Yes, rents received are income and need to be declared. Obviously, you can claim for such things as maintenance costs, management fees, interest on mortgages and depreciation. We are not tax experts and recommend that clients get independent financial advice. Information is also available on the Inland Revenue Department website (www.ird.govt.nz). There is a booklet available “Rental Income” advising property owners on the tax implications of receiving income from a property.
You will need to advise your insurance company that the property is to be rented. There are also additions that you can get for rental properties including loss of rent cover which you may wish to discuss with your insurance company.
You should also ascertain what is covered by your policy and decide if you need a small policy (usually called the “Landlords extension”) to cover chattels. The house policy does not include drapes, white ware, and furniture. Most companies now include carpet in the house policy, but it will pay to check.
There has been a big change in the Tenancy Law as the result of an Appeal Court decision (Osaki). Tenants can no longer be held responsible for damage to the property unless it can be shown that the damage was deliberate and intentional. The decision says that the tenants can have the protection of the owner’s insurance. Owners are unable to get the tenants to pay the cost of the excess or for amounts under the policy excess.
The Government has indicated that they will change the law because of this decision, but it is unclear when.
Because of the current position owners should carefully consider the level of their excess and it seems that the safest approach would be to have the lowest excess you can get.
This act covers the NZ Law relating to renting your property out. It covers the obligations of both landlords and tenants. Every landlord and tenant must operate under the rules of The Act. For more information go to www.tenancy.govt.nz
No, we don’t operate a Letting Agency – we only look for tenants for properties we manage. We focus solely on Property Management in Wellington– the tenanting and overseeing of other people’s homes or investment properties in the owner’s absence. If you want somebody to just find a tenant for you, we are sorry we don’t handle one-off letting.
We place advertisements on Trade Me, on the internet and contact relocation companies where appropriate. Advertising is at the expense of the property owner. You are only charged the cost of the advertisement (no loading fee is put on it). We operate a booking system where potential tenants log in to make an appointment to view a property thus providing their mobile number and email address. They cannot visit a property without booking in and are personally shown through the property. No keys are given directly to potential tenants to view the property and the property is not left open and unattended for potential tenants to go through.
Nobody can guarantee you the perfect tenants; however, experience has shown that following good procedures does minimize the risks. All prospective tenants are required to fill out an application form. This form gives information about the tenants and they are required to supply details of personal referees and their current or previous landlord. It also authorizes us to do credit checks. All prospective tenants are reference checked and because we personally show them your rental property we are also in the position to form a personal opinion of them. This is the main reason we do not ‘subcontract’ this work out or employ people solely to view properties and find tenants. We do decline tenants who have applied for rental properties when the reference checking does not satisfy our requirements.
This depends on the market and the time of the year. It is important to:
- Present your property in excellent condition.
- Price the property at the correct level (sometimes it is better to take $10 less a week and have little down time than ask top price but have the property empty for several weeks). If you are purchasing a rental property and the selling agent advises you that the property will rent for “XYZ” dollars ask them how many investment properties they own, or how many properties have they personally let out in the 4 week period prior to marketing the property.
- We would allow 3 – 4 weeks to find a tenant. It could happen sooner or it could take a little longer.
Our normal practice is to put fixed term tenancies in place.
A fixed term tenancy is exactly that. The tenancy would commence on a fixed date and terminate on a fixed date. Notice to either party cannot be given. So as the owner of the rental property you cannot give the tenant notice because you wish to shift back into the property or because you have sold it with vacant possession.
A common type of tenancy in New Zealand is referred to as a periodic tenancy. In general terms, a periodic tenancy requires that a tenant must give 21 days’ notice prior to vacating a property. If the owner of the property wishes to shift back into the property they must give the tenants 42 days’ notice and if the property is sold the tenants must also be given 42 days’ notice to vacate, once the property owner has an unconditional purchase agreement. Should the owner of the property wish the tenants to vacate for any other reason 90 days’ notice must be given.
It is important that you keep us informed of your long term plans so that we can ensure that if you are returning to your home or wanting to sell it that the right sort of tenancy agreement is in place.
Tenants living in properties we manage must pay a bond equivalent to three weeks rent. This bond is held with Ministry of Business, Innovation and Employment (MBIE) as per the Tenancy Act.
All tenancies are subject to the Residential Tenancies Act and all clauses must comply with the act. Any clauses outside the act are unenforceable even if signed by the tenant. If you wish to have specific clauses please discuss them with us.
