Wellington Propertyscouts

Propertyscouts Month End Newsletter - 1st Dec 2017

1 December Newsletter
What wonderful weather we’ve had in Wellington over November, one of the driest recorded while last November was the wettest ever. As they say, ‘you can’t beat Wellington on a good day’, let’s hope it continues…

LVR restrictions being adjusted: The Reserve Bank announced on Wednesday that they will be adjusting the Loan to Value Ratios (LVR) for owner-occupier buyers and investors from 1 January. For investors, the deposit required will now be 35% of the purchase price, instead of the current 40%. This is not a significant reduction and will not exactly see investors rushing back into the market which is exactly the intention of the Reserve Bank. Moreover, the adjustment for owner occupiers is not with the LVR itself but an adjustment of the ‘speed limit’ or how much a bank can bend the rules. This is the amount of new mortgage lending banks can do that exceeds the current 80% limit of the value of the home. Currently the rules can be bent on 10% of all lending but this will be increased to 15% of lending. Are you still with us? Let’s just stop there because all you really need to know is how it affects investor’s right? https://www.interest.co.nz/property/91098/reserve-bank-will-begin-rolling-back-lvr-restrictions-speed-limit-high-lvr-lending

Market update:  Trade Me have advised that there has been a big drop in rental listings compared with last year.  Their rental property index found the number of rental listings last month was down 50% on last year! They reported that they hadn’t seen that kind of drop in advertising previously.  So what’s it all about?  According to head of Trade Me Property, Nigel Jefferies, it has to do with credit restrictions on first home buyers meaning fewer can get into the market and were therefore renting longer.  At Propertyscouts Wellington we keep a record of the listings for Wellington. Compared to this time last year there is almost no difference (580 vs 573 listings for Wellington) which seems to contradict Trade Me’s statistics. However, Wellington has a huge spike in available listings over January and we can expect the listed properties to almost double in this month.   

Crystal ball gazing – the changing face of the rental market:  The business of being a landlord is constantly changing, but never more so than the last few years.  What we know is the demographics amongst renters is shifting. More and more we are finding that our tenants are wealthy professionals who have made the choice not to be tied down with property ownership. These people want good quality, well maintained properties and they are prepared to pay good rent for them.  Landlords renting to these tenants can expect their properties to be well looked after and for the tenants to be there for the long haul. 
While we’re at it, let’s not dismiss the effect automation is going to make in the future.  It’s been predicted that petrol cars will cease production by 2025 (that’s only 8 years away folks) and apparently five years after that most journeys will be undertaken by Uber style self-drive electric cars! Hang on, weren’t we meant to be living on Mars by now? Anyway, we’re not quite sure how we feel about that, but some of this will become reality one day which will remove the need for some car parks and home garages …. hmmm how many more bedrooms could you fit into that rental if you no longer need the double garage?  Rest assured the world is always going to need rental properties and landlords.   

Propertyscouts Christchurch:  Just a reminder that our latest Propertyscouts franchise in Christchurch is now up and running.  The franchise owner is Rachel who worked as a property manager in the Dunedin office for the last two years.  If you know of anyone looking for a property manager there then please get in touch with Rachel.  Christchurch@propertyscouts.co.nz

Q:  Does a fixed term tenancy agreement automatically extend? 
A:  No, it doesn’t.  Where a landlord wishes to end a fixed term tenancy at the conclusion of the tenancy he/she must write to the tenant between 21 and 90 days from the tenancy ending advising the tenant that the tenancy will end on the due date.  If the landlord fails to do that then the tenancy automatically reverts to a periodic tenancy and the landlord would need to give the tenant 90 days’ notice for them to vacate. More problematic, the tenant at any time only needs to give 3 weeks’ notice.
From the Team at Propertyscouts

Disclaimer:  Given the opinions expressed in parts of this email it’s important that we make it clear that the contents of this email are opinions and observations and made in good faith.  We suggest that in all cases independent legal and financial advice is sought. 

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