REINZ Real Estate Magazine - Autumn 2021

RealEstate AUTUMN 2021

A REAL ESTATE INSTITUTE OF NEW ZEALAND PUBLICATION

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RealEstate AUTUMN 2021

A Real Estate Institute of New Zealand Publication

IN THIS ISSUE OUT & ABOUT 08 FEATURES 13 SECTOR GROUPS 26 EVENTS 40 EDUCATION 41 OBITUARIES 43 TECHNOLOGY 45 FINANCE 52 INTEREST STORIES 54 INDUSTRY 60 LEGAL 62

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APARTMENT LIVING HAS NEVER HAD MORE APPEAL

26 28 30 36 38

RURAL MOMENTUM SET TO CONTINUE CLIMATE RISKS COULD IMPACT LOANS

50 52 54 62

BUILDING A SMART CITY – FROM THE GROUND UP

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POTENTIAL CHANGES TO THE UNIT TITLES ACT

TAX DOESN’T MEAN TAXING YOUR BRAIN INVEST IN PERSONAL BRANDING AND SOCIAL SELLING AML: EXPIRED PASSPORTS GUIDANCE

RTA AMENDMENT ACT 2020 FUELLING UP FOR THE FUTURE NEW PLYMOUTH RIDING REGIONAL NZ’S SUCCESS

ADVERTISE THROUGH REINZ The Real Estate Magazine is a quarterly publication distributed to 14,000 members of REINZ. Ad packages are available. If you are interested in advertising contact Kim Thompson - kthompson@reinz.co.nz

Cover Image: The Ridge © Barfoot & Thompson

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KEY CONTACTS Real Estate Institute of New Zealand Inc PO Box 5663, Victoria Street West, Auckland 1142 Phone: 09 356 1755 Free Phone: 0800 473 469 Fax: 09 379 8471 Email: info@reinz.co.nz www.reinz.co.nz

Chief Executive

Bindi Norwell, Please refer all queries in first instance to Kirsty Loader, Ph: 09 356 1752, kloader@reinz.co.nz

Advisory Services

Melisa Beight, General Counsel Ph: 09 356 1760, mbeight@reinz.co.nz

Membership Team

Mary Rackham, Membership Services Manager Ph: 09 356 1750, mary@reinz.co.nz Karen Chambers, Membership Services Admin Ph: 09 356 1845, kchambers@reinz.co.nz Cindy Stowers, Membership Services & Web Admin Ph: 09 356 1849, cstowers@reinz.co.nz

Events

Louise Gordon, Events Manager Ph: 09 359 5454, lgordon@reinz.co.nz

Communications

Editors

Dee Crooks, Editor-in-Chief; Kim Thompson, Editor; Ph: 09 356 1753, dcrooks@reinz.co.nz

Dee Crooks, Corporate Communications Director Ph: 09 356 1753, dcrooks@reinz.co.nz

Design and Layout

Education

Printing

Belinda Woolrych, Education Director Ph: 09 359 5455, bwoolrych@reinz.co.nz

MacWork Design & Print info@macwork.co.nz Ovato Ltd

ISSN 2324-3791

Technology

Kirti Desai, Chief Digital & Innovation Officer Ph: 09 356 1761, kdesai@reinz.co.nz

Finance

Rowan Dixon, Chief Financial Officer Ph: 09 356 1762, rdixon@reinz.co.nz

PropertySmarts

Deborah Dunning, Product Manager Ph: 0204 185 5026, ddunning@reinz.co.nz

DISCLAIMER: Any views or opinions included in this publication do not necessarily reflect the views of the Real Estate Institute of New Zealand Inc but remain solely those of the author(s). REINZ is grateful to the companies who have advertised in The Real Estate magazine who enable us to bring this publication to our members. However, placement of advertising in this publication does not constitute an endorsement of the products and/or services shown. Neither is REINZ responsible for the accuracy of any advertising material.

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CEO UPDATE

2021 kicks off where 2020 finished

Bindi Norwell, CEO, REINZ

Continuing the theme of ‘expecting the unexpected’, 2021 started off the year by being the busiest January the country has seen in five years with a 3.2% uplift in sales volumes compared to January 2020. Normally this time of year is a little quieter as people head to the beach for a well-deserved break (real estate professionals included!), however, with low interest rates, overseas travel limited and the reinstating of LVRs in the back of people’s minds, January was anything but quiet.

This sentiment was echoed by almost everyone I spoke to on a North Island roadshow back in January. Most areas were experiencing activity levels not seen for a number of years. One of the biggest issues I heard time and again was how the lack of stock continues to be a concern as it leads to disappointment when buyers miss out on a property and it adds further pressure on prices.

Repeatedly we’ve highlighted the importance of being able to build at speed and scale in order to address the issues of affordability and to try and reduce the significant supply deficit the country has.

Hopefully, there will be some movement in this space as the Government has just announced its proposed changes to the Resource Management Act (RMA). The current RMA looks set to be replaced with three new pieces of legislation – the Natural and Built Environments Act (NBA), the Strategic Planning Act (SPA) and the Climate Change Adaptation Act (CCA). The new regulations should be easier to apply and understand, require more coordination across local authorities, be more focused on key subject areas, deliver better outcomes for the environment, simplify costs for planning processes and reduce build timeframes.

Looking forward to the coming months we expect to get more clarification from the Government on the reforms to the Unit Titles Act (which is desperately needed) and

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we anticipate further details on proposed timings of the regulation of the property management profession. We will keep members updated as these two key pieces of legislation progress through parliament.

The industry has also made great progress with the real estate qualification suite review. Thank you to those who have given your feedback into how you think the new qualification should look. Your views have been critical to ensure we have created a qualification suite that is attractive and will support the real estate profession both now and into the future.

REINZ is currently embarking on a new digital transformation project which includes assessing our entire digital infrastructure.

The initial phase will look at the front end of our website and CRM system, and then phase two will look at the member-only areas of the website. This project will significantly enhance the user experience for members and will help future proof REINZ’s IT infrastructure for the years ahead.

We have also enhanced our PropertySmarts offering to ensure that we provide members with the best experience possible. We recently upgraded the managerial oversight function where branch managers now have access to all appraisals created by their agents, making it easier to comply with regulation. We have also revamped the suburb insights to include demographic, census information, median days to sell, monthly listing and median price trends.

