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Long term commercial-like leases the future for residential tenancies?

A changing residential rental property environment in New Zealand means that the time is ripe for landlords and tenants to consider longer term residential leases that are similar to commercial lease arrangements with rights to assign, sublet, and renew.



A changing residential rental property environment in New Zealand means that the time is ripe for landlords and tenants to consider longer term residential leases that are similar to commercial lease arrangements with rights to assign, sublet, and renew.

New Zealand law firm Stainton Chellew is suggesting that recent legislative changes and housing affordability in Auckland are paving the way for a longer term and potentially quite different relationship between landlords and tenants, than the current one to two year norms that dominate residential tenancy relationships at the moment.

These could involve giving the tenant a greater level of freedom during the term of the lease, and fewer inspections for example, on the understanding that the property would need to be reinstated at the end of the lease.  A balance would need to be struck and the landlord may well require a higher level of bond to be paid in return for agreeing to a more ‘hands off’ type of lease.

A partner at the law firm Stainton Chellew, Mr Francis McEntee, said today that while some property managers might not like  changes in this direction, a number of factors – including legislative changes – are creating a rental environment similar to that in the United Kingdom and Europe where long term residential leases are common.

“It is something that can favour landlords and tenants. Recent law changes and increasing enforcement by the Inland Revenue Department mean that people who own residential rental properties will be less inclined to buy and sell frequently.  What they will be looking for is steady and low-hassle rental income.

“The culture of buying and selling residential rental properties short term will end.”

Mr McEntee said the long term lease arrangements would suit people with young families – such as those in the first home buyer mould – who want a stable family environment, but who can’t quite get into the market yet.  A longer term lease would mean more predictable rent and less disruption to children’s schooling, while they bed down and save for their own home down the line.

“We’re not talking about long term leases for students here. We’re talking about people with jobs and families who make great tenants, but they have no certainty about where they live, and have to put up with regular and intrusive property inspections, and the inability to ‘make a home’ by hanging up photographs or creating a small vegetable garden in the backyard.

“I expect some property managers may resist this because their model is based on active tenancies and tenant turnover, but landlords need to start taking a long term business approach to property investment, and other property managers will see opportunity in this model too.”

Mr McEntee said the long term tenancy leases could work a lot like current commercial leases, which have an existing body of law around them and established precedents, like the ability to assign or sub let the lease subject to landlord’s consent, rights to renew the lease for further periods, and to make some limited cosmetic changes to the property.

“Tenants need to be given the scope to make a home for themselves, without the uncertainty of being asked to move on within a short time period, and so long as the lease makes provision for them to return the property to it’s original condition, they should be able to carry out home making changes like painting the interior.

“Landlords will become more passive, but in exchange they get lower tenant turnover, less costs on fees and maintenance– and a more secure, predictable income. I expect that would appeal to their bank too, which might be able to offer more favourable terms and interest rates if they see a longer term lease in place.”

Mr McEntee said that in the past landlords wanted more flexibility to sell on short notice, but legislative changes and market factors mean residential property investment is becoming a longer term strategy.

“A long term residential tenancy lease similar to a commercial lease is not the same as a ground lease or leasehold title, which generally get a bad rap because of the potential for enormous rent increases.

“What we’re talking about here is more of a balanced business proposition; a situation where landlord and tenant commit to a lease relationship long term for their mutual benefit. So it may be that landlords would still hold inspections from time to time, and there is also potential for holding bonds – those are really variables that people could work through at the start.

“There would be, for example, regular Consumer Price Index (CPIs) and/or market rent reviews. Concepts that are recognised in the commercial lease context,” he said.

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Home Insulation Requirements




Home insulation keeps your property warmer in winter and cooler in summer so it just makes sense to have at least the minimum depth of insulation in the ceilings and underfloors and also in the walls too if you can do it.

European countries are getting ready for an unprecedented heat wave of 40 degrees Celsius or more, and unfortunately, people perishing the heat is unavoidable.  The old and young suffer the most in extreme heat so a home that has good insulation keeps its inhabitants comfortable.

Newer countries with milder climates have seemingly avoided building homes with much consideration of insulation requirements.

Many properties have just the lining and cladding between them and a cyclone, hurricane or heatwave.  However, it’s becoming apparent that in countries like Australia and New Zealand, the rising costs in healthcare have their Governments focused on improving the quality of tenanted properties.

In New Zealand, the new Healthy Homes Standards has forced the hand of landlords to comply with insulation requirements by 1 July 2019.  All rental properties must have adequate ceiling and underfloor insulation.

Insulation Minimum Depth Recommendations

The recommendations for the minimum depth of insulation for the ceiling, underfloor and walls depend on the climate, and severity of weather conditions.

The UK, USA, Canada and countries like Australia and New Zealand all have depth requirements, therefore landlords need to beware that there is no ‘one size fits all’ should they decide to take on the job of fitting out a rental property for compliance.

All new homes need to be fitted with insulation in time there won’t be a residential property without it.

How Insulation Works

For the nerdy, you’ll find how insulation works fascinating.  However, for the purposes of this blog post, we can summarise it as a product measured in terms of its R-Value or depth, for its thermal resistance quality.

Insulating materials differ however their role is the same and that is to prevent heat flow.  Stop the heat escaping from within the home to the outdoors via the ceiling, walls and floors and also prevent hot and cold air transferring from outside into the home.

