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Uno Property Management Newsletter – Nov-2017

January 18, 2018 By UNO Property Management

Rental industry set to be shaken up by new Labour led-Government

A big-shake up to the residential rental industry is imminent under the newly-formed Labour led Government.

Within the first 100 days Prime Minister elect Jacinda Ardern, New Zealand First leader Winston Peters and co have a mountain of initiatives to tick off.

Labour will hit the ground running in Government, with a programme of work across housing, health, education, families, the environment and other priority areas.

As far as the rental industry is concerned, passing the Healthy Home Guarantees Bill, which will ensure that all rental properties will meet a minimum standard of insulation and heating, is top of the list.

This Bill is awaiting it’s Third Reading and should be passed into law by the end of the year.

The Residential Tenancies Act Amendment Bill, which is proposing changes to tenant liability, unlawful tenancies and methamphetamine, should also be passed into the law at some stage.

Only the Greens voted against National’s Bill in its First Reading and unless Labour and New Zealand First flip, these changes should come into effect.

However, with the Bill currently at the Select Committee stage, don’t be surprised if there are subtle changes before it’s Second Reading.

Extending Notice Periods to 90 days

The biggest changes that Labour have proposed face a lengthier wait.

Labour’s rental policy include scrapping letting fees for tenants, extending notice periods to 90 days abolishing “no-cause” terminations and limiting rent increases to once a year.

All these changes, particularly the adoption of the Australian model for letting fees, where property managers bill the landlord for the cost of finding a new tenant, will create a fair amount of disruption to the industry.

Tenancy consultant Scotney Williams believes these proposed changes reflect the current state of flux in the industry.

“Landlords and property managers will have to accommodate significant changes to their business model,” Williams said.
“With the new Government promising to abolish the requirement for tenants to pay letting fees, property management firms will have to charge their owner clients a fee to replace the abolished letting fee formerly paid by tenants or suffer reduced income.
“Property managers and landlords will also find terminating periodic tenancies much harder with the removal of the “no cause terminations, involving the use of the 90 day Notice”.

Labour’s rental policy isn’t a priority in their first 100 days in office.

But that doesn’t mean it won’t happen and there is a possibility that the Greens’ initiative of a compulsory Rental WOF could be added to the mix.

A lot will depend on New Zealand First.

Sound familiar?

Is your rental property completely compliant?

There has been a case recently where a tenant has been able to claim a refund through Tenancy Tribunal when the tenant found out that the property was not fully compliant.

Without going into too much detail of the case, some work had been done to convert part of the premises into a living space by a previous owner but the work did not have a permit. The new owner was not aware of this and there is no suggestion that this was intentional. The landlord as soon as he was made aware of the situation obtained a Certificate of Acceptance. There are other parts of this story but no need to go into those at this stage. The tenant was refunded the rent paid even though this was just a small part of the property and the property was in excellent order. The Tribunal decided the tenancy was not legal.

This got us thinking about how far this could go. We have to be very careful with the word sleepout and unless we know it is permitted as such we will only allow it to be a hobbies room or similar. So, do not allow a tenant to sleep anywhere that is not correctly permitted. Some tenants think they can sleep in the garage!

We must make sure all situations are covered that require permits or compliance certificates: wood burners, electrical work, plumbing etc. It is not just insurance issues that may come back to bite us, but also possible Tribunal claims. We do ask all owners when they sign up with us if everything in the house is compliant. However you don’t know what you don’t know and if you buy a house without a LIM report it could come back to bite you.

If you are thinking about buying an investment property we strongly recommend a LIM report and a meth test as part of the agreement. In addition to this plumbing and electrical reports would be a wise move. By the way, do not forget to find out what the insulation is and to what standard; that could save you a heap of money going forward.

The cost to self-managing landlords for ‘poor management’

Nothing is worse than when a disgruntled tenant throws the book at you and you have to defend yourself.

Professional property management provides a strong layer of protection for you at a relatively minimal cost.

