- Spring 2015 – Here’s to a busy, busy Spring!
- Summer 2015 – Trust us with your rental property
- Autumn 2016 – Why we think the numbers stack up well
- Winter 2016 – Commercial Property is Getting Serious Traction
- Spring 2016: Now Is The Time To Sell
- Summer 2016: It’s been an interesting year, alright!
- Spring 2017 – Spring is here, it’s time to sell…
Welcome to Spring! It’s lovely to see the gardens around Christchurch burst back to life after a cold winter.
I’d like to take a moment to cut through the confusing messages from the media around the state of the real estate market and give you a first-hand look at what we’re actually seeing on the ground here in Christchurch.
Compared with the post quake boom years, we have had a relatively quiet winter for sales; however this does not mean that properties are not selling. There has been a steady flow of sales and we are still seeing some record-breaking results.
Right now, it feels like the spring market is returning to normality and vendors who are well prepared, open to advice and present their properties well will get a good response from buyers.
Now more than ever, there is a huge benefit to having a well thought-out marketing campaign and carefully considering the method of sale. Each property will
have a target market and it is important that your agent creates a campaign to speak to this market and a process that suits the property and its likely buyers.
Traditionally, election years make for a more cautious market, as people wait for the outcome. This aside, we still have low interest rates and record-breaking migration statistics, which predict healthy numbers settling in the Canterbury region thus putting pressure on the housing supply.
The central city is on the brink of some large projects being completed, such as The Terrace with the reopening of Fat Eddies and The Crossing with the opening of global fashion retailer H&M, both being big draw cards. There is also the emerging fashion precinct in lower High Street and the first new supermarket in the CBD. The Justice and Emergency Precinct will also drive more interest into surrounding areas as thousands more workers return to the CBD.
Why do buyers and sellers put so much weight on RV’s (Rateable Values)?
The answer is quite simple – they don’t understand all the different ways RV’s can be distorted. Here are some examples of the distortion effect:-
- Owners can apply to change their RV at any time by paying $350 to QV (Quotable Values) for a RV reassessment (Urgent Rating Value Review) because they consider their rateable value is too high or too low.
- Substantial improvements are often not reflected in a revised RV for properties that sell quickly after the work has been completed. The margin between RV and selling price could easily be distorted by as much as 25%.
- For new builds, development costs are charged by the council based on the builder’s estimated build cost. The higher the estimate, the greater the charge so the incentive for the builder is to be as conservative as possible. The conservative build cost becomes the basis of the Improved Value (IV) in the RV. The margin between the RV and selling price will again be distorted and may well remain so until the property sells and a new 3 yearly RV is set.
- RV’s for properties that haven’t sold for many years tend to be distorted and much lower than they should be. It’s only after a property is sold that the RV does its market level catch up based on the new sale price.
Given that buyers and sellers routinely ask property professionals what the typical sale price to RV ratio looks like for a particular suburb, it’s easy to see how universally flawed this can be.
In any given suburb, you will see at varying degrees the full range of distortions. This means you could have some houses whose sale price is relatively close to the RV, whereas the neighbouring house could easily reflect a difference of well over 25%.
In summary there are far too many distortions for the RV to sale price ratio to be a reliable valuation tool when you consider the majority of properties have never been inspected. Some owners had their property RV reassessed and increased before selling, other owners had substantial work done without their RV being updated, other properties that had recently sold with very low RV’s because they had not been sold for a long time or lastly other properties that had been sold for the first time that had a very low RV because of a conservative Council development (build) cost estimate.
Another point to bear in mind about RV’s is that if your RV increases, it doesn’t necessarily mean your rates will increase. There are two factors that govern whether your rates will increase:
- Has the RV of your property increased by a greater amount compared to the RV of the rest of the properties in the rating district? Whole suburbs can increase by different percentage gains than other suburbs; and
- Whether the council needs to increase its rates levy to collect more money than the previous year.
