Possible After Effects Of Alert Level 4 on the Rental Market

Possible After Effects Of Alert Level 4 on the Rental Market

What Property Experts Have To Say…

The Alert Level 4 Lockdown has already impacted the rental market in an adverse way and has immensely slowed rental income/investment for some landlords. According to a survey run by a property management consultancy Real iQ, it seems the rents in New Zealand are likely to fall as a result of Covid-19 and the Level 4 Lockdown. As we as a community seem to be making some head way in terms of fighting off this lethal virus, our property rents may not be in for the same.

The director of Real iQ predicts that property management companies in Auckland will likely face default rates of more than 20%. This means 1 in 5 rental properties are likely to fall into rent arrears. A survey carried out at the start of the lockdown period highlights an increase in rent arrears from 3.23% to 6.57% by the property management companies that completed the survey.

Based on Real iQ’s survey 40% of the property management companies taking part believe that the market rent will remain the same. The remainder have varying opinions on how much the rent could fall by, the highest being 20%.

There may be some discrepancies in the different areas that are effected. Low income towns such as Mangere, Papakura, Manurewa, in South Auckland may not be highly effected as rents are already generally low. Whereas the high-end rental suburbs may see a bigger effect on their market revenue and rents as staff are laid off and contracting work is slowed down or put to a stop and rent becomes less affordable. One of the mostly effected areas could be the Auckland CBD with its apartment market and student accommodation.

“If rents exceed more than 40% of the tenants net income, then they will likely struggle with payments. Incomes are going to decrease and rents will follow”, says David Faulkner (Director of Real iQ).

As unemployment increases in these coming months things are not looking good for the rental market. “The net income for New Zealanders will be negatively impacted and this, in turn with an increased supply of rental property will lead to an inevitable drop in rents.”

David believes that landlords are likely to sell their investments as employment/income rates continue to plummet and they are forced to release capital or mortgage sales.

Whilst it may be a bit worrying to be a landlord right now Reliance Property Management is here to help. With our knowledge in property and the rental market we can provide you the best advice when it comes to renting out your investment. We also have experience dealing with rent arrears and means of retrieving your rent money, as well as a database of tenants who are actively looking for rentals to ensure your property is not left empty.

There may be some things you could do during the lockdown or your downtime to make your rental property look more attractive.

Clean up your entrance – your entrance is the first thing people see, so you want people to have a good first impression.

Garden – make sure the lawns are mowed and the garden is nice and tidy.

Fencing – gives your property and tenants added security and privacy. It also increases the value of your property.

General Maintenance – use this time to fix small wear and tears that may have arisen over the years. In turn helping you find better tenants.

    Covid -19 Update

    Covid -19 Update


    As you all will be aware the coronavirus pandemic has escalated and continues to have major consequences on all aspects of our society. From a property management perspective there are both economic and social ramifications that could impact your rental investment.

    IMPACTS ON OUR LANDLORDS – From a property management perspective

    Property Marketing/Viewings

    Due to the enforced lock-down viewings are not to take place as they are not included in the essential services list. However virtual viewings through photos/videos may be possible.

    Rent Freeze

    The government has announced a freeze of all rent increases for the next 6 months. This includes any rent increases notices given to the tenants before the lock-down period which were to take effect during/after the lock-down period.

    Tenant Protection Temporarily Increased

    There are now limited reasons for which a tenant may be evicted.
    These reasons include –

    • Substantial damage to the property
    • Assaults and threats to the landlord, landlords family or neighbours.
    • Property left abandoned
    • 60days behind in rent as opposed to the 21days.

    These changes will remain in place for 3 months and may be extended. Any landlord/agent not adhering to these rules may face fines of up to $6500.

    Mortgage Payments

    The government, banks and the reserve bank have announced a 6 month mortgage holiday scheme to take some pressure off landlords who have been impacted by the virus.
    However a “mortgage holiday” does not mean you do not pay mortgage for 6months. Though you will not be making your mortgage repayments, your mortgage interest will continue to accrue, which means the amount required to be paid will remain the same and you will just be deferring the payments.

    Inspections, Repairs and Maintenance

    Routine inspections and maintenance do not come under essential services, therefore will be deferred till the lockdown period is over. Some insurance companies however require quarterly inspections to be carried out, therefore if a landlord is concerned they should contact their insurance company to see how they will be treating this matter. Urgent repairs may be carried out if related to essential services such as water, power, waste or gas.

    Tenancy To Start/End During Lockdown

    Travel is restricted to essential travel only (supermarket trips, doctors visits, etc) during the lockdown therefore moving house is not classed as an essential service. However if the Ministry of Housing and Urban Development suggest that if a tenant does need to move during the lockdown they do so by following the Ministry of Health guidelines and keep to their “bubble” and do not come in contact with anyone outside of their “bubble”.

    Tenancy Tribunal

    The courts, tenancy tribunal and justice system in New Zealand are considered as an essential service. They will continue to operate and hold possible hearings via telephone or video-conference.

      Tenancy Law Changes Proposed

      Tenancy Law Changes Proposed

      A bunch of rental law changes have been proposed by the Government to protect tenants. But what are these changes and how are you effected by them as landlords?

