New Zealand’s rental market?
  • Landlords reveal why your rent is rising
  • Buying property for the short-term rental market
So how do you sort out what might be accurate or truthful, and what might apply to your own situation?
 
For example:
  • Did you know the rental market slows down at certain times of the year?  This affects the time it takes to rent properties and rental returns. It can vary from city to city.
  • Do you know what the rental market is doing right now, suburb by suburb, or city by city?
  • Are queues of prospective tenants a myth or reality for Auckland? Or does tenant interest vary according to location, and the type of property you are trying to rent?
  • Do you know about legislative changes affecting rental properties that come into law on 4 April 2018?
  • Do you know about changes to the law for rental properties that will be compulsory from 1 July 2019?
  • Do you know what these new laws are and how they apply?  Or are you relying on what’s been speculated in, or even relatively ignored by the media?  Do you understand how these changes will affect you and your property?
  • Are you aware of what a PCBU is, and how this affects you and your rental property?  Landlords, property managers and tenants all have obligations to discharge as PCBUs. (A person conducting a business or undertaking).
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By not knowing, you risk significant fines for non-compliance.  With the correct information you can significantly enhance your returns or find great tenants quicker.
 
Get in touch with the experts in Auckland property management.  Quinovic Property Management specialises in managing residential rental properties.  We have been managing properties for over 30 years and know the rental market inside and out.  It’s all we do.   With a nationwide network of 34 offices, 180+ staff, an in-house property lawyer, and thousands of properties under management – you can see why.
 

Our Free Offer to You

At Quinovic Parnell we are offering to give you free, up to date, accurate, informed and customised information;  relevant to you.  If there are enough people wanting the same information, we will publish the questions and answers.
 
Follow the link below to get in touch with Quinovic Property Management Parnell, Auckland:
 

Tips from Quinovic Parnell to Help Prevent Your Christmas Gifts Being Stolen

The festive season can be the time of year when thieves target your presents – both in your home and vehicle.  With the warm weather we tend to get out and about more.  There’s invitations and celebrations this time of year too – so you could be leaving your home unattended more than usual.

We thought now would be the perfect time to offer you some tips.  They apply to home owners and tenants of rental properties:

  1. Keep Valuables Out of Sight in Your Car:  When out Christmas shopping ensure valuables and gifts are out of sight.  In the Christmas rush it can be easy to put everything on the back seat and rush to the next store without a moment’s thought.  Use your boot or parcel shelf.  Check gifts and valuables are out of sight and ensure you lock your car if you need to leave it unattended.
  2.  Place Your Gifts Out of Sight Until Christmas Day:  Put off placing your gifts under the tree until as close to Christmas Day as possible.  It’s a good idea to close the curtains so all presents are out of sight.
  3. Store Valuable Items in a Secure Place:  Make sure your valuable presents are away in a lockable cupboard, stored in a bedroom or in a secure locked garage.
  4. Keep Boxes and Receipts Out of Sight:  Your boxes and receipts should be out of sight from prying eyes and we suggest making sure they aren’t visible through windows.
  5. Get Your Online Gifts Delivered Elsewhere:  Online shopping is more and more popular.  Get your online gifts delivered to an address where someone is there all day, or at your workplace.
  6. Avoid Placing Gifts in One Place:  While it’s tempting to store all your gifts in one place, it’s a good idea to store them in multiple areas in your home.
  7. Be Careful How You Dispose of Packaging from Expensive Items:  With so many great offers around the festive season it can be the perfect time to buy a big ticket item or upgrade the television.  Take your packaging away for recycling to the local refuse centre, or break or rip it into smaller pieces which are unable to be identified.

We hope our tips have helped you to enjoy your festive season.

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Managing Your Residential Rental Property:

The clouds are forming.  Anyone involved with managing residential property needs to understand this.

Housing was a key issue in the recent election and we have a new coalition government.  Changes are definitely coming.  They have indicated that renting will be more stable and healthy for families.  So changes are most definitely coming!

Are you aware of recent past changes to your responsibilities as a landlord?  The big issue last year was smoke alarms and all home/apartments should be meeting the standards.  Make sure you know how this applies to your property.

Changes to the rules about insulation are compulsory from 1 July 2019.  Savvy landlords are looking to meet these standards sooner rather than later.  They know there are only a limited number of quality insulation installers available.

Some landlords have left things to the last moment.  It is likely costs will increase as installers struggle to finish all work by the deadline.

What should you be doing right now?  If you are a first-time landlord make sure you get a Landlord Pack from Tenancy Services.  Under the Residential Tenancies Act 1986 it will tell you:

  • What protections and responsibilities you currently have
  • Tell you how to lodge a bond
  • How to keep track of rental payments
  • How to go about selecting good tenants and what you can do if your tenant breaches tenancy law

Landlords and tenants must both respect “quiet enjoyment.  Are you aware of the responsibilities you have towards your property’s neighbours?  Do you let your tenants know about their responsibilities?

