Allen Realty property managers have experienced record low vacancies, currently sitting at 99% occupancy rates. Unlike rental agents throughout the rest of the country, most Auckland agents continue to report high demand and low vacancies throughout the first five months of the year.

Although current vacancy rates are low and rents are on the rise, many property managers have reported a slight decline in tenant enquiries over the last six weeks. Historically the winter months often slow down in the rental market as less tenants move, resulting in lower demand. Many commentators expected influences such as the Rugby World Cup and Christchurch earthquake to stimulate Auckland’s winter market during 2011. However it appears the traditional winter slow down has once again struck, especially in some areas such as Albany (58 3-4 bedroom properties available on Trade Me as at 14 June 1011). The market may not be as quiet as previous winters, but property owners may experience a slight decline over the next quarter.

The latest statistics released from the Department of Building and Housing show good increases in medium rents over the last year. According to these statistics the May 2011 average rent is up 4.7% compared to May 2010. They report the Central Auckland average was $442 (a rise of 6.9% from May 2010), North Auckland was $446 (a rise of 4.9% from May 2010) and South Auckland was $399 (a rise of 6.4% from May 2010). Property owners should note that these average rents do not provide a good basis to determine rent reviews as there are many variables over many suburbs. You can read a recent blog on The Art of The Rent Review for further information on rent reviews.

Between June 2010 and June 2011 most suburbs have seen strong demand and rising rents. For two bedroom homes, key areas showing increases have been Avondale 13%, Grey Lynn/Arch Hill 13%, Mission Bay/Orakei 12%, Mt Wellington 13%, Remuera South/Meadowbank 17%, St Heliers 13% and Western Springs 14%. Medium rents for three bedroom homes show some similar increases including Kingsland 11%, Kohimarama 18%, Royal Oak/One Tree Hill 10%, Western Springs/Morningside 11% and Titirangi 10%. You can view the latest market rent statistics on the Allen Realty website as well as variances between 2010 and 2011.

As winter sets in landlords should be aware of the traditional decline in demand and be proactive in marketing and presenting properties in order to attract tenants and compete with other landlords. Start marketing properties as early as possible and attend to any necessary maintenance prior to showing tenants. There are some issues that need particular focus during the winter months and our previous article A Landlord’s Preparation for Winter gives some good advice on these issues. Other articles of interest may be How to Rent Your Property Faster and The Tenant Selection Process.

You can register for future rental market updates at www.allenrealty.co.nz.

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Owners in this situation must now appoint a New Zealand based agent for the entire duration of the time that they will be out of the country. Failing to comply with this provision of the RTA by March 2011 could result in the awarding of costs to the tenant of up to $1000. The changes have been made to ensure that tenants are always able to contact a local agent working on behalf of the owner when they are out of the country.

Owners can choose either a professional management company or could elect to use someone such as a family member to manage their property whilst overseas. Prior to going overseas the tenant must be notified of the agent’s contact details and the bond centre must also be notified.

When deciding who will manage your property while you are overseas, remember that property management is simple when everything is going right, but ensure that whoever you choose is both prepared, and suitably experienced, to be able to deal with a tenancy emergency should one arise.

Refer Residential Tenancy Act – new section 16A

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It also makes you wonder how much longer we’ll be doing this only every 10 years… If its online, couldn’t we do it more often? SO much can change in 10 years it seems the data is only useful for a few years. If it helps people and businesses make smarter choices then lets do it!

If you can’t read it all here’s the summary: Apartment dwellers are growing in numbers, younger, more educated, earn more, have greater access to the internet and are more likely to rent.

This is what I learned from 23 pages of ‘stuff’ on apartment dwellers from Statistics NZ:

• In the 10 years between the 1996 and 2006 census the number of people living in inner city apartments in the three main centres has almost quadrupled. In Wellington the number more than tripled from 1,410 to 4,743.
• The increase above was more than the growth rate for the total population of those areas. i.e. Wellington’s population grew by 14% but the growth in apartment dwellers increased by more than 300%…
• In Wellington 30% of apartment dwellers were engaged in full or part time study.
• 49% of the nations apartment dwellers are aged between 20 and 29 years. A further 20% are aged between 30 and 39 years.
• Only 5% of apartment dwellers did not have a qualification, compared to 25% of all New Zealand adults as a whole.
• 49% of apartment dwellers walked or jogged to work on census day. Compared to non inner city apartment dwellers where 57% used a car, truck, van or motorbike.
• The most common occupation group was ‘Professionals’ at 32%
• On average inner city apartment dwellers worked longer hours. 44% working more than 50 hours a week compared with 36% for non inner-city apartment dwellers.
• Inner-city apartment dwellers had a higher labour force participation rate.
• The median income for apartment dwellers was higher then for New Zealand adults as a whole. With Wellington having the highest, followed by Christchurch then Auckland.
• 27% of apartment dwellers lived in an apartment they owned. Compared nationally to 67% living in a house that they owned.
• Wellington had the highest number of people paying more than $450 a week in rent, at 40%.
• 36% of inner city apartment dwellers lived in a household with no access to a car. This compared to 14% nationally.
• Apartment dwellers had a higher rate of access to the Internet than those outside the CBD. (70% compared to 60%).
• The size of inner city apartments has been reducing over the years.

If you are still reading this good job! Hope you got something useful from it.

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• tenant packs up and leaves
• communication between the tenant and landlord breaks down
• the tenant takes the landlord to the tenancy tribunal

The best way to operate your rental properties is to treat it like a business. By acting ethically and in a professional manner, you can attempt to provide a hassle free tenancy for your tenant. This will result in rent being paid on time, the property being well maintained, and maintenance issues being reported as they occur.

Once communication is lost between the tenant and the landlord, it becomes difficult to re-establish that level of trust that was once there. The tenant needs to be made aware at the beginning that if they do have any issues they need to communicate them to the landlord. By having open two way dialogue, the tenant feels that the landlord is there to listen and provide guidance when needed.

If you use an independent property management firm, make sure they belong to IPMA (Independent property managers association). They follow a set code of conduct that they are bound to which ensures all property managers under the IPMA umbrella are acting in an ethical and professional manner.

Without your tenants, you have no income. They can always pack up and leave and go elsewhere, where as you will be left with a vacant property that you will now need to advertise and get tenanted which will cost you money.

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What are the current legal requirements?

The Residential Tenancies Act 1986 does not have specific sections that apply to the requirement of landlords to provide smoke alarms. However, section 45C specifies a landlord must “comply with all requirements in respect of buildings, health, and safety under any enactment so far as they apply to the premises.” This means that all houses must comply with the Building Act 2004.

The current Building Act 2004 requires that all new houses and consented alterations provide “means of detection and warning” in the event of fire. Like the Review of the Residential Tenancies Act, the Department of Building and Housing is currently preparing a Building Act Review, so changes may occur. Although the current regulation does not apply to existing properties, the requirement for alarms will usually be triggered if you are carrying out any building works that require an application for building consent from your local council.

What is the best type of smoke alarm?

The two main types of fire alarms available are Ionisation and Photoelectric alarms. Consumer.org.nz have carried out research on various alarms and report the following:

Ionisation alarms sense the volatile combustion products from hot flaming fires, but don’t do as good a job sensing the smoke from cooler smouldering fires because fewer combustion products are present.

Photoelectric alarms shine a light beam across a chamber and detect if the air in the chamber becomes partially obscured, detecting smoke from both types of fires.

The NZ Fire Service also provides some good recommendations on the types of alarms that are available. The best type will usually depend on the type of property, your budget and personal preference.

What other options are there?

Alarms can be powered from different sources. Battery Operated (DC) smoke alarms can provide detection if there is a power failure, provided they are installed correctly and the batteries are charged. This is often the most cost effective. AC powered smoke alarms are powered by mains and will only provide detection if power doesn’t fail. These can be slightly more expensive and must be installed by a certified electrician. AC with battery back up is generally the most comprehensive and will provide detection even when there is power failure – as long as batteries are fresh and correctly installed. Many smoke alarms now have long life batteries that can last up to 10 years.

Where should I install fire alarms?

All properties will generally have different requirements depending on the location, size, number of levels and exits. Generally alarms should be installed in hallways as close to the bedrooms as possible, as the alarms must be audible to people sleeping on the other side of closed doors. The bigger the home the more alarms are required and most alarms will come with instructions on where to install them. The NZ Fire Service provides some good guidelines and The Building Act 2004 provides information on the specific types of smoke alarms that are required and some guidelines on where to install them. All alarms should be installed in conjunction with the manufacturers’ instructions. There are also guidelines on where not to install them, such as kitchens.