Imagine for a moment your current tenant gets ‘offside’ with you about a relatively minor disagreement, or if they take exception for you filing a legal notice against them for something rather small (e.g. cleanliness, rent arrears or disturbing neighbours).

Or, you want to claim the bond back, the tenants are upset and again they file against you.

The potential court imposed costs through ‘poor management’:

Discrimination (up to $4,000)
Not providing an address for service (up to $500)
Being overseas for longer than 21 days without appointing an agent (up to $1,000)
Requiring ‘key money’ (up to $1,000)
Requiring a bond that is too large (up to $1,000)
Requiring un-authorised security (up to $1,000)
Not lodging the bond within the correct time (up to $1,000)
Requiring more than two weeks rent in advance (up to $1,000)
Charging a rent too high relative to the market (by order) (up to $200)
Failure to provide a tenant receipts for rent (up to $200)
Failing to keep adequate records (up to $200)
Getting rid of tenants goods incorrectly (up to $2,000)
Interfering with tenants privacy (up to $2,000)
Non-compliance around means of escape from fire (eg alarms, locks etc) (up to $3,000)
Not meeting obligations around cleanliness (up to $4,000)
Not meeting obligations around maintenance (up to $4,000)
Not meeting obligations around smoke alarms (up to $4,000)
Not meeting obligations around insulation (up to $4,000)
Not meeting obligations around building matters (up to $4,000)
Not meeting obligations around health and safety (up to $4,000)

If you have not complied, or are not currently complying with the list above you are running a risk. Getting good advice from a professional property manager can really help. Give your property manager a call now to discuss about this.

Uno Property Management Newsletter – Oct-2017

October 6, 2017 By UNO Property Management

Methamphetamine no longer covered under Real Landlord Insurance Policy

In September 2017, we were notified by Real Landlord Insurance that their policies will no longer include methamphetamine contamination coverage on any future new business and renewal policies.

Please review your existing building policy to ensure that you have the appropriate levels of cover for your requirement.

The notice we sent out on the 26th of September has the full details (please click through to view), or if you would like more details, please contact your Uno Property Manager.

Being Lease Compliant – It’s About Minimising Risk

Upon entering into a new lease agreement, your property manager will need to ensure that your lease complies with current legislation that affects all rental properties.

In today’s leasing environment there are a raft of compliance issues that need to be addressed before entering into a lease agreement, some of which have not affected lease agreements before.

New rules about smoke alarms and existing insulation are now in effect with full insulation compliance by July 1st 2019. Landlords who fail to comply will be harshly treated by a tenant tribunal.
Obviously there is a cost to the property investor to ensure compliance, however the risk of non-compliance far outweighs the cost of compliance.

A large number of property investors are ignoring the need to have their property lease compliant simply because they haven’t needed to do it before or, they cannot see the benefit of the cost.

By ensuring that your property is lease compliant, not only with Residential Tenancy legislation, but by compliance legislation (as detailed above), the property investor avoids the risk of having an invalid tenancy agreement, or facing heavy penalties and having any insurance claim denied in the event of a loss in the above events.

Worse still the non-compliant property investor could be liable at law in the event of a public liability claim as a result of a non-compliance loss. As an industry we have already seen this occur following house fires in rental properties where the property investor becomes personally liable should the property not be smoke alarm compliant.

Your property manager is faced with the unenviable task of informing you of these additional lease compliance costs, however the advice must be heeded to ensure that your property is compliant and so you minimise your risk of legal action and additional costs.

3 Tips for the New Real Estate Investor

Becoming a real estate investor has lots of advantages, one advantage of investing in the real estate business is that even in times of economic hardships, it will always give better returns than stocks and other types of investments. After all, land is a finite resource and people are always in need of a place to live, play, work, and shop. Thus, for real estate, it’s a matter of demand and supply. Besides, the value of real estate will continue to increase despite the occasional economic turmoil.

