One such leasing issue which is likely to become increasingly significant is the ability of landlords to charge improvements rent percentage when they are required to seismically strengthen their buildings to bring them up to the required levels of the building code.

The ADLS 2008(2) deed of lease improvements rent percentage clause provides that where a landlord is required by any legislation or requirement to spend money on any improvements, additions or alterations to a property, the landlord can charge an amount additional to the rent up until the next rent review date. The amount that can be charged will be a percentage of what the landlord spends. That percentage is stated in the lease.

The likely relevance of this is where the Council requires landlords to strengthen their buildings to meet the requirements of the building code. The Council is currently assessing various buildings around town to determine what, if any, works are required. Such building code requirements are statutory requirements, so it would seem that a landlord will be within their rights under the ADLS lease to recover the specified amounts from their tenants.

Whether this will be a sticking point with new lease negotiations remains to be seen. It may be that parties negotiate the improvements rent percentage more heavily than in the past. No doubt as landlords begin to carry out the required works to their buildings the improvements rent percentage clauses will be put to the test.

Written by: Jourdan Griffin, Senior Solictior, AlexanderDorrington

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Buyers currently have a set of implied warranties that a developer of a residential property gives under the Building Act 2004. These include warranties that the building work will be carried out in a proper and competent manner, in accordance with the plans and specifications and that the work will be completed within a reasonable time, if no time is stated.

Under the new proposals, in addition to damages, buyers will have a statutory right to cancel if the breach of warranty cannot be remedied or if it is a substantial breach. A substantial breach occurs if:

• A reasonable client fully acquainted with the nature and extent of the breach would not have entered into the contract;
• The building work is unfit for the purpose stated or is of such nature and quality that it cannot be expected to achieve the desired result stated in the contract; or
• The building work is unsafe.

Consumers will still have the protection of the Fair Trading Act 1986, the Consumer Guarantees Act 1993 (or whatever these statutes become given consumer law generally is also under review) and at general law e.g. negligence.

In addition they will have whatever rights properly derive from the contract, including the rights to cancel contained in the Contractual Remedies Act 1979. This new right to cancel will be in addition and it is not something a developer will be able to contract out of.

Another example of the current policy to enhance consumer protection in the development sector and another right of cancellation that a developer’s funder is going to need to take a view on.

This Bill has been referred to the Local Government and Environment Committee. Submissions are due on 11 June 2012 – if anyone wants to make a submission then please e-mail. A report is due out from that committee on 1 September 2012.

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Read the full article here: Webinar This Wednesday – Property Investor Update

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Garry has been doing some fantastic stuff in South Auckland and we have a new video here for you to see where Garry and I (Sean Wood) discuss how Garry did this great property deal. Click Here to see Garry’

End valuation $385,000; paid $225,000:
Rental appraisal $640 or so a week

Garry was able to achieve these results by using the systems, advice and some of the renovation crews and discounts available from the PropertyTutors team in his area.

The advice that Garry received was through the Masters Programme, which has clearly produced astounding results.

The Masters Programme was created to impact on the success of the individuals wanting to really focus on their Property Investment NZ business. Once members have completed the initial six-month programme they are invited to join the Masters.

During the 12 months that the Masters runs, the participants spend one day each week with me in the marketplace – attending open homes, visiting properties with agents, and should a deal arise I help them to negotiate it.

However, before the negotiations start we spend some time analysing the fundamentals: why the vendor is selling, what price the vendor is hoping to get, the return on investment, whether it is under- or over-rented, and how much it will cost to renovate (if necessary) without overcapitalising.

If the numbers stack up, we write up the sale and purchase agreement then and there.

I’ve run the Masters programme since May 2008 with two groups per year (May and November) each with just 20 individuals at a time. Once the year is up, current participants can retain their spot by rejoining. I’m happy to report that 16 out of the original 20 in my first Masters group signed up for a second year because they’d been so successful.

Sean Wood, PropertyTutors Limited

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Last month Rustica joined a discussion called “where are these investors now” revealing her story of success and  failure in property investment.

Excerpt of Rustica’s post on PropertyTalk.com 24 April 2012

Knowing the story was one worth sharing Rustica entered a short story competition ran by Wealth Dynamics on their Facebook page.    If you are a member of Facebook you can access the story here and also vote for Rustica ( I did).