Other important issues to consider

Smoke alarms may be ineffective if covered in dust/dirt or obstructed in any other way. This is likely to occur if tenants smoke in properties (usually flats and apartments) and cover the alarms. Many building managers will tell stories of tenants obstructing smoke detectors and some body corp rules/building regulations now prohibit this obstruction and issue fines to tenants who do this. The fire service may also charge tenants or landlords for false callouts.

Educating tenants in utilising the effectiveness of the alarms is also the key, including the potential outcomes if they obstruct alarms or fail to check them regularly. Smoke alarms will also be ineffective if they are not installed in the correct locations in the home.

Smoke alarms are also available for people with hearing impairments. These special purpose alarms provide additional warnings such as visual alarms and when one is activated, generally all activate to provide a more comprehensive warning system.

In closure smoke alarms are a single warning device and should not be relied on as a complete fire detection system. A comprehensive system would also include the use of sprinkler systems, fire-resistant materials and fire exits.

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All landlords should provide window coverings. Gone are the old days when some landlords let tenants provide their own coverings. If you don’t have them installed then tenants will rent elsewhere. We recommend that rental properties should have cost effective, durable, modern coverings that fit each window. The location of your property (and the prospective tenant market – you should know your market) will help determine what sort of blinds/curtains you install, but there are some good guidelines to follow.

We recommend that landlords with properties out West or South (where there is often more wear and tear than in the central city) stay away from venetian blinds made of aluminium slats which although look smart, are damaged easily. The blinds and cords can be damaged as tenants clean them, or careless tenants open the windows without lifting blinds (by reaching between the slats) or the wind can cause damage to the slats. Executive properties and apartments in central Auckland may be better suited to these blinds as the properties are often not subject to the same amount of wear and tear. Vertical fabric venetians have plastic beading that keeps the blinds together and these can break easily, so the same rule applies. The one good thing about all venetians is that they are easily serviced with many companies out there providing a maintenance service. Roll down sun shade blinds are great and have a modern, clean look and are very durable but are often the most expensive choice so exceed many landlords’ budgets.

Curtains and nets seem to be the most preferred covering in most rental properties. Bedrooms require both curtains and nets whereas lounges and dining rooms can often get away with just curtains. Kitchens, toilets and laundry’s can get away with nets only. Nets in wet areas should be trimmed high so they do not hang in the vicinity of taps etc. Nets should be white and you can purchase nets with built-in zipped cuts that allow you to trim the nets to the height of your windows. Nets should be hung on cords on the inside of the window frame but not attached to the glass. Curtains should be hung on rails on the top of the window frames so when closed they hide the nets. If you invest in new curtains make sure that they are hung correctly to maximise presentation and prolong the life of the curtain.

Nets provide additional privacy when curtains are open but also allow a small amount of sunlight to shine through which has obvious benefits to your rental property. More sunlight means less moisture which has a positive effect on tenant’s health and also increases the life of all of your chattels including carpets and paintwork. Curtains should be thermal backed to provide maximum insulation. You can increase the life of your nets/curtains and blinds by tenant education and improving insulation and air flow. For example tenants should be told to regularly open windows and encourage air flow. Property owners with moisture problems can reduce these problems by installing fans and air/heat transfer systems such as HRV (Home Ventilation System) products which circulate air around the home. This will help avoid mould growth and discoloured window coverings.

We suggest that you purchase neutral colours that don’t clash with tenant’s furniture and personalities – for example, don’t choose multi coloured rainbow or pink/orange curtains. White curtains mark easily so contemporary grey/brown colours are always a good option. Presentation can be maximised by having consistency in all rooms and not different colours in every room. If your children’s bedrooms have kiddie cartoon curtains it may be worth replacing with normal curtains to increase your potential tenant market. Your property may then appeal to a wider range of tenants such as professionals or students.