In January we launched our new Local Suburb Guides in conjunction with Home Prezzo. Feedback has been positive and lots of members have signed up for the free trial – if you haven’t already you can do so via the stats platform. Members are enjoying the ease of which suburb level information and activity can be shared across social media and at open homes.

We were excited to welcome Melisa Beight to the REINZ team as our new General Counsel. Melisa brings more than 20 years legal experience to the role and has significant property experience which will stand the profession in good stead. You can read more about Melisa on page 13.

Lastly, as you will no doubt be aware, I will be leaving the real estate profession in the middle of March and will be moving to a new role with ProCare. It has been an absolute honour working with such a dynamic profession and has certainly been a lot happening over the past four years!

I’ve thoroughly enjoyed working with each and every one of our members as I’ve got to know you over the past few years, but I am looking forward to the new challenges ahead in an entirely new industry. I will remember my time at REINZ fondly and I will certainly continue to keep a close eye on all things property related, and especially how house prices track in the coming months.

Best wishes, Bindi Norwell

OUT & ABOUT

Property Brokers welcomes New Plymouth to the family Property Brokers has extended its already impressive footprint by opening a branch in New Plymouth.

“We are thrilled to have expanded into the Taranaki region. We are really proud to deliver locals with the exceptional real estate services that we’ve become renowned for providing,” says Guy Mordaunt, Property Brokers’ Managing Director.

Property Brokers Regional Director, Paul Roache, says that he is particularly delighted with the decision of almost all the former TSB Real Estate team to join Property Brokers. “As soon as we met them, we could see what a great team they were, that they enjoyed working together and were a perfect fit with the Property Brokers family culture.”

With over 75 locations across the length and breadth of New Zealand, Property Brokers’ team of over 850 strong has proudly delivered exceptional real estate services to the regions for more than 30 years now, thriving in places where relationships and trust count for everything, and a deal is done on a handshake.

Les McDonald exits the Professionals Long standing member and owner of Professionals Katikati, Les McDonald, has sold his business to nearby Professionals members Neville Ruske and Paul Billinghurst, in a successful exit and retirement.

“Les is one of the longest standing members of the group, there isn’t much Les doesn’t know about real estate that is worth knowing. He has been a staunch supporter of the group and our principals and is a passionate member of his local community. It is sad to see him leave but also a great result for Les and his wife Merel for a successful succession and to see the brand continue in the area,” says Shaun Taylor, CEO, Professionals.

Professionals opens Taupo Office Long standing real estate businessman Ross Harvey and the team at Lakeland Realty in Taupo have joined the Professionals group, and business is booming. Ross is a stalwart of the New Zealand real estate industry.

A previous board member of the Professionals group, Ross also founded (and later sold) Harvey’s Real Estate.

Ross says, “Since opening the doors under the Professionals brand, we have had great community feedback on being back in town. Operating as an independent operator is not easy, so joining a national brand with its support structures and digital focus is a great move for the team and me.

We’ve never been so busy!”

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OUT & ABOUT

New leaders for Ray White Gisborne realise business owner ambition Buyers and sellers of Gisborne can look forward to new passionate and progressive agents on their doorstep as Ray White opens its doors in a new location and under new management.

Ray White New Zealand Chief Executive Carey Smith said the new team in Gisborne was ambitious and ready to respond with positive outcomes for every client they looked after.

“Our new team in the area of sales includes Shelley Donaldson, Tom Harbott, and Alan Thorpe – and they are leaders in their own right. Not only have they got a track record of success in Gisborne, but they will be able to bring this to a new collective high. In the area of property management, Hamish Harrison brings a dynamic youthful but experienced level of confidence to this increasingly important area of real estate.

“We are proud to welcome our new team in Gisborne who share our Ray White family values together with a strong sense of achievement,” concludes Smith.

We’re back: RE/MAX returns to the Capital RE/MAX Capital Legacy made certain nobody would miss its arrival in Wellington this year: a giant billboard on the SH2 Motorway announced the business a week before the launch.

“You can’t miss it. It was election time when it went up and we were right alongside the Prime Minister. People certainly noticed, and Ivan (the RE/MAX Capital Legacy Director and Sales Manager) began taking calls immediately,” says Thariq Rifki, Director of RE/MAX Capital Legacy.

The business name is both a nod to New Zealand’s capital, Wellington, and to a vision of creating a legacy for people, helping them to wealth created through property.

Aritzo opens doors in Whanganui Aritzo has recently opened a new branch in Whanganui headed up by licenced salespeople Talia Annear, Heather Kubiak, Rochelle Burton and Felicity Temple.

Aritzo first opened its doors two years ago based on concept of wanting to try something different and Pernell Callaghan says that things are going well.

“The company is aiming to have 200 people by the end of the year, so it’s growing really fast,” says Callaghan.

Photo: Paul Brooks

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OUT & ABOUT

Pop up Penguins Harcourts is thrilled to have been the presenting partner for Pop up Penguins in Christchurch, a trail of individual decorated sculptures, designed by artists – and by children and sponsored by local businesses. The aim is to give residents and visitors the opportunity to discover and delight in all the aspects which make the city unique, in what has been a difficult year for many residents. The Harcourts team says it has been truly rewarding to help bring these colourful artistic endeavours to life, for everyone to enjoy over summer.

Hats off to the graduates A shout out is due to Barfoot and Thompson’s first newly graduated Property Management Training Academy cadets.

Each of them has already moved on to his or her first roles as portfolio managers in the company’s branches. This qualification is unique in that it harnesses transferable skills such as amazing customer services performance - and works on any gaps, in order to produce knowledgeable, reliable, well-rounded property managers.

At the conclusion of the trail some of the penguins will be sold at an auction run by Harcourts to raise money for Cholmondeley Children’s Centre, which offers Short term respite care for children aged three to 12 years whose whānau are in crisis.

Property Brokers raises $273,500 for not-forprofits right across provincial New Zealand

Healthcare at school could make all the difference In partnership with the Starship Foundation, Barfoot & Thompson recently celebrated the launch of the second Whare Hauora unit, at Point England School. This fit-for-purpose mobile health unit located on the school grounds supports low decile communities by providing accessible healthcare to vulnerable children in our communities.

