Our most popular advice for property investors

Here’s a look back at some of our most popular tips and nuggets of wisdom from the months and years gone by… Think of this as your all-in-one cheat sheet for wise property investment.

As we’ve said many times before, renting a house out isn’t what it was 20 or 30 years ago. There wasn’t a lot of government regulation, and renters were typically short-term tenants often slugging it out through university or dossing in a share flat before buying a home of their own.

The typical renter has changed, with many wanting safe and secure long-term housing they can create a home in. And quite rightly too. So, we’re often asked, “How can I ensure my rental is up to scratch and attractive to quality renters?”

• Basic renovations and upgrading of the most used spaces in houses is a good idea. Think of a well-designed, open-plan kitchen with low-maintenance materials and hard-wearing floors and countertops. A water-tight bathroom with good ventilation and mould-resistant paint, as well as an effective source of heating will set you apart from other rentals on the market.
• The outside matters too - consider some basic landscaping such as gravel and pavers to create a tidy outdoors area, and a bit of heat and drought-resistant grass. Low-maintenance planting is best so your rental looks the part all through summer.

• Know your loan-to-value ratio (LVR). The LVR is a critical part of a property investor’s toolkit, and it’s essential to “know your figure” if you’re looking to buy an investment property. The LVR is the amount of your loan compared to the value of your property, and most lenders like to set a borrowing limit of 60% (therefore requiring a 40% deposit or equity on an investment property). So, you’re in safe waters if, across your investment portfolio, you have at least 40% equity.
• Get clued up on tax. Originally intended to stop property speculators from flipping houses for profit and to take some of the heat out of the housing market, the New Zealand property tax laws were changed in 2015 to include the bright-line test on any residential properties bought and sold. The rule looks at when the property was acquired; if it was on or after 27 March 2021 the bright-line period is 10 years, or 5 years for qualifying new builds. If it was acquired between 29 March 2018 and 26 March 2021, the bright-line period is 5 years, and if it was acquired between 1 October 2015 and 28 March 2018 the bright-line period is two years

The good news is that the current Labour-led government has promised that they will not be introducing Capital Gains Tax in the foreseeable future.

Not at all! There has been a lot of negative comment in the media on the government’s plans for tenancy law. We’ve always maintained that the Government is listening to both sides of the fence, and it’s worth remembering a lot of their initiatives reflect the changing face of renting in society – not everyone fancies living like a Dunedin student.

• Tenants deserve warm, healthy homes. And better homes attract better tenants. The Healthy Homes Bill set out to ensure all homes, rental or otherwise, are fit for people to live in. This means that all rental homes need to be properly insulated (minimum of ceiling and floor) and have an effective, modern heating source. This has minimal effect on our valued owners as the vast majority of our homes under management meet these new standards anyway. Particularly now that we have virtually all the required insulations signed off.
• An enhanced Residential Tenancies Act (RTA) actually benefits us all, from property managers, to landlords and tenants, striking a balance between protecting a landlord’s interests and making sure tenants get fair rights for the rent they pay.
• And the meth contamination … in November 2022, the Government announced upcoming regulation of methamphetamine contamination in rental housing. This is intended to provide clarity on what to do when residential rental premises are found to contain methamphetamine residue, and at what levels it becomes a problem which should be addressed. After public consultation ending early 2023, the legislative process will move forward with regulations anticipated to come into force in the first half of 2024.

• Communication is key. If you wish to market the property without tenants, ensure you give 90 days’ written notice.  If marketed with tenants in residence keep the lines of communication open during the sales process and respect the tenant’s right to restrict viewing access. An experienced sales agent working in conjunction with our property managers can make the process smooth and stress-free for all parties.
• Before you plan on selling, consider any taxes you might owe to calculate your bottom-line result. Remember the bright-line test: you’ll likely owe capital gains if you buy and sell within ten years.  However, there are exemptions, so understand what those are so you have the full picture.