What about your responsibilities for locks, security, repairs and damage?  Experienced landlords would be wise to ensure their practices are up-to-date and robust.

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And then there’s the rental property insurance minefield.  Are you aware of how your insurance policies work and what they cover (and don’t cover).  This includes requirements for regular inspections, detailed property reports and relevant photos.

Moving forward, what can you expect?  Healthy homes are warm and dry.  You need to make sure your rental property is well-ventilated and has heating.  Our view is that over time a heat pump will be the least standard.

A Warrant of Fitness for rental properties will likely soon be essential.  It would cover ventilation, insulation and heating requirements.

Your future options.  The reality of being a landlord is you are running a business with its risks as well as rewards.  Being a landlord is no longer a hobby or part-time job.

At Quinovic Parnell it is our job to keep up with what is happening in all aspects of property management.  Our expertise allows us to help our owners plan ahead and maximise investment return.

Our knowledge and experience allows us to assist our rental property owners mitigate risk
With proven systems in place we check and report on all compliance areas affecting your property and tenants.

Talk to Quinovic Parnell about partnering with us.  We are your specialists in residential property management.  We commit to looking after you and your property with both care and return.

Get in touch with Kerry from Quinovic Parnell today about us managing your Auckland residential property:

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How Fit is Your Investment Property?

Warrants of fitness for rental properties have featured in the media lately, and have also come into the spotlight with political parties recently.  We are familiar with warrants of fitness for the car – what about for your rental property?

The signs are that some sort of warrant of fitness for landlords is on its way;  let’s look at what this will mean for you.

Changes in tenancy laws on 1 July 2016 meant the following:

  1. All rental properties are required to have smoke alarms.
  2. All new tenancy agreements need to include a statement of the extent and safety of insulation in the property, and any replacement or installation of insulation in a rental property must meet the required standards.

Warrants of Fitness for Rental Properties may be Sooner than You Think

August 2017 – the Wellington City Council announced it will pursue a voluntary rental WOF and intends to make it compulsory in 3 years.

What would a WOF cover?

The best idea we have is what the Wellington City Council has introduced, and if you are a landlord it would be good to familiarise yourself with the 29 items on the criteria.  This includes insulation, heating, ventilation and structural stability.

An inspector would check your rental property in the following areas:

  • All walls, ceilings, linings and floors are intact
  • All surfaces are clear of mould
  • Adequate food preparation and storage in the kitchen
  • Secure storage with child safe locks in the laundry
  • The lounge would require fixed heating.  In the future it is more likely that a heat pump would be the minimum standard
  • Portable heating would be unacceptable unless it was a unit or apartment less than 50sqm
  • Windows would require secure latches
  • The front entrance would need to be clearly labelled, identifiable and with good lighting at the front and rear

Overall your investment property must be in reasonable condition, with good spouting/stormwater which does not leak, and no cracks or holes.

Paths, decks and surfaces are to be free from moss and non-slip.

This is a quick overview of the changes coming, and it’s never too late to start ensuring your rental property will meet the standards when they are enforced.  It’s protecting your investment as much as it is maintaining its quality and this in turn attracts quality tenants.

Quinovic Parnell is more than willing to work with owners and put plans in place to ensure your investment is looked after and by doing so, retaining its value for owners and tenants alike.

Is your property up to scratch?  How ready are you for possible warrants of fitness of rental properties?

Follow the link below to get in touch with Quinovic Property Management in Parnell today about putting a plan in place for your Auckland rental property:

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Are You a Reluctant Landlord?

You marketed your home for sale, it didn’t sell at your price – now you want to move on

Auckland property sales appear to have slowed.  At Quinovic Parnell  we are seeing frustrated vendors turning to the rental market when their property hasn’t sold for the expected price.

Many of these property owners are frustrated and disappointed.  They have gone through the sales process, and the effort required – both physically and emotionally.  Often they have moved on in their minds from owning the property and are having to rethink what to do.  They may have already purchased another property, and visualise being there.

Can you fully embrace an entirely new way of thinking from home owner to property investor, and treat it like a business?  You could rent your home out until the Auckland property market supports a good sale.

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Perhaps you have decided to go ahead and become a landlord.  Our professional experience and expertise in residential rental property is critical to making sure you get things right.

Here are some of the things that anyone considering becoming a landlord needs to think about.  All good reasons to have experts who deal with these each day do the work for you:

  • Your legal obligations
  • Letting, tenant screening, acceptance, bond collection and lodgement
  • Professional distance when managing the relationship with tenants
  • Rent collection
  • Repairs and maintenance
  • Rental appraisal and rent increases
  • Regular inspections
  • Advertising and marketing
  • Record keeping

Do you have the time to deal with situations when they arise?  We do!  We have the time and the experience to do the important things that ensure the best care of your property, and the best return.

Get in touch with Kerry Kirwan today to discuss us managing your property:

  • P:  09 373 4353
  • M:  0220 108 005