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• Always check that rental payments have been made on the due date so you can initiate collection of arrears immediately
• Automatic rent payments deposited directly into your rent account are preferable, and it is best to set up payments to coincide with the date of your tenants personal income payments to reduce the likelihood of missed payments
• Have a zero tolerance policy to arrears and have direct and immediate contact with your tenant in the event of rent payments being missed
• Arrange immediate repayment of arrears (preferably the next day) with your tenant and if repayment is not initiated as agreed start formal proceedings (e.g. issue of 10 day notice) straight away – this way if rent remains unpaid the tenancy bond is likely to cover the arrears incurred if you have to progress to eviction
• Formalise agreements relating to repayment of arrears via a Tenancy Tribunal Mediation or Hearing and enforce Tribunal Orders when necessary to recover arrears
• Lodge Tribunal decisions and 10 day notices with tenant databases such as Tenancy Information NZ (TINZ) to help protect other landlords from suffering the same problem from repeat offenders

By following the points above, you will collect rents on time more often. Rent collection is imperative to the success of a rental property. Learn from your mistakes and improve your rent collection policies as you go. By having a solid foundation to start with you will be better prepared if the time comes when a tenant stops paying.

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Your tenancy will be governed by a Tenancy Agreement and The Residential Tenancies Act. After decades of renting properties to tenants on behalf of property owners we have put together this list of important issues for you as a tenant to consider when choosing the right property for your family. This will hopefully reduce the potential for problems with landlords and save you time and energy.

Most tenants main criteria when looking for a property is location. You should narrow down locations that you wish to consider prior to beginning your search to save you time. Auckland is a big city so there is no point in viewing a property unless you are happy with the location. Key points to consider when considering an area is the proximity to local schools, transport, shops and other infrastructure, as well as proximity to your family and place of employment.

What should I expect from a suburb?

Presentation of the neighbours, their vehicles and properties give you an indication of the types of people that live in each street. A drive-by down the main roads will show you what facilities/amenities and goods and services are available in the area.

How do I research a suburb?

You can use technology to your advantage by using Google maps to assist you with your research. Google maps provide a map view and also a satellite image view so you can check out photos of the location via the internet prior to inspecting. Never make a decision on a specific area based on what a landlord says eg. “This is a good street” as you need to satisfy yourself to that regard! You can also check schoolzones.co.nz to find out more about the local schools. Reading local community newsletters will also educate you on the area and what it has to offer. You can read community newspapers online at stuff.co.nz/auckland .

You can use various websites to find and compare rental properties. Try www.allenrealty.co.nz, www.trademe.co.nz or www.realestate.co.nz.

What rent will I pay?

The location will influence the majority of the rent. Some of the rent will be influenced by the amenities and condition of the specific home. Market rents are affected by demand and supply in each suburb so if rental properties are in high demand in that area you can expect to pay more. As a general rule, the closer a property is to the city centre the higher the rent. You can view average rents for most Auckland suburbs on the Allen Realty website www.allenrealty.co.nz

When you finally choose suburbs to concentrate your search on there are specific issues you should look at. This will ensure that you end up with a property that ticks all your boxes that you will be happy with long term.

• Security: Check locks on all doors and windows – most properties are rented ‘as is’ so property owners won’t necessarily be obligated to upgrade something.
• Maintenance: Assess what you will have to maintain as part of your tenancy eg. whose responsibility is the lawns and gardens? Hedges should generally be a joint responsibility with tenants and owners. Do you maintain the swimming pool or does the owner? Who sweeps the driveway or maintains any common areas?
• Insulation: Make sure that you are satisfied with the property and confident that it will be warm and dry. Look for signs of discolouration on flooring, paintwork, and window coverings (curtains/nets) which show evidence of any moisture. Remember that most rental properties will suffer from some degree of moisture. Make sure properties have adequate ventilation. If you can open windows regularly and operate fans or heat pumps then this will assist with airflow and reducing moisture.
• Noise: The location of the property will affect the amount of noise you should expect. If a property is on a main road or in the CBD you should expect a certain amount of associated noise. If there is a building site next door you should also expect some noise. Often apartments in the CBD have double glazing which will help reduce this issue. The owner of the property cannot directly affect or change this aspect of a property so it is important that you do your homework.

When you choose a property to apply for and a landlord accepts your application then you will have to negotiate a tenancy. The following issues need to be negotiated first, as once you sign a tenancy agreement it will be too late to change your mind.

