Ray White Snells Beach
Investor Gate Property Management Newsletter - July Issue
Market Report
There has been far more activity in the rental market over July than there has been in the last two months. In fairness, some of July’s results are the culmination of work done in June. Nevertheless, there has been a substantial increase in lettings being completed.
Perhaps as a sign of the times, we are finding tenants far more reluctant to consider properties that are not close to the main centres/towns. For example, tenants are requiring properties close to Warkworth township rather than the outer villages of Leigh or even Snells Beach. It would seem that tenants are wanting to keep travelling costs down in these current economic times, and are happy to compromise on lifestyle.
What Others Are Saying About Us!!
Fantastic! Excellent report, far superior to what we used to get from (previous company name deleted)! Paula - This was about our Inspection Reports
“Many thanks for your outstanding service.” Phillipa
“I have really enjoyed reading the articles on insurance policies.” Margaret
Just a quick note to say a big thank you to yourself and Nicole. She has been awesome! It’s reassuring to know our property has someone so pro-active looking after it. Murray and Christine
I just wanted to write to say Thank You for the wonderful job you did over the past 18 months as my Landlord. Michelle
I have found Claire to be my greatest asset. She is efficient, honest, fair minded and capable in any crisis. Kayleen
Your professional attitude re inspections and reports to landlords and the handling of rent transfers etc is excellent. Bob
Destruction of Premises
If the property is only partially uninhabitable, the rent will stop, and the landlord and tenant should negotiate a reduction in the rent for the tenant’s loss of use and either party can apply to the Tenancy Tribunal for an order to end the tenancy.
If the premises are uninhabitable due to a breach of the tenancy agreement, if the tenant is not in breach the rent will stop, the affected tenant or landlord may give notice to end the tenancy. If this is the landlord, they must give at least 7 days notice. If it is the tenant, they must give at least 2 days’ notice.
If a landlord carries insurance for the property, this does not lessen a tenant’s liability for damage that tenants cause intentionally or carelessly.
I’m sorry, your policy doesn’t cover that...
It seems we may have stirred up a bit of a hornet’s nest with our recent articles on insurance. A number of property owners have found that the policy their bank had arranged for them, did not have landlord extensions. Some had extensions, of a kind, but very limited.
The problem we face as your property manager is that property enters our management service for a variety of different reasons including:
These properties have generally had insurance cover prior to being handed to us for property management. An issue of these existing policies is that many policies do not cover damage caused by people who are legally in the subject property, this would include tenants. There are exceptions in some policies, to these rules. In many cases our office does not have details of your policy or even the company that you are insured with. Obviously, some owners do not deem it important enough to provide this information in our Management Agreement. Some provide the bare minimum of information, such as company name only, which makes administering and claiming difficult and protracted.
As in our last two issues of investor gate we urge you to immediately write to or phone your broker or insurance company and advise them of any changes that may have taken place since the property was first insured and, check what you are covered for. Most companies have add-ons to their standard policies to cover tenanted properties. Additionally, we have advised you of alternative and/or additional policies that are especially for tenanted homes.
We also urge you to contact our Property Managers and ensure we have the full details of your insurer, including Policy Numbers - after all, we are here to help you.
If you have any queries, and there have been a few since our first article on insurance, please email or telephone your designated Property Manager.
Sale of Property
If the landlord wishes to place the rented property on the market for sale, they must advise the tenant of this in writing.
To show the property to prospective tenants, purchasers or a registered valuer who is engaged in the preparation of a report, the landlord needs the prior consent of the tenant to enter the property. The tenant cannot unreasonably refuse consent but may attach reasonable conditions to their consent.
Tenants may not have to agree to open homes or auctions on site and can insist that the property be shown by appointment only. If a landlord wants to include open homes or
an on-site auction in their sale plan, they should discuss this with the tenant first and get their tenant’s prior consent for specific dates and times for these to occur.
If the tenancy is for a fixed term, the property must be sold tenanted, unless the landlord and tenant come to an arrangement for early termination of the tenancy.
Unless the tenancy was terminated by agreement or notice, the new owner would inherit the tenancy agreement that was already in place and the vendor should provide a photocopy of the tenancy agreement to the purchaser.
The landlord must notify the tenants in writing that the property has been sold, who the new owner is, and when the new owner will take over. The new owner should advise the tenant in writing of their details, their address for service, when they take over, and where the tenant should pay the rent.
The landlord and purchaser should complete a change of landlord/agent form [PDF 146 KB, 2 pages] and forward it to the Department of Building and Housing to update the bond record. The landlords rights to the bond pass to the purchaser at the date of settlement or the date of possession whichever is the earlier.
Selecting a Property Manager
The nature of the relationship
Contracting someone to manage your residential property is like using an accountant or lawyer to manage your business affairs. Many landlords expect their property manager to receive rent on their behalf, find suitable tenants, handle maintenance, and deal with disputes and termination issues. In essence, the property manager becomes the landlord’s agent looking after their investment.
