Summer Newsletter 2021

Townhouse Developments in Christchurch

SAM COWDY / Commercial Sales & Leasing Consultant

With the surge in house prices over the past couple of years, the home purchasing process has become more difficult and stressful for many buyers. Massive queues at open homes, having to compete in multi-offer purchasing scenarios, as well as spending money on due diligence for properties that you don’t end up buying are all common issues at the moment.

These situations, along with changes in traditional Kiwi housing culture and affordability, have resulted in a huge rise in the popularity of townhouses in recent years. Brand new townhouses purchased off plans have proven to be a great option for many of our buyers.

The majority of developers will offer a fixed price to work towards, and buyers have the opportunity to get a property under contract before spending time and money on due diligence.

Another bonus of purchasing off plans is that only a 10% deposit is payable once you confirm your due diligence, and the balance is not due until construction is completed.

There is also the potential for value growth, as properties bought off plans are often worth more when the build is complete than the price paid at the start.

Townhouses have attractive features for owner-occupiers and investors alike. They tend to be in convenient locations, close to transport links, parks, schools and shops. In addition, being brand-new, highly efficient, modern builds, there is a lot less ongoing maintenance required.

New build properties also have tax advantages for investors. Owners are permitted to write off interest as an expense, and capital gains tax is only applicable if a property is sold within a five year bright line test period (as opposed to the 10 year bright line period for existing homes).

In addition, banks have more favourable criteria for lending on new builds and loan to value ratio (LVR) restrictions are also more accommodative for new build properties.

In response to the high demand for housing, new developments, both big and small in scale, are popping up to satisfy buyer appetites. Ongoing population growth in our cities and the housing intensification that comes with it means the popularity of townhouses is only set to increase.

Brand new townhouses purchased off plans have proven to be a great option for many of our buyers.

Changes to Tenancy Terminations

OLIVIA COWDY / Manager, Property Management

The New Zealand Government has passed legislation that can restrict tenancy terminations where people are required to stay at home in accordance with a COVID-19 Public Health Response order. The bill is awaiting Royal assent, which is imminent, and will become law the day after it is signed off by the Governor General.

The bill allows the restrictions to tenancy terminations to be switched on and off by ministerial order (a ‘COVID-19 tenancies order’) in response to public health measures which generally restrict people from moving house.

Currently these restrictions do not apply, but they would likely come into play if Alert Level 4 type restrictions were activated for a particular region.

This legislation would make a number of changes to the Residential Tenancies Act, if activated by ministerial order, including:

Landlords will not be able to apply to the Tenancy Tribunal to terminate a tenancy if a tenant is 21 days in rent arrears – tenants will need to be 60 days in arrears for termination to be granted. The tribunal may refuse to make the order if the tenant is making a reasonable effort to pay the rent or, if after balancing the interests of both parties, a termination is found to be unjust.
Landlords will not be able to end tenancies, except in limited circumstances.
Most terminations will be postponed until at least 28 days after the restrictions lift.
Tenants will still be able to give notice to end their tenancy as usual, but must consider if doing so would affect their ability to comply with COVID-19 public health requirements to stay at home.
If a tenant had previously served a notice to end the tenancy before the restrictions period, or agreed with the landlord that the tenancy would end but now wants to stay, they will be able to withdraw the notice or agreement by notifying the landlord in writing.
New tenants can terminate a tenancy by giving two days’ notice if they are unable to move in due to COVID-19 restrictions. Any bond or rent in advance (relating to the period after the termination) that was paid must be returned to the prospective tenants.
If a new tenancy was due to begin but new tenants are not able to move in as the property is not vacant, then any agreement between prospective tenants and the landlord will be cancelled. Tenants and landlords should work together to make a plan for when restrictions lift. Any bond or rent in advance that was paid must be returned to the prospective tenants.
If fixed-term tenancies become periodic due to the restrictions, the landlord may end the tenancy by giving 28 days’ notice within 28 days of the restrictions lifting.
Landlords will still be able to apply to the Tenancy Tribunal to terminate tenancies for limited reasons, for example where a tenant engages in significant anti-social behaviour or causes substantial property damage.
If a tenant had previously got a termination order from the Tenancy Tribunal before the restrictions period, and now wants to stay, they can withdraw the termination order by notifying the landlord in writing. If the tenant still wants to terminate the tenancy once the restrictions are lifted, they can do so by giving 14 days’ notice within 14 days of the restrictions lifting.
If a landlord had previously got a termination order from the Tenancy Tribunal before the restrictions period, which had not come into effect, the termination date is suspended until 14 days after the restrictions lift (unless the termination order was for one of the limited reasons allowed during the restrictions period or the tenant decides to end the tenancy on the original date).
If the minister wants to lift restrictions, they must give seven days’ notice that they are going to lift the restrictions so that tenants have time to make the necessary arrangements to move properties.