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2020 was a challenging year – with a pandemic, lockdown, an election and more, it definitely was not an easy one for a lot of people out there. During the month of October, Property Brokers decided to run a ‘Selling for GOOD’ campaign. For each new listing, we committed to donate $500 to a not-for-profit organisation of our vendors’ choice.

We were thrilled by the response and are proud to announce that over 550 giant cheques have been presented to not-for-profits right across provincial New Zealand, resulting in a total of $273,500 going straight into our communities, to help local people.

OUT & ABOUT

SPOTLIGHT Papakura’s Local Realty leads Century 21 awards Century 21 New Zealand has announced its real estate winners for the fourth quarter of 2020, which saw its high-energy Papakura franchise take out some key awards.

Local Realty won Top Office for the Quarter, for both gross closed commission, and units (the number of properties listed and sold).

Meanwhile, Local Realty salesperson Kevin Ratnayake won Top Salesperson for the Quarter in both categories. He was also a Diamond Sales recipient, along with colleagues Gary Bal and Iresh Tennakoon.

Local Realty sales superstars Ishan Sikka, Anjali Amarasinghe, Kanwar Dillon and Aman Kaushal also featured prominently in the fourth quarterly awards. Meanwhile, Local Realty won Property Management Office for the Quarter for the highest number of new managements (under 250) – in an office with this threshold.

Also featuring prominently in Century 21’s latest awards was Century 21, The Moshi Group, based in Wellington Central.

Alen Moshi took out Top Principal for the Quarter, in both GCC and units, as well as winning a Diamond Sales Award and Jeh Wasti also won a Diamond Sales Award.

The Platinum Sales Award went to Ian Pepper of Century 21 Rural and Residential Real Estate, Huntly.

Gold Awards went to Winston He, Century 21 Queen Street Realty, Auckland; Rod Hull (Century 21 Platinum, Tuakau); Christine Stevens (Century 21 Stevens Realty, Mangakino); Eli Gadsby (Century 21 Gadsby Realty Te Awamutu) and Ishan Sikka (Local Realty, Papakura).

Property Management Office for the Quarter (over 250 managements) was awarded to Century 21 Edwards Realty in Botany.

At the same time, at Edwards Realty, Vicki Southgate won Property Manager of the Quarter while Annette Edwards received the Quality Service Award and the Recognition Award went to Nidhl Chadha.

Administration Team Member of the Quarter went to Molly Johnson (Premier. Turangi) and Personal/Sales Assistant of the Quarter was awarded to Emma Hey of Stevens Realty, Mangakino.

Harcourts wins ‘Gold’ for the fourth year in a row For the fourth consecutive year, Harcourts New Zealand has been awarded the Reader’s Digest Quality Service Gold Award in real estate sales. 1,500 New Zealanders rated which companies provide the highest levels of customer service and respondents can only rate services they have experienced.

“To have been awarded gold in a year as challenging as this one has certainly been extra special,” said Harcourts Managing Director, Bryan Thomson.

“Our teams around the country always strive to be the best and offer honest, personalised service that our clients tell us they love.”

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OUT & ABOUT

Harcourts Cooper & Co raises $50,000 for Breast Cancer Cure Harcourts Cooper & Co recently raised over $50,000 at a fundraising evening for Breast Cancer Cure, after what was a difficult year for most charities. As a board member of Breast Cancer Cure, New Zealand’s only not-for-profit organisation established solely to work towards finding a cure for this particularly common cancer, Martin Cooper of Harcourts Cooper & Co encouraged his offices and team to get behind the important charity, by holding various public events.

With COVID-19 having caused many cancellations in the past 12 months or so, when New Zealand eventually got down to level one and Martin’s team was in a position to host an event, they set out to bring in significant funding for Breast Cancer Cure’s ongoing research efforts.

Najib Real Estate delivers Christmas food parcels

With generous donations from business partners and local business they were able to host a combined auction and lunch which raised a significant sum and will now become a major annual event in the company’s calendar.

Late last year, the dedicated team at Najib Real Estate hit the streets to deliver Christmas food parcels to 174 deserving Christchurch families. As a values-based, purpose-driven organisation, Najib also gives back 5% of the commission on every house they sell, to the local community.

The Najib team proudly worked through wet Christchurch weather to give families in need a Christmas to remember – with whānau from local schools and Waipuna Trust amongst those receiving the parcels.

Najib Real Estate has run their festive delivery for three years now and it has quickly become their favourite day of the year. Great plans are already afoot for Christmas 2021!

Ray White Whangarei wraps up 2020 with splash of colour 890 participants representing 79 Northland businesses recently took part in the ‘2020 Ray White Hatea Loop Challenge – With a splash of colour’.

Sponsored by Ray White Whangarei & Tutukaka since inception, and run in conjunction with Sport Northland, the Ray White Hatea Loop Challenge celebrates the Hatea Loop Walk/Cycleway (Huarahi o te Whai) and Workplace Health.

The event is designed for workplaces to participate and challenge one another in a fun, festive and social atmosphere – with plenty of healthy competition for those vying for a category win (and bragging rights).

Funds from this years’ Ray White Hatea Loop Challenge will go towards supporting Sport Northland’s Active Workplace Programme which promotes physical activity in the workplace to help create happier, healthier working environments.

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Ray White Whangarei and Tutukaka were once again proud to take out the ‘Real Estate’ category – with over 30 of their sales, property management and administration staff competing, plus several members volunteering to marshal at the event.

FEATURE

REINZ’s new team members The REINZ team has recently welcomed a few new starters. Here’s a quick introduction to our newest team members and some information about what makes them tick.

Melisa Beight, General Counsel

Melisa joined REINZ in mid-January as the new General Counsel. Melisa forms part of REINZ’s Senior Leadership Team and will report directly to the Chief Executive.

Melisa brings 20 years’ experience to the role, including 15 years’ legal experience in private practice, working for leading law firms in Auckland and London, plus approximately 4 years’ in-house legal experience. Most recently, she was General Counsel and Company Secretary for 9 Spokes International, a FinTech start up and publicly listed organisation. Melisa also has experience advising and working with industry bodies and membership organisations.