In short, we counsel against putting so much weight on the RV when valuing a home. It’s much more important to consider local sales information that accurately reflects the real, current state of the market in a particular area.
GET YOUR FREE PROPERTY REPORT TODAY!
As a reader of this newsletter, we offer you a FREE PROPERTY REPORT on your property with commentary on recent comparable sales in your immediate neighbourhood. Should you wish to take advantage of this, please call us on 03 355 6555 today and ask for the “Free Property Report” offer.
The rather obscure phrase, ‘as is where is’ has become such a fundamental element of the Canterbury property market in recent years to the point where most homeowners or buyers are familiar with the term. Say it elsewhere in New Zealand and you’ll get a lot of people scratching their heads.
Buying or selling a property ‘as is where is’ essentially means exactly what it sounds like: you’re selling a property “as it is right now, where it is right now” at the date of the sales contract.
Arguably, that’s how most houses in NZ change hands – unless there is a clause in the contract to remedy something – such as un-consented work- prior to the sale. Thanks to the earth’s violent movement in Canterbury, and the subsequent deluge of insurance claims, things are a little different here.
Buying a property ‘as is where is’ here means that the insurer of the property decided it was too damaged to be worth repairing or they opted out of managing the repairs on the insurance claim and paid the owners a cash settlement to undertake that process themselves. The latter of these two options is by far the most common basis for ‘as is where is’ sales. The owners take the insurance settlement and sell the damaged property for a lower rate than if it was repaired and generally use both sums to settle on an undamaged house elsewhere. The buyer then undertakes the repairs themselves.
There are benefits to both buyers and sellers in this situation, but it’s critical that buyers really do their homework properly to ensure they don’t get caught out with unexpected and costly surprises during the repair.
Cowdy and Co are experienced in sales of this kind and we’re keen to work with anyone wanting help with an ‘as is where is sale.” Call us today on 03 355 6555.
We often receive enquiries from building owners, landlords and tenants as to how the seismic strengthening regime applies to buildings in New Zealand.
Under the Building Act 2004 (Act), buildings that sit at 33% or less of the building code are considered “earthquake-prone”. When a building is earthquake-prone, a Council may issue a notice requiring the owner to take steps to reduce or remove the danger, and essentially make the building not earthquake-prone.
Councils cannot require owners to strengthen earthquake-prone buildings beyond 33% of the building code. Where buildings are leased, tenants may nevertheless be able to negotiate a higher percentage of compliance with the building code and require the building to be maintained at that level during the lease term.
An owner who receives a notice from the Council will have a certain length of time to carry out the strengthening work. Each Council is required to adopt an earthquake-prone building policy under the Act which will normally dictate the time available to an owner to complete the works. Failing to complete the works by the deadline may result in a fine.
The position under the Act is set to change in the near future as a result of the Building (Earthquake-Prone Buildings) Amendment Act 2016 (Amendment Act), which will come into force on 13 May 2018 (or potentially sooner than that).
Timeframes for Councils to identify potentially earthquake-prone buildings will be determined according to the seismic risk of the area, with each geographical region having either high, medium or low seismic risk.
An engineering assessment may need to be provided by the owner of a potentially earthquake-prone building. Based on the assessment the Council will decide whether the building is in fact earthquake-prone, in which case the Council will issue an earthquake-prone building notice. Timeframes for completing the strengthening work upon receiving the notice depends on the seismic risk of the area, with timeframes being halved for “priority buildings”.
If you would like legal advice on the current position under the Act or the changes to be introduced in the Amendment Act please contact Rebecca Saunders or Michael Copeland from Lane Neave lawyers on (03) 379 3720 or visit our website www.laneneave.co.nz.
Now is the time to insulate your rental property. A Statement of Insulation is now compulsory on all new tenancy agreements and insulation will be compulsory by 1 July 2019.
Community Energy Action (CEA) offers up to a 50% insulation subsidy (if your tenant has a Community Service Card), a free energy advice service, and free recycled curtains for tenanted properties.