Tenancy Services says the aim of this new legislation is to provide much needed certainty and clarity for both landlords and tenants. It is also about avoiding confusion and being more prepared within the rental sector, through resolving many of the inconsistencies between COVID-19 restrictions and the Residential Tenancies Act 1986.

What is a CCC Property File?

NICK COWDY / Residential Sales Consultant, Principal Agent

Christchurch City Council (CCC) holds property files for every property in the city, containing comprehensive information including consent decisions, plans and a variety of other documents. Property files in digital format can be obtained from the council (a fee is applicable).

A Land Information Memorandum (LIM) report, on the other hand, is a summary of information about the property and its neighbourhood.

Obtaining the property file directly from the council is the only way to know with certainty that you have all of the information about the property held by the council, so if you are doing your due diligence on a property you are wanting to buy, it is a good idea to request the CCC property file in addition to the LIM.

Information you can expect to find in a LIM includes:

Summaries of building consents and resource consents for the property and neighbouring homes
Information on hazards such as potential for erosion, slips, flooding, pollutants and so on
Local zoning information
Aerial photographs and plans indicating the availability and location of services, access to water, sewage and storm water pipes
Rates information.

A CCC property file contains additional information, such as:

Completed building permit and consent information
Drainage plans relating to consented work
Resource consent decisions
Historic LIMs
Copies of original plans, specifications and consents issued in respect of the property
Application forms, Code Compliance Certificates, project information memorandum (PIM) and planning reports
Information about historic issues, including complaints made by current or past neighbours in the area, which can be enlightening
Any other correspondence about the property.

Obtaining a CCC property file is especially handy if there are any suspicions of unconsented building work, or work that wasn’t completed correctly.

Further information, including how to order and pay for a CCC property file, can be found on the Christchurch City Council website.

Things to do in Christchurch this Summer

With Covid lurking around every corner and the new traffic-light restrictions in place, the holiday season already feels far from the summers we used to know. Even with the continued absence of overseas travel, it doesn’t mean we’re destined to a stay-at-home summer – there are plenty of opportunities to discover more of our beautiful region.

Top Day Trips –

There’s something to explore around every corner in Canterbury, with most of the region within a few hours’ drive of Christchurch. If you’re wanting some time out from the city without travelling too far, try out a few of these great places:

Hurunui District

North of Christchurch, through the beautiful Waipara Valley, this area has a lot to offer from scenic landscapes to delicious food and wine. Gore Bay and the Cathedral Cliffs showcase our stunning coastline, while further north, the Cheviot Hills Reserve is a great place to see some incredibly old, large specimen trees.

Banks Peninsula

Lyttelton is the oldest settlement on Banks Peninsula, and the town is rich in history, with cafes, bars and restaurants. Stop off at Governor’s Bay to see the famous Ohinetahi gardens which has two galleries, sculpture and woodland trails, and a significant 19th century homestead. Or travel a little further out to Little River to enjoy the great food and art gallery.

Akaroa

Less than a two hour drive from Christchurch, Akaroa’s French origins are visible in the colonial architecture and boutique shopping. Get out on the water to take in the view on a harbour cruise to see the Hector’s dolphins, or hire a kayak, yacht or paddleboard.

Mid Canterbury

Take Inland Scenic Route 72 into the backcountry and revel in the snow-capped Alps, sparkling lakes and winding rivers. One of the best ways to take it all in is by a hot air balloon flight. Enjoy golf, archery and clay bird shooting at Terrace Downs, or head to the Hakatere Conservation Park for fishing, tramping or mountain biking.

Waimakiriri District

Take to the river in Kaiapoi to enjoy activities ranging from a cruise on the River Queen to hiring a kayak or paddleboard. A short 10 minute drive away is Waikuku Beach where you can learn to surf, or enjoy a scenic walk around the estuary, up the Ashley River and the Taranaki Walkway.