Outside of work, Melisa loves wineries, vineyards and a good book.

Roshan Methananda,

Data Business Development Manager Roshan joined REINZ in late January as the Data Business Development Manager. He reports to Kirti Desai, REINZ’s Chief Digital and Innovation Officer.

Originally from the UK, Roshan has been in New Zealand for 5 years and joins REINZ from IDC, where he was part of the research and data sales team. He has also worked for Spark Digital, 451 Research, Ovum and Datamonitor with 14 years of data and research industry sales team experience.

Outside of work, Roshan is an avid animal lover with 2 dogs and 2 cats. He is an active member of dog walking groups, owns a vast movie collection and has a huge interest in automobiles.

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FEATURE

House prices in Wairoa grew at fastest rate in NZ during 2020 ACCORDING TO LATEST REINZ DATA

House prices in the Wairoa District, Hawke’s Bay, grew at the fastest rate of any district in New Zealand during 2020 with a 63.5% increase in median prices from $165,000 in 2019 to $269,750 in 2020, according to the Real Estate Institute of New Zealand’s (REINZ) latest analysis.

Wairoa was the only district in New Zealand that saw median prices increase in excess of 40%, with the second largest increase in median prices being seen in the Kaikoura District, where median prices increased 38.0% from $395,000 in 2019 to $545,000 in 2020. Close behind, was the Waitomo District, where median prices increased by 35.3% from $225,000 in 2019 to $304,500 in 2020.

Bindi Norwell, Chief Executive at REINZ says: “Wairoa District experienced an extraordinary level of median price growth last year, with house prices rising by 63.5% in just 12 months – that’s an increase of $104,750 in 12 months. This is the sort of growth level we would expect to see over a number of years, not just a number of months.

“What was really interesting about this analysis, was that of the top 10 fastest growing districts in New Zealand last year, all of them were in smaller regional areas rather than in the big cities, showing just how much pressure we’ve seen on house prices in the regions. It wasn’t until we got to number 22 on the list that we saw a district in a major city represented,” Norwell points out.

“The rate at which house prices have increased has put significant pressure on those wanting to enter the market, and Wairoa which topped the list, has seen many locals priced out of the market. The big questions most people are now asking are how much higher can prices go and how long will the rise last for? The reality

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is, that unless we can address the supply issues, we’re likely to see house prices rise in the short to medium term,” concludes Norwell.

Looking at the major centres, Auckland City topped the list with median price growth of 20.9% (from $951,000 to $1,150,000), followed by Lower Hutt City with growth of 18.9% (from $580,500 to $690,000) and Dunedin City with median price growth of 18.8% (from $459,250 to $545,500).

Auckland City also took out the ‘title’ of being New Zealand’s most expensive district, whereas in 2019 North Shore City topped the table and Auckland City was in third place. Queenstown Lakes District moved from second place to third place in 2020.

FEATURE Median house price 2019

Median house price 2020

% change

Auckland Region

$850,000

$950,000

11.8

Bay of Plenty Region

$600,000

$685,000

14.2

Canterbury Region

$451,000

$495,000

9.8

Gisborne Region

$389,000

$490,000

26.0

Hawke’s Bay Region

$493,000

$585,000

18.7

Manawatu-Wanganui Region

$370,100

$451,000

21.9

Marlborough Region

$450,000

$520,000

15.6

Nelson Region

$565,000

$620,000

9.7

Northland Region

$495,000

$572,000

15.6

Otago Region

$494,500

$580,000

17.3

Southland Region

$301,000

$360,000

19.6

Taranaki Region

$385,000

$450,000

16.9

Tasman Region

$610,000

$695,000

13.9

Waikato Region

$547,000

$625,000

14.3

Wellington Region

$640,000

$727,000

13.6

West Coast Region

$199,000

$239,000

20.1

New Zealand Excl. Akl

$500,000

$571,500

14.3

New Zealand

$590,000

$680,000

15.3

Region

We are who we hire.

We look for a special quality in our people.

We understand that to be the best provincial real estate company in New Zealand; we need to have the best people. Our people are real, genuine and ambitious. They care about others and are committed to their clients, community and colleagues. They are quick to embrace new concepts and innovation and have the drive to get the job done well.

Right now, we have leadership positions across provincial New Zealand and are looking for people to take up the challenge. We have great people to work with, so if management is a challenge that inspires you, come see what it means to be “Proud to be here!”

Looking to take your career to the next level? Call us now for a confidential chat about a move to a life less ordinary 0800 367 5263 or email recruitment@pb.co.nz

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FEATURE

Looking ahead in 2021 Tony Alexander, Independent Economist

Every year brings something interesting in the residential real estate market around New Zealand, if not always for the country as a whole, at least for many of the regions.

As it turns out, having seen an unusual period from 2012 to the end of 2019 when regions were doing different things, now all locations broadly-speaking are in sync.

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FEATURE In 2012 Auckland’s market started rising strongly, but the rest of the country did not really accelerate firmly in terms of turnover and prices until 2015. Come the end of 2016, with help from the 40% minimum deposit requirement for investors, Auckland peaked out, but the rest of New Zealand kept rising.

This can be seen in Auckland average prices rising just 1% from the end of 2016 to the end of 2019 compared with 25% average rises elsewhere. But since the March quarter of last year Auckland has re-engaged with the upward leg of its cycle while the rest of the country has continued to move ahead, with price rises respectively of 17% and 14%.

Will this resynchronisation continue through 2021 or will differences open up again?

When we consider the main factors which have been driving real estate markets ahead in recent months it is hard to see that any substantial regional differences will appear this year beyond the usual statistical variations inherent in any system.

First and foremost, all regions will continue to feel the upward effects of low interest rates this year and expectations that such rates will remain low through 2022 – for both borrowers and those saving in banks.

Second, people in all parts of the country will embrace a continuing expectation that when the borders open up many of the Kiwis currently overseas will return to Auckland, Eketahuna, New Plymouth, Christchurch etc.

Third, all around the country shortages of readily developable land have arisen as builders have been flooded with orders for new houses from buyers struggling to find what they want amongst listings which nationwide are running 70% lower than ten years ago. If anything, courtesy of the 2016 Unitary Plan, Auckland has more land within its boundaries able to be scraped and rebuilt on than most other locations.