It has been proven to be one of the best ways to create wealth, and with it, you don’t need to be a genius or have immense wealth to succeed. Here are a few expert ideas to get you started as a new real estate investor.

Inspect plenty of properties
Don’t just buy the first property you encounter. Many real estate investors avoid putting in the effort to look at the many opportunities out there, and they end up buying properties because they “look nice.” Anyone who had made a purchase on impulse can probably understand why this isn’t a wise investment strategy. Taking the time to investigate the various pros and cons of a property is important. Doing this will help you assess whether the property is worth your time and money. This is especially true if there are details that will need to be renovated or remodelled, as they can be easy to overlook if you just give the place a cursory look. Since you won’t be living there, don’t make your investment decisions according to your personal preferences. Although you should not be a victim of analysis paralysis, ensure you take the time to look at a wide variety of properties. Give yourself lots of options and then make your choices based on the criteria you have laid down for yourself. It’s a much better investment to spend a little bit of time considering multiple properties, rather than spending a lot of your time upgrading a poor purchase.
Build your financial goals
Before making your first analysis or purchasing your first property, determine your expectations from your investments and understand your financial goals. In the “time vs. money” theory, the more you have either one of them, the less you need the other to achieve your financial goals. Thus, take the time to understand your goals and ensure that each investment you make is a step towards achieving your dreams. If you don’t know how to establish financial goals, seek the services of a financial advisor.
Determine the best areas to find properties
Many investors limit their search for properties to areas near their home. Often, however, the best rental areas may be situated a bit further away. A lot of times investors think they should live near their properties to keep an eye on them. However, it may make more sense to simply hire a property manager in the area where your properties are located. This is another great way to help you get your properties purchased in the best location possible.

Investing in real estate offers you an excellent opportunity for building wealth. However, it also requires you to lay a firm foundation by knowing how and where to source for suitable properties, setting sound financial goals, and choosing an experienced property manager to help you with your investment.

Finding the Right Property Manager

If we are not doing any of these things, please let us know! When selecting the right property manager, it is important you consider these important factors.

The agent will accurately appraise your rental property to quickly rent your property to quality tenants and keep your vacancy period to a minimum.

Understands the importance of ensuring the presentation of the property is maximised to attract the right tenant, who in turn will pay the rent on time and respect the property.

Knows the importance of in-depth tenant induction when a tenant moves in, ensuring they are well educated on the right expectations for a much better chance of tenancy success.

Believes the rent must be paid on time every time and educates the tenant accordingly with their zero tolerance to rent arrears policy.

Promptly attends to repairs and maintenance as they are observed or reported by the tenant.

Quickly negotiates a new lease renewal term and keeps the rent maximised at lease renewal time, in liaison with the property owner.

Ensures the property is kept well maintained at a high level of cleanliness at property inspections and quickly follows up with the tenant anything found to be unsatisfactory.

Makes sure the property is vacated satisfactorily to a high standard of cleanliness, allowing for reasonable fair wear and tear, comparing the property to a comprehensive written ingoing inspection report and a variety of digital photos taken at the tenancy start.

Uno Property Management Newsletter – Sept-17

September 12, 2017 By UNO Property Management

Avoiding Some Common Landlord Traps

Tenants from hell, high loan repayments and persistent maintenance problems can conspire to make landlords feel investing in residential property is best left to suckers.
Bricks and mortar, however, remain one of the most popular and effective ways to build long-term wealth. Property investors should always look at taking a long-term view.

Bad tenants
Poor tenant selection can be a major trap. Signing up a bad tenant can lead to a series of problems that may be time consuming and expensive to fix. You need to screen prospective tenants carefully. A professional property manager will be able to help with this. They have access to default registers that lists tenants who have caused past problems. It is important to check and phone all of the referees, past property managers and all details provided by the applicant.