Make the most of your summer by enjoying some of these fantastic events taking place around Christchurch in the coming months:

The Bread & Circus World Buskers Festival will again light up the streets of Christchurch from the 14^th – 30^th January 2022. With an action-packed event programme, free outdoor spectacles and must-see ticketed events, there is something for everyone.
The Great Kiwi Beer Festival returns on the 29^th January 2022, showcasing more than 35 craft brewers and street food vendors.
The South Island Wine & Food Festival, celebrating the South Island’s position as one of the leading wine producing areas of the world, takes place on the 5^th February 2022.
A unique summer experience in the 1900s replica township of Ferrymead Heritage Park, Nostalgia Festival is where you can enjoy some summer tunes on the 12^th February 2022.
Christchurch’s biggest outdoor summer music festival, Electric Avenue, is back on the 26^th February 2022.
For sports fans, the ICC Women’s Cricket World Cup is taking place at Hagley Oval from the 4^th March – 3^rd April 2022 with venue packs available for a limited time.

Updated Healthy Homes Standards

OLIVIA COWDY / Manager, Property Management

The Government has announced changes will be made to Residential Tenancies (Healthy Homes Standards) Regulations 2019 which are expected to come into effect in April 2022.

The changes that will have the most impact are to heating, however there will also be updates to the ventilation, moisture ingress and drainage standards.

Heating:

The Government has accepted they need to better reflect how certain properties retain heat. These changes will apply to certain apartments, certain new builds and properties renovated throughout to the 2008 building code requirements for insulation and glazing.

The updates to the heating standards will generally enable smaller heating devices to be installed in new homes, renovated properties built to the 2008 building code requirements for insulation and glazing, and apartments.

The 90 day compliance deadline will start 6 months after the changes come into effect rather than 90 days after a new tenancy commences. This provides a grace period of up to 9 months.

All properties will have additional flexibility with the introduction of alternative pathways to compliance, an increased ‘top up’ heating allowance and a higher tolerance for existing insufficient heating capacity. Geothermal heating will also now be compliant.

Ventilation:

Mechanical ventilation systems (e.g. HRV systems) that continuously extract from kitchens and bathrooms, for homes that received building consent on or after 1 November 2019, will be compliant.

Moisture Ingress and Drainage:

Installing an alternative moisture barrier will not be required where it is not reasonably practicable to install a polythene barrier.

While the updates wont effect most rental properties, we believe this is a step in the right direction.

You can contact your property manager if you would like further clarification.

Mortgage Tips

It’s common for people with mortgages to expect to live with their loans for 20 or 30 years, but there are a number of things that can be done to help pay yours off faster.

Paying your mortgage off faster can, in itself, save significant amounts of money. An example of this is: a $500,000 loan paid over 30 years at an interest rate of 3% would cost $258,573 in interest. If this was paid over 20 years at the same interest rate, the cost in interest would drop drastically to just $165,191.

Tom Hartmann, managing editor at the Commission for Financial Capability, says most people are creatures of habit. “Once you start making payments at a certain amount, you’re probably going to keep doing that… but you can get the settings right, get used to paying more and then continue to do that.”

While increasing payments is an option for some, for others it’s not possible. Sometimes, however, you don’t have to increase your payments to reap the benefits. Simply keeping your payment level constant if you move to a sharper rate means you chip away at your total balance quicker.

Hannah McQueen, financial coach and founder of Enable Me, says paying a mortgage faster requires a “multi-pronged” strategy.

“But it starts with the basics: maximising your personal cash surplus – that is, how much money you have left over after all your costs are covered. You need a plan to create surplus, maximise it, and maintain it – because that doesn’t tend to be most people’s default position,” she says.

“People tend to get very focussed on securing the lowest possible mortgage rate or the highest investment return – which is important – but you shouldn’t overlook the impact improving your own financial behaviours can have. In our experience with our clients, about 15 per cent of your income can be found and put to work, which is very powerful.

“You need to structure your mortgage so you’re not stung with fees for paying it down faster, and you also need to be able to re-access that money to help protect you in times of volatility.”

Shane Adamson, from New Zealand Home Loans (NZHL), says the reality is that most people have no idea what they spend their money on.

“The biggest revelation for most Kiwis who prepare our worksheet is that is the first time they’ve ever taken a look at where their money is going.”