Fourth, all regions will be equally negatively affected by young buyers starting to shift their spending plans back to international travel and away from home buying as optimism slowly grows regarding the borders reopening and the timing for when this will occur – presumably early-2022.

Fifth, investors have been highly active all around the country and the reinstated 40% minimum deposit requirement will impact all locations. However, from a simple dollars point of view some buyers unable to make a deposit in Auckland may look elsewhere, particularly Christchurch as we have now hit

the ten-year time period commonly picked in 2011 for when the city would be “done”.

Coupled with the land availability in Auckland does this mean our biggest city will quickly lag pricewise again soon? Not really because after three years lying fallow, the city was due to restart rising strongly anyway, as noted above.

Could government policy changes greatly impact the real estate sector’s prospects?

Probably not. The government will not want to reduce the surge in demand for new housing because construction will provide a good economic boost for the next few years while growing supply in a way which will eventually slow the pace of price rises.

They might take some measures which reduce returns for investors. But with interest rates at record lows many will not leave the sector. Plus, amidst a shortage of rental properties and with rents set in a free market the government would risk spurring a surge in rent increases as landlords seek to restore their returns.

Come the end of this year, the balance of many diverse factors suggests still good turnover with prices again appreciably higher than current levels – though not rising at the unsustainable and undesirable pace of late last year.

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FEATURE

Number of million dollar plus properties sold in 2020 reaches new record levels ACCORDING TO REINZ DATA

The number of properties sold around the country for one million dollars, or more, during 2020 increased by 68.0% when compared to 2019. In 2020, 18,181 million-dollar-plus properties sold (up from 10,819 in 2019), surpassing the 2016 record (11,619 million-dollar-plus properties sold) by an additional 6,562 properties, according to the Real Estate Institute of New Zealand’s (REINZ) Million Dollar Price Report.

Looking at New Zealand excluding Auckland, the number of million-dollar-plus properties sold increased significantly by 61.5% in 2020 with 5,056 properties sold in this bracket (up from 3,131 in 2019 – an additional 1,925 properties) – a record level of sales in the million-dollar-plus bracket in a calendar year.

In Auckland, the number of million-dollarplus properties sold during 2020 increased remarkably by 70.7% when compared to the previous year, with 13,125 milliondollar-plus properties sold (up from 7,688 in 2019) marking the highest number of million-dollar-plus properties sold in Auckland since records began, and the first time Auckland has seen more than 10,000 properties sold in this bracket.

Bindi Norwell, Chief Executive at REINZ says: “When COVID-19 first hit New Zealand’s shores in Q1 2020, no one would have predicted that the year would become a record breaker for property prices and would conclude with a 68.0% uplift in the number of million-dollar-plus properties sold.

“Additionally, the 2016 record was exceeded by more than 6,000 sales and this was the third consecutive year that New Zealand

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has seen a year-on-year increase in milliondollar-plus properties sold.

“The regions have seen a similar pattern, with a 61.5% increase in million-dollar-plus property sales. This is a result of demand continuing to exceed supply in many parts of the country and shows the effect that the shortage of housing stock is having on house prices,” continues Norwell.

“There has been a significant increase in the number of properties sold at the top end of the market, with a 112.7% increase in $3 million-plus property sales nationally and a 71.9% increase in $3 million-plus property sales outside of Auckland,” Norwell says.

“While the property market may have taken a slight pause in the first half of 2020 due to COVID related restrictions, the second half of the year showed signs of renewed confidence with more than two-thirds of those million-dollar-plus sales occurring in the second six months of 2020,” says Norwell.

Regional breakdown The region with the biggest percentage increase in number of properties sold for one million dollars or more was Southland, with a 166.7% increase from 2019 (8

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properties up from 3 – an additional 5 properties). However, these numbers do appear more inflated, due to the small sample sizes.

15 out of 16 regions saw year-on-year increases in the number of properties sold for $1 million or more in 2020 – with all 15 reaching new record highs. The West Coast was the only exception, with no milliondollar-plus sales recorded.

Regions with the strongest percentage increases in the number of million-dollarplus sales year-on-year, in addition to Southland, were: • Manawatu/Wanganui: +130.4% (from 23 to 53 properties – an additional 30 properties) • Marlborough: +117.7% (from 17 to 37 properties – an additional 20 properties) • Tasman: +102.4% (from 42 to 85 properties – an additional 43 properties) • Gisborne: +100.0% (from 13 to 26 properties – an additional 13 properties).

When looking at the number of properties sold for $3 million or more in 2020, Hawke’s Bay saw the largest percentage increase, growing from 1 property in 2019 to 3

properties in 2020 (a 200.0% increase yearon-year).

Regions with the strongest increase in $3 million-plus sales year-on-year, in addition to Hawke’s Bay were: • Auckland: +120.7% (from 323 to 713 properties – an additional 390 properties) • Northland: +100.0% (from 2 to 4 properties – an additional 2 properties) • Bay of Plenty: +81.8% (from 11 to 20 properties – an additional 9 properties) • Wellington: +66.7% (from 9 to 15 properties – an additional 6 properties) • Waikato: +66.7% (from 9 to 15 properties – an additional 6 properties).

In addition to these regions, Nelson and Marlborough saw their first properties sold for $3 million-plus during 2020, with 2 and 1 properties sold respectively.

Nationally, the number of $3 million plus properties sold in 2020 increased 112.7% year-on-year (from 387 to 823 properties – 436 more properties). There was also a 108.7% increase year-on-year in $5 millionplus properties sold nationally in 2020 (from 69 to 144 properties – 75 more properties).

“There are a number of factors behind the rise in the number of million-dollar plus properties sold including demand continuing to outweigh supply, record low interest rates, increased regional investment, increased consumer confidence levels, a fear of missing out, a strong agricultural sector, the removal of LVRs in early 2020 and the perceived need to rush before they are reinstated.

Additionally, we’ve seen an increase in first home buyers in the market who tend to be purchasing at the lower to mid-end of the market, which in turn, lifts the overall market up.

“It will be interesting to see what happens in the first half of 2021 and whether more stock will come to the market, or if investor buying will slow with the reintroduction of LVRs. The Government and the industry need to work together to ensure that the ongoing unaffordability of housing in New Zealand can be meaningfully addressed,” concludes Norwell.