If your tenant does not have a Community Service card, CEA can still give you a free assessment with a discount off the price of the quote.
Having proper insulation, an adequate energy efficient source of heating, and good ventilation reduces the risk of mould growth in the home. While there are many things the tenant can do to manage moisture levels in the house, the building blocks for a healthy home are these three things.
CEA provides free, no obligation assessments of ceiling and underfloor insulation for rental properties. CEA can also check to see if the ground is damp under the house. If necessary, CEA can provide a quote for a polythene vapour ground barrier which is placed on the ground, prior to installing underfloor insulation.
CEA are also able to provide free information and education for tenants – we know that the behaviour of some tenants can contribute to an unhealthy home. They also offer a free energy advice service over the phone or by email, which can provide information and advise about specific energy problems such as issues with high power bills and how to effectively heat the home.
CEA staff are professional, objective and provide impartial advice. We deal with numerous product suppliers which enables us to ensure we give objective advice.
Meth testing of houses has become a big thing in recent years – and it’s certainly gained some serious attention in the news media,with some seriously concerning stories making headlines. But all this conversation has also led to confusion, and a lack of consistency across a wide range of commercially available testing methods has only compounded the problem.
So it’s good to see that the Government has recently introduced a new standard for sampling and testing for methamphetamine contamination in residential properties.
The Tenancy Tribunal has made it clear that renting a contaminated property is a breach of the owners obligations to provide a premises in a reasonable state of cleanliness (section 45(1)(a) of the Residential Tenancies Act), and if a property has been contaminated by meth, the owner must professionally decontaminate the property and have it tested as meeting the new standard.
The owners obligation may apply, even when they didn’t know that there was possibly contamination present at the property. This makes the importance of regular testing between tenants, or testing prior to purchasing a property, an important step in residential property investment.
Cowdy and Co. welcomes the new standards, and will be working closely with independent testing organisations to help us evaluate properties in both our Property Management and Residential Sales divisions. If you’re worried your property may have been affected by methamphetamine or might get contaminated in future, please get in touch.
We’re excited to see the new voluntary Rental Warrant of Fitness launched by Wellington City Council recently. Cowdy and Co. has a large Property Management practice and we firmly believe that tenants should live in warm, dry and safe homes.
The programme works through an app that will allow tenants and landlords to check properties against minimum health standards designed by experts at the University of Otago. The app also allows landlords to request a full inspection by a professional and be certified as meeting the standard.
There are benefits to both landlords and tenants under this new scheme. For tenants, they can be confident that a property meets minimum standards in terms of warmth and safety, which will make the property more appealing than those without the certification. And landlords benefit too – being able to quickly and easily prove that a property is safe and healthy will make it easier to market and reduce tenant turnover.
We really care about our landlords and tenants – everyone involved in a rental transaction is a valuable part of our family business and we’re keen to see something like this voluntary programme introduced here in Christchurch. Watch this space!
For advice on how to ensure your rental property appeals to great tenants, call our Property Management team today on 03 355 6686.
Cowdy & Co Division: Property Management
How long have you lived in Christchurch: I was born in Wellington but moved to Christchurch when I was 8. I have just recently returned to Christchurch after spending two years in London.
Education: Bachelor of Teaching and Learning (Primary)
Family: My parents Julie-Ann and Denis Pyatt also live in Christchurch. I have an older brother who is a project manager for Naylor Love and a twin sister, Sylvia (No, we don’t look anything alike!) who is a dietician up in Auckland.
Personal Statement: Before heading over to do my OE, I trained as a Primary School Teacher here at Canterbury University. I have always enjoyed working with people, especially children, and I hoped that teaching would allow me to use those people skills. I lived in London for two years where I worked as a nanny for a wonderful family. This job allowed me to travel a lot, see parts of the world I wouldn’t have ever dreamed of seeing, and gave me an insight into how ‘the other half live!’