A tenancy agreement is done with the tenant(s). A pre tenancy inspection of the property forms part of the Tenancy Agreement and allows for any defects to be noted. This is signed by both parties.
Properties are inspected 3 times a year. This is over and above the initial inspection done with the tenant before the tenancy commences or the final inspection done when a tenant moves out of the property. Tenants must be given written notice of the inspection (a minimum of 48 hours) and inspections can be done only between certain hours. Should problems be experienced at an inspection follow up inspections as required are carried out.
If you have extensive gardens and wish particular care taken of plants it is recommended that you organise for a gardener to maintain the gardens on a regular basis. Sometimes owners also pay for lawns to be done as well.
If the gardens are only small and the lawns easy to maintain it can be the tenant’s responsibility. If you have a lawnmower that you can leave behind at the property this often helps.
If you have a multi flat property (two or more flats in the same building) we will organise regular lawn mowing services for you. It is difficult to ensure lawns are done if you leave the responsibility to 2 or more sets of tenants in the same building. Your property will then start to look overgrown and untidy.
There is no extra charge for organising everyday maintenance (e.g. plumbers, electricians, small maintenance jobs etc). However, if you require a refurbishment job or a major project to take place we do have an hourly charge for overseeing this. This charge covers our time, petrol costs when visiting the property, telephone calls etc in ensuring the job is completed to specifications.
Trades People employed for such work forward their accounts to Harvic Residential Property Management Ltd. We pay them on your behalf out of rents collected and the charges show on your monthly statement. We also request that each owner leave a $400 maintenance bond with us so we have funds to cover large maintenance expenses. This is in case the property is empty and no rental money is coming in or the work completed is of a major expense (done with the owner’s permission obtained first).
Some rental properties are rented out furnished however these tend to only gain short-term tenancies. You will find you have additional wear and tear on your furniture and you will be trying to rent your property to a more limited market (most potential tenants have their own furniture). However, it is a good idea to make white ware an optional item that you could leave in the property for a tenant. You do need to be aware however that you as the owner of the property would be responsible for the maintenance on these items.
You can place your rental property on the market whilst tenanted. However, there are processes under the Tenancy Act that must be followed and we can advise and follow these through for you. If you have a tenant in your property, who is on a fixed term tenancy you must sell that tenancy with the property. It is important that you have a real estate agent that is a good communicator (we can recommend agents who we know are good working with tenants) and can organise with your tenants set times for showing the property to potential purchasers. It is important that all parties work together in this process causing as little disruption for all parties concerned. Often the owner of the property will reduce the rent for the tenant whilst the property is being marketed.
Tenants are required to pay their rent by automatic payment in advance. The payment comes through to our client account and rents are checked daily (we have a computerised system, which tells us whose rent is due on a specific day). At the beginning of each month we compile a full statement for property owners of the rents collected less all payments made on behalf of. The balance of the money is transferred to the owners nominated bank account within 3 working days from the beginning of that month (this allows the bank time to ensure all of the rent money in our client account has been cleared). As our system is automated you may find payment goes in earlier, but please allow 3 working days just in case of those unforeseen circumstances which can come up from time to time.
All rents and any other monies received on behalf of an owner are paid into our client account. This account is specifically for owners and does not form part of the operational bank accounts of our company. All payments made on behalf of the owner are also made from this account. Each owner’s transactions are individually identified within this account and the account is balanced on a daily basis. Property Owners are supplied with a monthly statement, which identifies all transactions during the month.
We effectively operate 7 days a week. Our office is open between 8.30am and 5pm Monday to Friday. Should a tenant have an emergency after hours or at the weekend they have access to a cell phone number in order to contact us. Jude or Colin answer this phone and action, if of an urgent nature, takes place immediately.
The office is not open during the weekends, as these are the main days for showing prospective tenants through properties.
Nobody could give a guarantee of this nature. We are not at the rental property 24 hours a day 7 days a week, however we do our best to ensure your property is looked after. We do regular inspections and if there is a problem bring it to the tenant’s attention and then follow up to see if it is rectified. If at the end of the tenancy something is not right, we endeavor to come to an agreement with the tenant. If this is not possible we will put your case to The Tenancy Tribunal for them to make an independent decision on the matter.
Owners do need to be aware, however that there will be wear and tear on the property and at times accidents do happen.