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FEATURE

Apartment living has never had more appeal Matt Baird, Projects Manager, Barfoot & Thompson

For decades, the Kiwi dream has involved a standalone home on a quarter acre section, however in recent years, with house prices continuing to rise, this dream has become unaffordable for many. This is especially true for those trying to get onto the property ladder for the first time. While New Zealanders have been slower than people in other countries to embrace the idea of apartment living - the Kiwi market is now mature and going from strength to strength.

At Barfoot & Thompson Projects we’re seeing record activity in the apartment space and we anticipate continuing growth in multi-unit housing. In 2020, there was a 175% increase in the number of apartment sales in comparison to the same period in 2019, spread over a number of projects including Westlight, Urbizen, Crest, The Ridge and 30 Madden. So, what’s driving this staggering increase in sales? We know the target markets and what they’re looking for, whether it’s a first home, something mid-range, or top-end luxury, and we provide design guidance and develop an appropriate sales strategy around the specific target demographic.

Demand has been strong for good quality owner-occupier apartments across all price bands and this market has continued to show good depth. For instance, I would estimate that 90% of the residents living in Wynyard Quarter own their property.

Apartment living is all about location and amenities.

People seek convenience and easy access to transportation. The commute time for those living in outer suburbs that are part of the Auckland sprawl, can be a gamechanger for many who don’t want a long commute to work. People are willing to sacrifice the idea of a home and yard for convenience and nearby amenities such as shops and restaurants.

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Developers are getting creative Even with the provisions in the Auckland Unitary Plan, not everything on a buyer’s wish list can always be met at a particular development and we’re finding that some developers are getting creative to accommodate buyer needs. A good example to share is of one of our recent developments, a multi-unit building (21 units) in Mt Eden, where car parks were not feasible, but the location was fantastic.

The design incorporated a free electric bike with every unit, in addition to having e-scooters available to residents. A shared electric car (with a charging station onsite) that residents can book to use when necessary was also made available. Buyers loved the innovative concepts and these features became a selling point for the project.

Some developers are continuing to partner with KiwiBuild thus broadening their pool of potential buyers to include qualifying first home buyers who are keen to get on the property ladder as soon as possible.

Looking towards the future In New Zealand we have been incredibly lucky when it comes to COVID-19 so far.

In many ways we are the envy of the world but that doesn’t mean we were totally unaffected, and this is particularly true in real estate with respect to developments.

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30 Madden

Urbizen

It’s clear that Kiwis have embraced apartment living and continue to do so, as reflected by the success of our various projects. That said, in the short term, I don’t see large master planned communities like Hobsonville Point getting the backing they need right now, I think that overall, there is still a mild aversion to the idea of densely packed housing. Banks are still very risk averse as the dust settles globally around the impact of the pandemic and developers wanting to take on something of that scale may find it difficult to secure finance.

In short, there are going to be limited resources and interest from financial institutions so undertaking massive builds is going to be difficult. From our experience, smaller developments with 10 to 30 units will be more common in Auckland.

Developers won’t want to commit to a project that is going to take years to come to fruition. Instead, they will want to get in and out in 12 to 15 months.

Westlight

Apartments as a housing solution With the market as hot as it has been recently and the overwhelming housing crisis, apartment living as a concept needs to be embraced. First home buyers need to be realistic with their expectations, understanding that they won’t be able to afford anything equivalent to what their parents were living in at the same age.

Failing to understand this will only lead to disappointment and wasted time. A first home is not a life sentence, and apartments should increase in value over time.

Buying off the plans means you can purchase a unit without the price wars that can happen in a competitive auction environment. There are display suites at most developments that will give you a solid feel for what you are buying and our experienced off-the-plan salespeople are experts at guiding buyers through this process. Also, you are not responsible for mortgage payments until the property is completed and settled.

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Financialisation of New Zealand housing market is driving house price increases

Ruth Berry, Director, BBHTC National Science Challenge

In Aotearoa, New Zealand, our housing stock is now seen as a major commodity and this financialisaton of the housing market is driving exponential increases in house prices.

At the same time, home ownership is still a dominant aspiration for New Zealanders.

Evidence from Building Better Homes, Towns and Cities (BBHTC) National Science Challenge shows that it is not land costs which determine whether houses are built or not, it’s about what people can sell those houses for on the open market, with a profit margin that is attractive to banks and equity lenders.

When this occurs and in the absence of strong policy direction, housing becomes a vehicle for investment and financialisation is normalised. Despite delivering often untaxed, windfall gains only for some sectors of the market - property investors, speculators and owner-occupiers.

“Our evidence shows this financialisation is fuelled by, and fuels, heated housing prices, cycles of liquidity and constraint and reduction of access to owner occupation,” explains Challenge Director Ruth Berry.

“We see this play out in the report released recently by Statistics New Zealand that shows our home ownership rates are the lowest they have been in 70 years.”

The Housing in Aotearoa report reveals a sobering picture – only 64.5% of Kiwis own their own homes and house prices have been rising at a faster rate than wages over the past five years. Māori and Pacific home ownership statistics are much worse with

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fewer than 50% of Māori and fewer than 40% of Pacific people owning their own homes. Māori and Pacific home ownership is declining at a faster rate than for those with European ethnicity.

In Auckland, median house sales price mid-2020 came in at about 11.5 times the median household income.

The evidence shows the flow-on effect is that market forces influence what is being built and bought.

As a result, it becomes unprofitable to build lower quartile value housing because it only suits a certain sector of the market. Without intervention or support, the market will not deliver homes in the lower quartile of value, our most needed.

“This leads to the type of environment that we are seeing now with runaway house prices and a lack of low cost, new and affordable housing being available to low and modest income people,” says Ms Berry.

BBHTC researchers looked at the availability of financing for developers to understand how the housing market has slowly become financialised.

What the evidence shows is that banks do not accept risk, rather they require developers to make substantial margins and

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limit their exposure by imposing minimum equity requirements. Developers must provide equity through their own capital or by using equity finance, which is expensive.

Overall, financier practices will ensure that the commodity value of the house remains and their investment is not at risk.