While there are some things that are non-negotiable, such as insurance and grocery bills, there are little things that can be changed with your discretionary spending that can make a big difference.

Christchurch Industrial Market Stands Out

SAM COWDY / Commercial Sales & Leasing Consultant

With fierce competition for quality properties among tenants and investors alike, Christchurch has become a stand-out performer in the industrial property market nationally. Recognised widely around New Zealand for its excellent industrial property investment fundamentals, Christchurch is the premier logistics and warehousing hub for the South Island – a sector which has experienced strong growth during the pandemic.

Over the past 12 months vacancy levels have dropped, and those with an understanding of industrial property see the market as under-valued with strong rental growth prospects. A year ago, investors were scrambling to secure industrial properties with decent lease terms, however the rapid decline in industrial vacancy across Canterbury is giving investors prepared to take on more risk the confidence to look at shorter-term lease stock.

The drop in vacancy levels is driving demand for land and design build development projects, with the phenomenal growth in e-commerce prompting the need for more warehousing space. The sector also has a positive future outlook, with our warehousing requirements only growing bigger.

It’s widely known that the low rental rates in Christchurch are out of alignment with the rest of New Zealand, and investors are hopeful there may be some rental growth to come, with rents having remained largely static over the past decade.

Proposed Bill to Ease COVID-19 Financial Burden

In addition to new legislation making changes to tenancy terminations occurring during lockdowns, the government is also taking steps to help tenants deal with the financial impact of Covid restrictions on both commercial and residential tenancies.

The bill would insert a clause into the Property Law Act, requiring a ‘fair proportion’ of rent to be paid where a commercial tenant has been unable to fully conduct their business in their premises because of lockdown restrictions.

Justice Minister, Kris Faafoi, said the measures followed concerns that were initially raised during lockdowns in 2020.

“Landlords and tenants would need to agree on the amount of rent that is fair. They could also agree that the clause does not apply,” Faafoi said, adding that where landlords and tenants were unable to come to an agreement, mediation or arbitration would be required.

“The proposed law change would only apply to leases which do not already provide for adjusted rent payment terms during an epidemic emergency.”

Associate Housing Minister Poto Williams said that in principle, “agreements need to reflect the uniqueness of the current Covid-19 situation, and provide the means by which both landlords and tenants can share the financial burden of the impact of Covid-19 restrictions.”

Retail NZ and Hospitality NZ said the change did not go far enough, and they would like to see some additional support for landlords and tenants to resolve issues that have cropped up since the most recent lockdowns in mid-August.

“The retail and hospitality sectors have been crying out for government leadership on this issue for 18 months, and nothing is being put forward to help resolve current rent-relief deadlocks,” Retail NZ chief executive Greg Harford said.

“While it is good news that the government is looking to help negotiations in future lockdowns, the reality is that many businesses are struggling to get their landlords to agree to reasonable arrangements to cover the last six weeks.”

Revamp for New Brighton

At a time when several projects are reinvigorating the seaside suburb of New Brighton, one developer’s vision has been hailed as a game changer.

Landowner Hayden Clavis plans to create a large complex opposite the beach, which will include hospitality outlets, shops and an events venue.

Known as The Beach House, the development will be located on the corner of New Brighton Mall and Marine Parade, opposite the New Brighton pier, playground, and library.

The 1500 square metre site is currently home to several buildings which Clavis plans to refurbish. They will reopen with food and drink outlets, shops, a function room and a communal seating area.

Featuring an events stage for music events and gigs plus an outdoor cinema screen, The Beach House will include about 30 tenancies and will be similar in nature to developments such as Little High, The Welder and Riverside Market in the central city.

The complex will have an environmentally sustainable focus and strong links with the community, Clavis said. He hopes to begin construction early next year and open in November 2022.

With resource consent already obtained from Christchurch City Council, the development is now going through the building consent process.

Chairwoman of the New Brighton Residents’ Association and co-chair of the New Brighton Project, Celeste Donovan, said Clavis’ project was “perfect” for the area.

“It’s innovative, it’s exactly the sort of development that will add to the value of the area. It’s a real game changer.”

Other projects lined up for New Brighton include an apartment development approved for Marine Parade, just north of The Beach House site, and plans by businessman Grigori Koykanov to develop the former Esplanade Tavern site on the beachfront.

An artist’s impression of part of developer Hayden Clavis’ planned new complex The Beach House.

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