To keep homes healthy humidity levels must be kept at a normal level.  This can be dealt with by opening windows and doors, to air out the home.  Remember mould love a warm moist environment, but at high levels mould can be dangerous to mankind.

Insulation Types

There are many different types of insulation including radiant barriers and reflective foils which are both highly reflective so heat is not absorbed.  Bulky fibre materials can be blown into the cavity, which is great for walls and ceiling, and there are the standard sheets.

Some products are made from recycled materials, like plastic, and car tyres.  There are natural products like wool, cotton and straw and of course, there’s the stable material fibreglass.   The list of types of insulation is long and includes many other man-made materials usually byproducts of plastics, metals and minerals.

Insulation Costs

The cost of the product will vary depending on the quality and quantity required.  Natural products like wool will be more expensive than some man-made options and be aware installation costs will be driven by supply and demand.

When there is a Government initiative at play with a compliance deadline to meet, installers will raise their fees accordingly.  Landlords are recommended to get their rental homes insulated before their Government makes it compulsory and costs rise with demand.

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Attracting More Business Travellers To Your Auckland Airbnb Property



Airbnb your rental property

Business travellers are often considered the ideal Airbnb guest.  Booking properties outside of busy weekends and holiday periods, reliability and the potential for repeat return visits, targeting business travellers with your Airbnb listing can prove a lucrative and low maintenance niche.

But how do you go about attracting such clientele?  Well, there are several things which you can do to attract the business traveller to your Airbnb listing.

Location, Location, Location

The most crucial aspect of attracting business travellers is (unsurprisingly) location. With the vast majority of business travellers requiring access to the CMD, the closer you are to your city’s CBD, the better.

For Airbnb guests in NZ, the most popular destinations are Auckland, Wellington and Queenstown, for business travellers the most popular city is Auckland and with most searching for accommodation in the CBD, your property will need to be located here.

Create a space to work

With many business traveller working while they travel it is important to create and showcase an appealing workspace. A desk, comfy office chair, access to a printer and scanner, fast Wi-Fi – all paint a picture of productivity.

Be sure to portray this in your listing photos and highlight the existence of your work space in your property description.

Take a more hands off approach

While originally Airbnb was created to rent a room in someone’s home, it was since morphed into more of a solitary experience. While many still opt for the cheaper lodging alternative and enjoy the experience of getting to know their host, a business traveller expects more of a standoff approach.

In your listing description stress privacy and talk your property up as an excellent place to unwind after a long day.

Also try and make your check-in process as simple as possible as after a long flight or drive to the city the last thing a business traveller wants is a complicated check-in.

Amenities – recreating a hotel experience

Traditionally business travellers stayed in hotel accommodation. However due to the rising costs of this, many turned to the Airbnb platform. But these travellers are still used to the hotel experience, so the closer you can emulate this, the more likely you are to foster return business travellers.

Offering a broad range of amenities, keeping these restocked after each guests and providing hotel quality linens are all great ways to recreate the hotel experience.

Disposable razors are an oft forgotten amenities which is always appreciated by business travellers who mostly fly with only carry-on luggage and are therefore unable to bring one with them

Hire a property manager

Hiring a dedicated Auckland Airbnb property manager can go a long way in conveying the professional, productive experience you want to portray.

Taking professional listing photos, crafting a listing description which appeals to business travellers, streamlining check in, restocking amenities and keeping your property clean – all tasks which a specialist Airbnb property manager can take care of you.

Taking on a property manager will also increase your chances of receiving more positive reviews which will only push you further up the Airbnb listing rankings for accommodations in Auckland’s CBD.

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Landlord Tip – Lost in Translation




Nowadays most rental properties are under 3rd party management i.e. landlords use property management firms and while this has allowed for greater objectivity i.e. landlords focus on the business of investing it also distances landlords from their clients; i.e. the tenants, and this can result in misunderstandings and important information getting lost in translation.

Landlords are in the People Business

Landlords are in the ‘people business’. Their clients are the tenants, and the property manager, a service provider, albeit the most important one. To get to the tenant, the landlord communicates via the property manager and as you’d expect sometimes important information is lost in translation and the aim is to avoid situations escalating so that they become costly. The most popular channel used to communicate with the property manager is email and they too also probably use email to communicate with the tenant so it’s really important to be very clear with your instructions. It’s so easy to say one thing and it’s interpreted as something else. There’s evidence communication break down between third parties and landlords in discussions on PropertyTalk.

New landlords now hand over their rental property to a property manager immediately so they’re guided by that firm’s management and communication requirements. However the transition wasn’t always this seamless. Landlords used to self managing found it really hard to let go and allow the property manager actually manage the tenancy.

Improve Communication

Looking back at these discussions it’s clear it was communication or the lack there of was the tipping point for so many of the issues that arose. Being in the people business Landlords even now when they’re more comfortable with the whole third party property management thing still need to keep a keen eye on forging a strong relationship with the property manager and this is how it can be achieved:

  1. Commit – confirm your acceptance of rules and guidelines. e.g. set a $$ limit for maintenance requests. Give the appropriate notice before visiting the property.
  2. Respond – reply and in a timely fashion to your property manager’s requests for information or maintenance requirements
  3. Share Information – let your property manager any changes to your circumstances i.e. you’re going on holiday or you’ve changed your contact details etc

When it comes to your responsibility as a landlord avoid putting off till tomorrow what you can do today. Act immediately with clear communication and taking action not only shows respect; it ensures a healthy relationship with your most important service provider – the property manager.

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