What gets built is often determined by how attractive the deal is to financiers.

Research by BBHTC into Special Housing Areas (SHAs) in Tauranga has revealed that even in markets where there is high demand and residual demand with people moving from Auckland, still developers may or may

not build, depending on the perceived financial gains.

in the market but the evidence proves such tactics won’t be quick enough.

“Until we have a housing system where there is clear policy about price points, mechanisms to support delivery of affordable housing and gives people an opportunity to use and enjoy secure housing at every level of society, our evidence shows house prices will remain at levels that are unaffordable for many,” says Ms Berry.

How then do we stop re-producing this wicked problem of a lack of housing for all?

Tactics, such as a capital gains tax, the brightline test and the IRD intention test (designed to determine whether activity is speculatory) may in time support a change

According to research done for BBHTC

by University of Waikato’s Iain White and Graham Squires, one of the multiple answers required lies in systemic changes to housing policies, both in New Zealand and internationally. Successive policy has our approach to ensuring economic resilience has privileged stability and recovery (return to normality) over economic adaptation and transformation.

TO CREATE MORE RESILIENCE, IAIN AND GRAHAM’S RESEARCH SHOWS IN ORDER TO ACHIEVE REAL CHANGE POLICIES THAT FAVOUR ECONOMIC RESILIENCE THROUGH ADAPTATION AND TRANSFORMATION NEED TO BE CONSIDERED ALONGSIDE POLICIES THAT FAVOUR STABILITY. RUTH BERRY

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Virtual innovation during COVID-19 Treena Drinnan, Chief Agency Officer, Ray White

As a fourth-generation family owned business, we have been through recessions, depressions and world wars. The depth of experience gained during historic economic uncertainty strengthened our position and we wanted to be proud of how we navigated this crisis and more importantly, supported our customers.

In the silence of the lockdown small amounts of almost hidden real estate activity were being seeded. The outcomes were in continuance and results of success were heard to a lessening crowd.

All transactions and activities relating to the listing and selling of property were to become remote. There was uncertainty around how a transaction was going to take shape, if at all. There were different opinions on what was to be legislated and not even did the 12th hour bell decide the outcome.

The real estate and housing predictions became more vocal as times of uncertainty unfolded, and even a degree of desperation, took hold.

We needed to remain agile, and react and respond quickly to an ever-changing landscape in uncharted waters. We needed to ensure we were positioned to carry out real estate agency work in the safest way possible, not only for our members but for our clients/customers and the wider communities.

These were unique times; and not only did we have a responsibility to be vigilant around hygiene and protection; we needed to be able to safely transact real estate.

The Ray White Group has always proudly been at the forefront of technology and now, in unprecedented times we were faced with revolutionising appraisals, inspections, open homes and auctions, whilst ensuring

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the safety of our valued customers and our own members was the utmost priority.

Our clients and customers have always, and will always deserve the best possible service, despite external factors out of our control, such as a pandemic. It was up to us to be smart and savvy, use all the tools at our disposal and innovate to ensure potential buyers, sellers, landlords and tenants felt confident in our process as much as us in our own delivery.

Offices across the nation embraced new virtual auction methods quickly with skill, with the number one goal in building this platform to provide a system where we kept the emotional connection between auctioneer and bidder, while maintaining physical distancing. Auctioneers and offices were required to adapt to technology which allowed them to thrive in a new environment.

The Ray White Group, in what is believed to be a ‘world first’, was the first to complete an international online auction with the auctioneer in isolation in Brisbane, some 2,288kms away from the picture-perfect property in Auckland, with vendors and buyers in lockdown in their own homes in Auckland and across New Zealand to achieve a successful sale.

Conducting auctions across the digital divide became the new norm and remains a current practice today.

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We needed to ensure that we had the ability to attract interest in a property being marketed online with the potential of not being able to carry out physical inspections.

Consumer engagement with virtual and 3D tours soared as we embraced this new world, with salespeople energised to virtually take clients through property via a variety of mobile apps from our One System as well as hosting live virtual tours on social media platforms. We prepared our salespeople with a number of online webinars, resources and equipment guides, for both vendors and agents to ensure professional videography and photography were executed and the right check-lists were in place for all parties.

We adapted our websites for virtualisation, highlighting 3D tours, virtual tours and floor plans together with virtual appraisals which gave customers confidence they could still engage with ease and efficiency.

We ensured booking and promoting private virtual tours were seamless with the use of the Homepass app which not only reassured customers from the comfort of their own home they could view the property virtually one-on-one with the salesperson, but to be sent documents and property brochures with the touch of a button via SMS or email.

We pivoted to an online training platform across our entire network;

yet another innovation borne of the COVID-19 pandemic, ensuring we were communicating on a regular basis, and remaining connected with our members.

The training content included real estate specific topics, leadership, wellbeing and we invited guest speakers from other industries to share their experiences and insights. To this day, we run a hybrid model of face-to-face and online training to suit our members.

It was important for us to continue to celebrate the accomplishments of our network members. Our international awards were held virtually, with funny man, ‘Vince Sorrenti’ hosting our ‘ISO Awards’ where more than 1,500 members logged on from home to see their friends and colleagues acknowledged for their achievements.

The aim of the ‘ISO Awards’ was simple - comic relief to keep morale high at a time of uncertainty in the world while also allowing us to celebrate success remotely.

Our media strategy, an area where we were shy, took immediate effect. Every day a media release has been sent through to direct contacts that have told the story about Ray White Now. Our dataset coming out of Ray White Pulse became more robust and reliable so we could enable knowledgeable action plans to give confidence to our network members

that we, as a company, knew what was happening in real-time and were confident in sharing this information broader.

Enter Ray White Now. Almost like a runway of data, this weekly document finds its way through an analytical lake of information.

Our own system has a depth of data that was not tapped to its potential. The path of Ray White Now has embedded language that gives a degree of factual certainty as opposed to questions and commentary that is based on opinion. An insight to provide clarity to all our customers on what is happening in the market now.

The real estate market continued to roll forward and while we made the statement of being the last industry in and the first industry out, no one really took comfort from how much depth and speed remains as a constant in the real estate industry.

We became one of the fortunate industries that can tell a tale of genuine success.