Where’s the rent?
Tenants from hell aren’t always those who trash your property. Those who don’t pay the rent or continually slip behind in payments can be just as painful for landlords. If a tenant is late in paying rent, it is important to take action immediately. This serves two purposes. First, it ensures that the outstanding rent is followed up and hopefully collected as soon as possible. It also communicates to the tenant that if they are late in paying, there will be immediate action taken,
The short-term problems that can plague landlords can be avoided or at least reduced with planning and research which sets a good precedent going forward.

No insurance
A landlord insurance policy eliminates unnecessary risk and potentially expensive payouts. Landlord insurance provides a safety net and peace of mind. It can provide you with cover against malicious and accidental damage to your property by tenants. It can also protect you from loss of rental income as a result of a tenant absconding or damaging a property and leaving it unable to be relet while repairs are made.

Overcommitting
Many property investors use negative gearing to get a nice tax refund but should remember they don’t get all their expenses back. With rental income yields below home loan interest rates, investors need to ensure they have the spare cash to cover not only the interest cost differential but also such expenses as rates, maintenance costs and management fees.

Can you fix it?
When maintenance or repairs are required, landlords should act as quickly as possible. As a landlord, once you have been alerted to maintenance issues, it is your responsibility to act or authorise your property manager to take the necessary action.

Failure to do so can be a legal liability risk. If a maintenance issue arises and you are slow to fix it, you may be held legally liable if your tenant injures themselves. Landlords should be proactive with maintenance. Regular routine inspections will highlight areas that need attention and it’s a good idea to implement a regular maintenance program.

Tenants as friends
Ideally the relationship between landlord and tenant should be at arm’s length. Too close a relationship can lead to difficulties down the track, especially in situations where the parties have a falling out. It is best to have a professional property manager that won’t be swayed by any personal interest.

No inspections
Conducting regular routine inspections and documenting the information can alleviate many possible problems. Many landlords who self manage don’t conduct regular inspections. This can have two consequences. If a tenant is causing damage to a property and regular inspections are not being held, the damage may go unnoticed and be costly to fix later on. Second, if maintenance issues occur and are not fixed, legal liability issues may arise for the landlord if the tenant injures themselves.

Self-managing
People who don’t have the time, the knowledge or an interest in property management can get burned if they try to be their own property manager. Many landlords simply don’t have the time to respond to maintenance requests or conduct regular inspections to address potential liabilities. While it can be tempting to save a small percentage of rental income by self-managing your property, the benefits of appointing a property manager far outweigh costs.

Consider Your Tenant When Selling

If you are looking at selling an investment property it is important to consider the tenant in the situation and understand that they can often feel their security and enjoyment of the premises has been affected.

Tenants can cause quite a bit of a problem and hinder viewing inspections should we not be able to get their cooperation. Though legislation requires that they allow viewing inspections to potential purchasers, the delays and legal process will cause everyone a lot of inconvenience.

Therefore it is important if you are thinking of selling discuss this first with your property manager who can then work with your tenant to grant you the access you require in a diplomatic manner.

Sometimes however it might be necessary to offer the tenant some monetary compensation, such as a reduction in rent payments for the period that the property is on the market.
Let’s face it, if the sale is going to reap some big monetary rewards it makes good sense to ensure the process is smooth and possibly invest a little to ensure that it does. This should also assist for better presented properties as well as cooperation with access.

Selling does require good planning and thinking ahead so be sure to contact us as your property manager first before listing your property for sale.

Future Investments?
Are you new to investing or have you thought of expanding your existing investment portfolio? Congratulations!
Planning ahead can be the difference between achieving your goals or simply aspiring to them. You have heard “be prepared” before!

Speak to your financial advisor or accountant about your objectives and timeframe. They will help you to consider any risks. The more specific and prepared you are the better chance you have of success. Remember to be flexible to cater for changes and challenges that the real estate and financial market may present.

Share your objectives with your current Property Manager, they may have the perfect opportunity for you without the leg work!