Selecting a property manager
When selecting a property manager, consider asking the following questions:
Contractual arrangements
Take time to carefully check and agree on the property manager’s responsibilities. You need to agree on all terms and conditions and clarify any queries at the outset to avoid problems later. You should always record your understanding in writing.
When developing the property management agreement, consider the following:
Cosy homes are easier to let
It pays to keep tenants warm—a good investment in heating will keep renters around for longer, writes Diana Clement
It feels like another bone-chilling winter is upon us. Tenants certainly don’t want a cold, draughty house. But should landlords provide them with modern heating systems? The answer is it’s not compulsory. Yet it’s a great selling point for a property and a reason for tenants to stay put.
If you were a tenant, would you leave a warm, dry property and move into a damp one over winter? Good heat pumps also provide cooling in the summer. Tenants are demanding heat pumps and ventilation more and more. Agents usually ensure that adverts for properties to rent highlight the heating systems. “Even with the lower-priced properties, if you say there is no heating [the prospective tenants] will walk away,” say agents.
Recently, one family was prepared to simultaneously pay three weeks’ rent in their old, draughty rental property and a new one with heating and a Smart Vent ventilation system. Landlords can’t necessarily ask much in the way of extra rent for a property with good heating, but it will be easier to let. Once heat pumps are installed, the tenant pays for the electricity. But one of the downsides of having a heat pump installed in a rental property is that the landlord then becomes responsible for maintenance.
Consumer magazine reviews heat pumps—it’s worth choosing a reliable brand and having it installed correctly. There is no one-size-fits-all heat pump, and the outside unit needs to be correctly positioned. Also, there’s a reason to take action soon. The Government is offering $500 off the cost of a clean heating device and installation. The remaining cost is also tax deductible.
To qualify, the property needs to have been built before the year 2000 and have up-to-date insulation, for which there is a subsidy as well.Details of the heating subsidies, which do not require the tenant to have a Community Services Card, can be found on the website eeca.govt.nz.
Not every landlord will want to install a heat pump, but there are other options, such as wood burners. Modern ones are relatively efficient. Usually a wood burner doesn’t require much in the way of costly maintenance, and the tenants need to supply the wood or pellets.
Finally, it’s worth remembering that unflued heating devices, often popular with tenants because of their price, can cause moisture problems and damage a property.
Property Management from the 20th Century… until today...
Then:
Advertising was by word of mouth, lists and three or four line advertisements in the local newspaper, filled with abbreviations.
Communication was face-to-face, letter or fax. We had a local contact if an owner was overseas.
The laws were not nearly as tightly structured. This changed with the implementation of the 1986 Residential Tenancy Act - when many anomalies were resolved, bringing greater balance to rental practices.
Payments were received by cash or cheque, often over the counter, resulting in a large amount of cash on-site. Owners and tradespeople were paid by cheque.
Property managers were often ex salespeople who were tucked away in a corner of the office, often seen as the “Cinderellas” of real estate. They were seen primarily as rent collectors. Property management was not viewed as a career path.
Property showings were individual, not clustered around an open home time. On occasions, prospective tenants collected keys after leaving ID and viewed the property themselves. A practice which makes us shudder today!
Tenancies were approximately 8 months long. Rentals were seen as short term until tenants were able to purchase their own properties.
Processes within the offices were largely paper based and not always systemised, resulting in time wastage.
Service standards were lower, office hours were adhered to and clients had to “fit in” with the property manager. Tenants had to put requests in writing.
Now:
Most prospective tenants often respond by e-mail to website photos and descriptions, giving prospective tenants a much clearer picture of the property they are about to view, resulting in fewer disappointments and a better rental success rate. Newspaper advertising is negligible.
Face to face and phone contact remains vital and at times letters are still appropriate (particularly in a formal situation). The bulk of our communication is by email, mobile phone or possibly text. The most appropriate mode for the client is the mode selected.
Many laws have been passed which affect property managers and property owners alike and an in-depth knowledge is required. The days for ‘near enough is good enough’ are long gone. Our clients are more articulate and are very aware of their rights. The most recent piece of legislation which has taken into account our changing society is the Amendments to the Residential Tenancy Act.
Offices have become virtually cash free with the majority of transactions via the internet, direct credit or eftpos machines. Most of our younger clients no longer own a cheque book. Offices are becoming virtually cashless.
Property management is seen as more of a career path with many property managers having tertiary qualifications and a wide working knowledge of technology and specific property management accounting systems.
Property showings, tenant selection and the checking process have become more standard and streamlined with open homes being the norm. Today’s property manager is expected to take on a sales role.
Tenancies have extended to approximately 18 months as home ownership declines. Today’s professionals are burdened with their student debts and are choosing to live a lifestyle in a location which they probably could not afford to buy in.
As in every service industry, expectations have risen exponentially. Today with emails, texts and mobiles, 24 hour service is the expectation. Our office is now open 7 days a week to cater for clients’ needs.
Change is constant but what an exciting industry to be a part of!