On my return to NZ however, I was itching for a change in career and property management has always interested me. Already, I am developing an understanding of how fast paced this role is, which excites me greatly.
Previous Jobs: Nanny in London, PA and Office Manager, St Andrews College Preparatory School.
In my spare time: Like most 20-somethings, I enjoy socialising with my friends and getting out and about in the weekend. I have a small Bichon Frise/Sydney Silky called Ralph and a 5 month old black lab called Mack who both keep me on my toes.
The Charity I support the most: KidsCan.
Favourite Home Cooked meal: I can’t go past a delicious Mexican meal… Team that up with a Corona and a sombrero and you’ve got a great night ahead!
Favourite Restaurant: So much has changed in Christchurch over the last two years I need to go out and explore what’s on offer!
Favourite Holiday Destination: Thailand, for the wonderful people, delicious cuisine, beautiful beaches and of course, it’s so cheap!
Favourite thing to do in Christchurch: I am enjoying taking the dogs and discovering new walks in my area. Rapaki, Halswell quarry and of course, our local beaches.
Favourite Book: The Bronze Horseman, Paulina Simmons. An oldie but a goodie.
Favourite TV Show: Nashville. I am not ashamed to declare my love for country music!
As we reported last year, MBIE’s Tenancy Compliance and Investigations Team was formed in July as a result of changes to the Residential Tenancy Act. Those changes means MBIE has new powers to monitor and enforce compliance with the Act – including the power to prosecute landlords who seriously or persistently breach basic housing standards.
MBIE recently reported the results of several different audits and subsequent investigations, including visits to five different property management companies in South Auckland, and to student flats in Dunedin.
These visits were the start of many scheduled throughout NZ and show that there’s still a long way to go in some quarters in terms of ensuring key safety and weathertightness issues are resolved.
In South Auckland, the teams found some firms could not give the Compliance and Investigations Team any assurance that all of their rental properties have working smoke alarms. They also found that some firms were still not ensuring insulation statements are a standard part of new tenancy agreements.
Whereas in Dunedin’s notorious Castle Street, six student flats were visited, alongside visits with property managers and landlords. The team uncovered significant issues regarding insulation as well as general maintenance problems taking a very long time to repair after being reported by the tenants.
And Christchurch won’t be immune: The team will be in cities and towns across New Zealand checking on business practices, to ensure landlords and property managers are fully compliant.
MBIE encourages anyone concerned with their rental situation to visit www.tenancy.co.nz to learn more about their options for resolving any issues.
Or you could give us a call – we’re committed to ensuring all our managed properties are compliant and work well for tenants. We’ll take care of it all for you. Call our Property Management team today on 03 355 6686.
The installation or repair of electrically-conductive insulation, known as foil insulation, is banned in all residences including rental homes. Anyone who breaches the ban commits an offence and may be liable to a penalty of up to $200,000.
The risk with retrofitting foil insulation is that the person installing it could accidentally pierce a live electrical cable with the fasteners (e.g. staples or nails) that they are using to attach the foil to the building structure. The foil, being metallic, conducts electricity and can become live if it comes into contact with live electrical wiring – potentially enlivening the entire underfloor of a building. MBIE reports that there have been five known deaths in New Zealand caused by electrocution associated with foil insulation in a residential building, as well as one reported non-fatal electric shock.
The ban is specifically on the following building methods:
- the installation of foil insulation into residential buildings with an existing electrical installation (retrofitting foil insulation), and
- the repair of foil insulation in residential buildings with an existing electrical installation (e.g. stapling ripped or damaged foil back onto the floor joists of a building).
Do not touch foil insulation without turning off the power at the mains first as there is an electrocution risk. If you have any doubts, contact a qualified electrician. If you choose to remove foil insulation, hire a qualified professional.
Anyone who inspects foil insulation, even after turning off the power at the mains, must proceed with caution as in some instances the foil may still be live.