Property Briefs

There have been a number of developments around property investment by overseas investors and also on residential tenancies.

If you are an overseas investor or a landlord, you should ensure you are up-to-date with the latest changes and/or proposals.

Update on Overseas Investment Act 2005

An overseas investor attempting to circumvent the requirements of the Overseas Investment Act 2005 has received the first criminal conviction under that legislation. In February 2020, Dr Won Joo Hur was fined $100,000 for falsely stating to the Overseas Investment Office (OIO) that a property was not purchased on his behalf and providing a false loan document to support his version of events.

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Property briefs

Frequent buying and selling of property tax rules under review

If you frequently buy and sell property, you may want to keep a close eye on Inland Revenue’s review of some property tax rules that was announced in September 2019. One area being targeted is the use of the ‘main home exemption’.

Under current rules, you may be exempt from paying tax on a property sale if the property is your main home. You cannot rely, however, on the ‘main home exemption’ if:

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Residential tenancies

Affecting both landlords and tenants

The Residential Tenancies Amendment Act 2019 came into force on 27 August 2019. This legislation affects both landlords and tenants in a number of ways including limiting a tenant’s liability for careless damage in rental properties, and how methamphetamine (meth) contamination of rental properties is to be tested and managed. Landlords are also now required to provide a statement in the tenancy agreement about the property’s insurance.

Damage to rental properties

The legislation is designed to encourage tenants (and their guests) to look after the property they rent, and for landlords not to be out-of-pocket for careless or intentional damage by their tenants.

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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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Property briefs

The agreement for sale and purchase

Checking the conditions

Given the significant financial commitment involved in purchasing a property, you want to make sure your investment is sound. One way of ensuring that a property is right for you is to include some conditions in your agreement for sale and purchase. If you do so, the purchase will only go ahead if your conditions are met. An agreement with no conditions included is ‘unconditional’ and you are obliged to complete the purchase once the agreement is signed.

Some common conditions that can be included in an agreement are conditions that give you time to sell your existing property, check what restrictions there are on the property’s title, or get a building report before the agreement becomes unconditional.

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Property Briefs

Warmer homes for Kiwis

Low-income homeowners or homeowners in low-income areas could be eligible for the new government grant to assist in keeping their homes warm in winter.

On 1 July 2018 the new four-year government program, Warmer Kiwi Homes, came into effect. Under this initiative the government will cover up to two-thirds of the cost of underfloor and ceiling insulation or, if you have a concrete floor, ground vapour barriers. Warmer Kiwi Homes only applies to homeowners who have a Community Services Card, however, funding help no longer stretches to landlords.

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Guiding your offspring into flatting

Going flatting for the first time is an exciting step for your adult children. They get to live with people their own age and you have your freedom. How can they make the most of this new-found independence with the least risk to them?

Residential tenancy agreements

Flat leases are really ‘residential tenancy agreements’. Agreements should be in writing, however, an unwritten agreement can sometimes be enforced. A written agreement makes the obligations clear for both a tenant and their landlord. Your child and their flatmates should talk with their landlord about what the agreement contains. You should remind them to read the agreement through before it’s signed – no one wants nasty surprises.

Residential tenancies can be for a fixed term or ‘periodic’. Fixed term means that the tenant rents the property for a fixed time such as 12 months. This means rent must be paid for the full term, even if the flatties go home for the university holidays.

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Is your rental safe and healthy?

Penalties for landlords dragging the chain

New laws came into effect on 1 July 2016 that require landlords to make their properties safe and healthy for tenants. These new laws provide some lead time for properties to be brought up to standard; they will apply to all rented properties from 1 July 2019. Will your rental property meet the new standard?

A recent Tenancy Tribunal decision shows that the Ministry of Business, Innovation and Employment (MBIE) is not shy of showing its teeth to ensure that tenants have safe and healthy homes by complying with the health and safety amendments to the Residential Tenancies Act 1986. The Residential Tenancies (Smoke Alarms and Insulation) Regulations 2016 outline requirements for rental properties, including underfloor and ceiling insulation, and requiring smoke alarms within three metres of each bedroom.

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