      Some Of The Main Proposed Changes To Take Place:

      1. Stricter laws in place when it comes to evicting tenants
      2. Rent changes to be made annually
      3. Increase in penalties for landlords not meeting standard criteria
      4. Tenant can make changes to property with little or no say from the landlord

      Lets take a closer look

      1. Stricter laws in place when it comes to evicting tenants.

      Periodic Tenancies

      Currently to end a periodic tenancy the landlord provides the tenant with 90days notice and is not required to provide any reasoning for terminating the tenancy. This is called no-cause termination of tenancy. A landlord must provide the tenant 42days notice if they are looking to sell or move a family member into the property.

      With the proposed new law in place landlords may not be able to terminate a tenancy without sufficient cause or reason, making it much harder to evict tenants. Some suitable reasons for evicting a tenant could be property renovation, change in use of the property, tenant shows anti-social behaviour or has been 5days late with rental payments on 3 separate occasions.

      The landlord can still end the tenancy if they wish to sell the property however will now be required to provide 90days notice instead of 42days.

      Fixed Term Tenancies

      Now when its coming up to the end of a fixed-term tenancy the landlord and tenant must come to an agreement together as to what happens next. They may come to an agreement to extend or renew the tenancy instead of terminating it.

      With the law change the tenant will have more say in the decision and could demand to stay.

      2. Rent changes to be made annually

      Currently rent changes can be made on a 6monthly basis. With the proposed law rent changes would only be allowed to be made once a year. This is to give the tenants more stability within their tenancy with less changes being made.

      3. Increase in penalties for landlords not meeting standard criteria

      At the moment the Tenancy Tribunal can charge fines of up to $50 000 against the landlord. With the law changes in place this figure is set to double to $100 000. This is to ensure housing health and safety standards are met.

      4. Tenant can make changes to property with little or no say from the landlord

      At present the landlord needs to give consent if the tenant wishes to make any changes to the fixtures in the property. The changes will give tenants more freedom to make minor changes to the property such as baby proofing, hanging pictures, installing brackets to secure furniture in turn making the property more safer and liveable.

      What do these changes mean for landlords?

      If these changes do go ahead, the law will shift strongly in favour of the tenants. The chances of these laws being approved depend on how firmly the landlord campaign oppose these changes. Depending on the outcome the proposed laws may be stopped or weakened in favour of the landlords.

      Landlords have less of a say when it comes to certain issues regarding tenancy. Tenants will be given more rights which makes it more difficult for the landlord to make changes to tenancies on demand. These proposed changes will be discussed by the Government and due to be announced mid-2020.


        Attention Landlords Deadline Approaching

        Attention Landlords Deadline Approaching

        The compliance with all tenancy laws is mandatory for all the rental properties in New Zealand as of July 2019. The ceiling and underfloor insulation are compulsory according to the new standards of TCIT (Tenancy Compliance and Investigation Team).

        The insulation for walls is not under consideration according to TCIT standards. It is important for every landlord to follow the new standards and enforce the changes quickly. There will be zero tolerance regarding the enforcement of the policy for the landlords.

        It is better to avoid the fine of $4000 for the rental property and meet the standards before the deadline which come into effect in July 2019. It is best to implement these changes for your rental properties sooner than later to avoid these hefty fines.

        There are insulation professionals who can help you to achieve these standards. They are available at an affordable price and can complete the task before the deadline.

        How to ensure the compliance with insulation of the rental property?

        The landlord needs to provide proof of insulation instalment with meeting the R value at minimum level:

        For Timber Framed Homes:
        The ceiling should be R 1.9 whereas, for the underfloor, it needs to be R 0.9
        For Masonry Homes:
        Ceiling should be R1.5, and for the underfloor, it should be R 0.9
        If there is any part of the house which is not under insulation, them it needs to be according to the new standards before the deadline.
        For the Auckland, New Zealand location, if there is no insulation in the house as of July 2016 then it is important to meet the standards of Zone 1 levels:
        The ceiling should be R 2.9, and for the underfloor, it needs to be R 1.3
        If the property is at these levels, then it needs to be according to the new standards and policies by July 2019.

        If it is a concrete slab or apartment as a rental property then you may be exempt from the new standards. You need to provide written confirmation regarding the exemption from a professional and qualified insulation expert or get the confirmation from the Body Corporate if you have an apartment.
        Statement for Insulation New Standards after July 2016

        The insulation statement needs to have the exact information regarding the type of property, location and condition. It is a recommendation to get the statement certification from ac qualified and professional insulation expert.

        Reliance Property Management Services

        With the help of a reliable property management company such as Reliance Property Management, you can invest in the knowledge and experience required to meet the changing standards. Reliance Property Management provides creative solutions to help landlords maximise profits on their investment and keep up to date with all current tenancy laws, news and changes, to keep our landlords better informed.

        Insulation Statement Experts

        The experts know how to make the insulation statement certificate perfectly without any errors for the submission. They are aware of the main elements which need to be there for the successful clearance from the TCIT in New Zealand.

          Get Started