Those of you who are unfamiliar with Wealth Dynamics it is ran by Roger Hamilton and he wrote a book I recommend called “Your Life Your Legacy”.  Rustica refers to the book and Wealth Dynamics as being a guiding force to turning her life around.

Over the period of three years Rustica built up an impressive $3million property portfolio and life was great.  The loans for the properties were with no doc lenders so the interest rates were high and her cash-flow per month soon became negative $8000.  Unless you have a lot of income coming in it’s hard to sustain that loss every month and the inevitable happened Rustica lost the lot  including her family home.

This was obviously a low point in Rustica’s life – (from the short story on facebook)  

Rustica suggests the key error she made in her property investment was trying to be a ‘Trader’ profile when she is a ‘Supporter’ profile and her husband is a supporter profile too.  To understand fully the Wealth Dynamics profiles I suggest you get a copy of Roger’s book “Your Life, Your Legacy”.  It is available on Amazon.com.

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There is always something appealing and comforting about an investment that you see, touch and know is real. Property Investment is one of the few investments that meets this. Through Property Tutors and Sean Wood Mentoring you can learn more about Property Investment.

1.Less Volatility – unlike stocks and shares property is not as volatile, price does not react sharply to market changes and other developments. Its value will not crash like many stocks.

2. No Fluctuating Rates – Fluctuating rates like you may see with exchange rates in forex markets are not seen in property markets. Usually prices make a gradual steady increase or even a marginal decline.

3. Generates Capital Growth – Property prices appreciate over time and the capital invested grows at a steady pace.

4. Serves As An Income Supplement – Property can become a source of additional income if used as a rental, or can save rental payments if you opt to live in the property. Though initially, the rent may be used for mortgage payments or loans taken to purchase the property, once the debts have been cleared, the rent is additional income to take care of some expenses.

5. Better Than Fixed Deposits & Bonds – These also are subject to changing interest rates and their long term returns are unpredictable.

6. Reasonable Returns – Financial analysts widely agree that the value of property doubles every seven to ten years. If an investor is not tempted into being greedy, this is a fair rate of return. Returns can also be earned by buying low and selling high, which just requires patience while the property value escalates.

7. Helps to raise loans for emergencies – Property is also the most acceptable form of collateral against which any bank or financial institution will be willing to give a loan whenever there is an urgent need to raise funds.

8. Property provides tax benefits – Owners of property enjoy tax benefits that convert into savings, while still meeting their obligations.

Property is an investment that can be seen and touched and not just a paper asset. For many people it is be the first big investment made and subsequent additions to the property portfolio can be done when surplus funds are available.

Click here for more articles on property…….

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Read the full article here: Can you Save Money with DIY Renovating

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Read the full article here: The Bond Lodgement Form

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Read the full article here: Tips For Property Renovation

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A purchaser looked for and thought they had found a property that was a house and income unit. The property had a separate one bedroom flat and was marketed by the agent as a “home and income”.

In fact a land covenant was registered against the title prohibiting the use of the property as flat or flats or as a boarding house or a residence for more than one household unit. The nature of the land covenant was not evident from looking at the title. A search of the instrument creating the covenant was necessary to understand its meaning.

The tribunal examined the responsibilities of the agent in making the information known to the purchaser.

The tribunal determined that the licensee agent should have searched the title or at least had someone else search it on their behalf. They should have been familiar with the information noted on the title. This they said was an essential role for the agent and failure to complete such a title check would amount to a breach of the real estate agent’s professional rules of conduct.

The comment was obiter but nonetheless has caused much concern and debate. Taken literally it requires agents (and in turn vendors) to be fully au fait with the title of any property they are selling. It requires that before the sale agreement is signed, agents must provide title information to a purchaser. The level of detail require seems akin to what the purchaser’s lawyer currently provides.

On a fee simple sale, where there is just a mortgage and a fencing covenant registered, that might be relatively simple, but increasingly titles are getting complicated. Some of them will have many notations registered.

Presumably the decision will lead to agents requiring vendors to obtain legal advice on the state of their title at listing. Already some lawyers have baulked at this – saying the caveat emptor rule ought better to apply.

Perhaps a change in the real estate agents rules to clarify responsibilities is warranted. In the meantime, vendors should expect to be paying for full title reports on listing; adding further to the costs associated with a sale.

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