Leasing commercial premises

Before you sign the lease

Commercial leases come in varying shapes and sizes. Whether you operate a transport business and need a place to park your trucks, manufacture and sell goods from a warehouse or conduct your trade from a boutique store in the heart of the CBD, your lease agreement will be at the heart of your business.

Before you sign a lease, there are a number of core issues to consider. It is important to do your homework and talk with us before you commit to anything.

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Property briefs

Building report conditions

If you have read an agreement for sale and purchase, you are likely to have seen the term ‘building report condition’. But do you know what a building report condition actually allows you to do, and what it doesn’t?

A building report condition gives you, as the buyer, the opportunity (10 working days is the standard, but this can be lengthened or reduced) to have a suitably qualified building inspector go through your soon-to-be-settled property and report on various elements of the building including the integrity of the construction materials used and its weathertightness.

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The secret lives of tenants

The ‘KFC test’ and tenant privacy

Following publicity in 2018 that some property managers were using the ‘KFC test’ to vet prospective tenants, landlords’ protection of their tenants’ privacy has come under scrutiny by the Privacy Commissioner. Any unlawful intrusion into your tenants’ private lives can be a costly mistake. If you are a landlord, it is timely to ask yourself, “How can I best protect my property without risking a privacy breach?”

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Subdivisions

Steps to take for a successful project

Subdivisions are more common than you think. A subdivision can range from the carving up of hundreds of acres of rural land for housing, developing land in a prime commercial area, selling half your quarter-acre section or simply wanting to extend your boundary a few metres. Whatever the scale of your subdivision, there is a common thread of stages to be ticked off – we explain below.

subdivision

Getting your land ready to subdivide

The first thing is to line up your professionals – discuss the project with us, arrange finance with your bank, consult your accountant and speak with a surveyor. If you are undertaking a large commercial development, you may want to line up buyers early on. A real estate agent can help with this so that you avoid cashflow issues half way through.

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Postscript

Claiming legitimate business expenses

With the recent media coverage about the claiming of business expenses, we thought it timely to remind you to always keep in mind what expenses are tax-deductible and what are not.

expenses

If you’re self-employed, there is very useful information here at Business NZ: https://bit.ly/31WdFgS

For those of you who work in a corporate environment, your organisation will no doubt have an expenses policy to ensure all claims are legitimate.

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Emissions Trading Scheme

Implications for owners of forestry blocks

New Zealand’s Emissions Trading Scheme (ETS) was established by the Climate Change Response Act 2002. The ETS was created as the vehicle for New Zealand to meet its obligations for the reduction of greenhouse gas (GHG) emissions under the Kyoto Protocol. The purpose of the ETS is to achieve a reduction in GHG emissions through emissions trading. Emissions trading is the exchange of carbon credits between those parties with surplus credits and those who are required to contribute credits as compensation for their production of GHG emissions.

Although the ETS affects nearly all New Zealanders in some way, it has significant impact if you are buying or selling forestry blocks, and/or own a forestry block. The first part of this article focuses on the implications of buying and selling of forestry lots, or land destined to be planted in forests. The second part gives you some background on the ETS, New Zealand’s obligations under the Kyoto Protocol and this country’s acceptance of the Doha Amendment. Continue reading “Emissions Trading Scheme”

Property Briefs

Healthy Homes Standards: what you need to know

Becoming law in 2017, the Healthy Homes Guarantee Act establishes regulations to improve the quality of rental housing in New Zealand.

mould

Following public consultation in 2018, the Healthy Homes Standards Regulations were approved by Cabinet on 13 May; you can find them here. The compliance timeframes in the regulations require rentals to comply with the regulations in all tenancies entered into after 1 July 2021 and all rentals will need to comply by 1 July 2024.

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Looking for your first home?

Help to get your foot in the door

The purchase of your first home may be more in reach than you think. In 2018, the government aligned the purchase price limits of existing first home buyer schemes with the newly-launched KiwiBuild programme. As a first home buyer, or an eligible ‘second-chancer’, you could use these schemes to help you into your new home, sooner.

firsthome

KiwiSaver First Home Withdrawal

If you have been a KiwiSaver member for three years or more, you may be able to withdraw your KiwiSaver funds (except $1,000) to contribute to your first home purchase. Each KiwiSaver scheme has different requirements for KiwiSaver First Home Withdrawal applications and you should contact your scheme provider directly to check your eligibility.

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Property sale and purchase

Important to get the GST component right

Generally speaking, GST on a property sale and purchase between two GST-registered entities results in a ‘GST neutral’ position for both the seller and the buyer. It’s essential that the sale and purchase agreement contains the correct wording, particulars and information in respect of the GST position of the parties to the agreement.

property gst

If, however, the parties to the agreement have not correctly recorded their respective GST positions, it can result in a situation where a GST liability is triggered. This can mean the seller would effectively receive a 15% reduction of the contracted purchase price (as they may have to return 15% of the purchase price to Inland Revenue). Or, a buyer may end up having to pay an additional 15% on the purchase price if the agreement turns out to be ‘plus GST’.

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National Environmental Standards for Plantation Forestry

Review due in May

The National Environmental Standards for Plantation Forestry (NES-PF) were first proposed in 2010. Following a period of consultation, the Standards came into effect on 1 May 2018, with a review due in 12 months after that (May 2019) to ascertain whether or not they are being successfully implemented.

Forestry

Ironically, the NES-PF came into effect a month before torrential rain north of Gisborne in the Tolaga Bay area in June 2018. This storm caused flooding which led to tonnes of forestry debris being strewn across farms and blocking rivers. The cleanup was expected to cost around $10 million and to take up to a year to complete. The cost and responsibility for this cleanup is still being determined.

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