Uno Property Management Newsletter – August 2017

August 29, 2017 By UNO Property Management

UNO Property Management Risk and Compliance Update

The implementation of the UNO Risk and Compliance fee means that UNO would be able to better equipped to deal with the rising problem of Methamphetamine in rental houses around New Zealand.

As professional property managers we are all well aware of the damage this drug can do but we also know what best practice steps we can put in place to help try and prevent the issue happening in the first place e.g. thorough tenant checks, tenancy agreements allowing for meth testing during the tenancy, and of course baseline testing before and after any tenancy itself.

Methamphetamine use is on the rise with more than 1% of the general population now classing themselves as a ‘regular’ user and all the while prices continue to drop and the ease in which our communities can access this drug increases at an alarming rate.

More Kiwis than ever before are now renting and an ever-increasing number of them are also using a drug that not only damages their own health but the health of the rental properties they are living in and that we manage.

The Property Managers of UNO attended a seminar held by REINZ at the end of June whereby they were informed that there was a change in the standard of Methamphetamine testing in New Zealand. The most significant change is the new standard being lifted to 1.5g/100cm2 limit, as compared to 0.5g/100cm2 under the old guidelines.

The new standard is a huge step forward in helping home owners and tenants deal with the risks of methamphetamine contamination. It will give people greater confidence and certainty, will result in hundreds fewer properties having to be vacated and save millions in unnecessary decontamination work.

Insulation assessments for all UNO managed properties are still ongoing. All owners will receive a copy of the Insulation Assessment Report provided by PinkFit Auckland along with their monthly statement.

Properties that do not meet the standard of insulation will have been issued a quotation from Placemakers to fit and install insulation that will bring the property up to standard. UNO Property Managers will be forwarding the quotes as they receive them, and discuss with you the best plan of action going forward.

Smoke Alarm Testing Services (SATS) have been to most of the properties managed by UNO, and have installed smoke alarms where there were none installed, and tested and replaced for all faulty smoke alarms in the properties.

A Statement of Compliance is issued by SATS once work has been completed, and it will be sent to you along with the monthly statement. We expect most of our owners to receive the Statement of Compliance along with their July 2017 statements.

Mistakes Property Investors Make in Choosing a Cheap Property Management Business

In property management, we see many property investors making the mistake that all PM businesses are the same, and all offer the same service so the best way to differentiate between them is to get cheaper fees.

However, we have found a common pattern among PM businesses is the cheaper they get, the lower their service levels get.

How is this so? Here is a simple step by step analysis of how cheap fees lead to poor service levels.

1. Cheap fees are the starting line – unfortunately the perception is that businesses all do ‘the same thing’, we collect rent, get repairs done and find a tenant. With this perception, we then might be attracted to a cheap business, or one that substantially discounts their fee to impress you to win your business.

2. The property manager must manage more properties – because the business has a much lower revenue base now because of their cheaper fees, the property manager is now well overloaded with too many properties to justify the same salary as the other ‘more expensive’ business down the road.

3. Burnout and resignation – the overload of properties under management causes the property manager to become disillusioned, not coping and causing ‘burnout’, struggling to meet investor expectations of service levels, with the result being resignation.

4. Good property managers now avoid the cheap PM businesses – once word of mouth spreads amongst property managers that to work at this business you must manage so many more properties, and so the good property managers steer clear of this business. Therefore, the only people the business owner can employ is either inexperienced or poor performing property managers who can’t get a job in good PM businesses.

5. Poor service levels – due to this factor of now lower expertise levels, the result is poor service all around and disillusioned property investors who thought they had a ‘bargain’!

Can I Make Improvements During a Tenancy

If you have a maintenance and improvements plan for your property, there may be some things you can do whilst you have a tenant in place.

It’s simply a matter of asking and then agreeing on the terms so far as access, time frames etc. as well a compensation allowance if required. Doing improvements can be a major benefit to you as you are completing the works while still receiving rent. One or 2 weeks rent could go a long way towards the cost of the improvements and improvements are important to maintain your quality of tenancy.