• Tenancy Term: The landlord and tenant should agree when the tenancy starts and if it is a fixed term (eg. 6 or 12 months) or a periodic tenancy (month to month).
• Agreement in Writing: All tenancy agreements should be in writing and should confirm the obligations of all parties including and not limited to the bond, rent due dates etc.
• Bond: Once you pay the bond then the landlord is required to lodge your bond with the Department of Building and Housing within 23 working days of receipt. You should receive written notification of the lodgement of your bond within 5 weeks of the start date of your tenancy.

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As professional property managers we often have property owners that contact us to enquire about either giving their tenants notice so properties are vacant just prior to the event, or alternatively renting out their family homes over this period. Many have been lured by the buzz of the World Cup fever and rumours of easy money and great returns. However, I believe that this potential market is over-inflated and many property owners will find themselves disappointed unless they face certain realities.

This RWC market will predominantly only benefit owners of furnished apartments and houses that are vacant at the time of the event. Those landlords who plan to give existing tenants notice to vacate so they can get higher rents for the period of the RWC, must think about the opportunity cost involved. They may secure double the normal return for 3-4 weeks of the tournament but then may also experience a week or two of vacancies prior to the RWC tenancy and the same afterwards before securing new long-term tenancies after the events. These vacancies may wipe out any potential profits and this is before you even think about potential damages to your property from a party who may be in the country for 3 weeks, never to return.

Any smart investor will ask − why terminate a long term tenancy to secure a better return for 3 weeks? With more tenants coming and going, there are greater risks of vacancies, damage, wear and tear and depreciation. There are also additional costs including marketing and the logistics of signing up tenants also to be taken into consideration. Landlords may need to pay for power/water/gas as tenants only staying a week or two certainly wouldn’t want to set up their own utilities accounts. There is also much debate about whether the Residential Tenancies Act would even govern theses short-term tenancies. Section 5M of Residential Tenancies Act excludes tenancies “where the premises are let for the tenant’s holiday purposes”

In many instances it won’t necessarily matter what legislation governs the tenancies as the tenants are visitors and could be gone before you even notice any problems, let alone take action against them. Landlords need to look at the big picture. The majority of visitors attending the event will surely stay in short-term hotels/motels/hostels and serviced apartments. They will spend most of their time out and about watching rugby and exploring New Zealand. The majority will only require basic short-term accommodation and not large furnished houses. They want to be spending little time on cleaning/cooking so most will opt for serviced accommodation. Many visitors will want to follow teams around the country and not commit to 2 or 3 week tenancies in one location.

Although there are many negatives to consider, there will be many landlords that will make the most of opportunities to rent out properties short-term for the event. I expect that some visitors, mainly families, will try and utilise this private market rather than staying in serviced hotels/motels/hostels and apartments. The majority of this market will be made up of private homes (not rental properties). Some visitors will want a base for the event and after the event, for extended stays.

For those looking to take advantage of this market, think outside the square! If you want to compete with other property owners then think about offering a rental package for a week or two that includes some of the following, which will help differentiate your property from the thousands of other landlords looking to cash in.

1. A pick-up service from the airport.
2. A bottle of NZ wine, a crayfish, and/or a dozen oysters upon arrival
3. A car with the property
4. A cleaner once or twice a week
5. Complimentary tickets to a minor game at Eden Park

The most important aspect is that property owners should know who is renting the properties. Deposits and Bonds should be taken and contracts completed stating maximum numbers of tenants, rules and regulations. You may only have one bite at the cherry so if it’s worth doing it’s worth doing well!

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Under section 62 of the Residential Tenancies Act only food and perishable goods may be discarded immediately by the landlord and all other items should be stored securely pending an application to the tenancy tribunal. The tribunal will then make an order either for the return of the goods to the tenant, or allow for the sale or disposal of the abandoned goods.

This is not ideal for the landlord as it costs time and money to go and store goods for a tenant that has left the property. Not only will you be responsible for looking after their household goods, you will also be responsible for cleaning the property and getting it ready to be tenanted again. This all adds up and ultimately will come out of your pocket until an order for claims against the tenant is processed by the Tenancy Tribunal.

The key message is that by getting a disposal order from the Tenancy Tribunal you are protected against any potential claim from an ex-tenant.

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