But not all can be forgiven or forgotten in 2020. Close to our hearts we lost good friends, good friends lost their businesses, good friends lost their jobs. Security in 2020 was taken away from many people and their ability to make decisions was paralysed. Our members are an example of a business that came into this relatively strong and came out stronger through agility, adaptability and resilience.

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SECTOR RURAL

Rural momentum set to continue into 2021 as demand exceeds supply While the challenges that have been present for some time remain, particularly the uncertainty with environmental planning and bank credit, the market is responding, driven off the back of proven returns.

General confidence to invest in the rural real estate market heading into 2021 is very positive, in stark contrast to the last three years’ market headwinds.

This is reflected in the significant role our primary sector now plays in New Zealand’s economic recovery, as other export sectors recalibrate post the impact of COVID-19. In addition, very low bank deposits continue to drive investment from the city in favour of the country, notably horticulture.

2021 holds high hopes for the rural real estate market, after a really strong end to the year..

While some of the issues around environmental operating constraints and access to banking credit are still present, our view is that there’s a general understanding around those issues, and the underlying returns are a lot more proven.

And that confidence is translating - so we are confident that the market this year is going to be different.

Pertinent themes that we believe will underpin the demand for land this year include: 1. Horticultural investment remains to be an appealing pastoral option. Currently, demand continues to outstrip supply with continued demand for quality horticultural land. Particularly for Kiwifruit Gold, where momentum buying for quality orchards has yet to find a ceiling. Origin Capital Partners went to the market seeking $50 million for kiwifruit investment and now expects to have $80-$90 million. MyFarm had

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Conrad Wilkshire, General Manager of Rural, Property Brokers

an unprecedented year in 2020 with $185 million invested, most of which was in horticulture. And, as farmers look to reduce their nutrient footprint under new regional controls, kiwifruit crops could provide a high-value, low-nutrient footprint option without requiring an entire farm land-use change.

2. The auction price of carbon will underpin the land market for traditional sheep and beef hill country farms. The carbon market is set to surge in 2021 as analysts maintain that prices may yet move beyond the $50/unit mark over 2021.

Currently, at $38 a unit up to $10 on a year ago, and demand for permanent forest land continues to outstrip supply.

3. The Overseas Investment Amendment Bill (No3) 2020 we anticipate will find support, where NZX listed companies will be allowed to go from 25% to 49% foreign ownership and rural lease terms extended from a maximum of three to ten years. Both measures would encourage new investment, retain New Zealand ownership/control and accelerate repayment of New Zealand Agri borrowing.

4. Irrespective of any changes to OIA policy, our view is long-term leasing of New Zealand farms, particularly large-scale dairy farms, will feature more this year than any prior period. The separation of the land-owning entity from the operations makes the land-owning entity more attractive to new city investment, including an outright sale, similar to the commercial sector.

5. Both economically and politically, the tide seems to be changing in favour of our primary sector. Labour has captured

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a significant share of the rural vote and has the prerogative now to reset the pace of change, with a more measured environmental approach, particularly the timeline to achieve freshwater standards and associated farm practices. This will underpin confidence more generally.

There are always forces at play with commodity cycles. Currently, it’s the exchange rates and the unintended quota consequences with Brexit. However, the biggest and most obvious is the ongoing impact of COVID-19 on our international markets as risks and challenges continue to emerge.

The International Monetary Fund estimates that the global economy shrunk by 4.4% in 2020. The pandemic has not only highlighted gaps and vulnerabilities; it too has highlighted opportunities, shining a light on the food and agri sectors. New Zealand’s primary products have held up well. Following COVID-19, the primary sector will be at the forefront of New Zealand’s export-led recovery, leading the way to a more sustainable economy.

The rural real estate market is resetting as farmers and growers look to expand their businesses sustainably in conjunction with a much stronger emphasis on the underlying cash returns. The dairy sector in 2021 continues to receive favourable feedback on both payout expectations and sustainable food production.

New research shows New Zealand dairy farmers have the world’s lowest carbon footprint – at half the emissions of other international producers.

Commissioned by DairyNZ, the study was released late January, independently produced by AgResearch and peer-reviewed by an international specialist in Ireland.

New Zealand retains its outstanding position in low-emission dairy milk production, with an on-farm carbon footprint 46% less than the average of 18 countries studied.

The Real Estate Institute of New Zealand’s (REINZ) December figures showed that 11 of the 14 regions recorded an increase in the number of farm sales for the three months ended December 2020 compared to the three months ended December 2019. The most notable being Waikato with 42 more sales and Northland with 28 more sales.

As 2020 closed on a healthy note, 2021 certainly presents a fantastic opportunity to acquire quality rural assets, at a reliable cash return. This year is looking positive across the board.

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SECTOR RURAL

Climate risks could impact loans Financial institutions are including climate change risk when considering rural loans, but most are working with farmers to help them address these challenges.

Climate change is not yet a significant consideration for lenders, but all say they are closely monitoring the sector’s environmental impact, including climate change, and it will have greater prominence in the coming decades.

Last September the Government introduced a requirement for the financial sector to disclose their exposure to climate risk.

The new rule is based on a “comply or explain” basis and applies to all financial businesses that have total assets or investments over $1 billion.

Businesses meeting the criteria are required to make annual disclosures covering governance arrangements, risk management and strategies for mitigating climate change impacts.

Westpac New Zealand’s Head of Agribusiness, Tim Henshaw, says the bank is not “at this stage” changing its rural lending consideration to include climate change risks, but it is a consideration for all lending decisions.

“However, we’re looking closely at the potential risks of climate change and we expect our policies will evolve to account for changing impacts over time,” Henshaw said.

A Westpac report released last November detailed exposure to climate-related financial risks based on 2018 data.

The bank had a $10.17 billion of agricultural lending and noted the sector faced “complex physical and transition risks from drought, storm flooding, erosion, consumer preference and regulation.”

But it identified opportunities from selling premium products to environmentallyconscious consumers or from forestry expansion.

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Neal Wallace, Farmers Weekly Journalist

The bank’s credit policy is that any loan over $1 million is subject to an assessment of climate change risk and those loans considered high risk are elevated to senior management for consideration.

Westpac is also reducing its own emissions and has provided $2 billion of lending to businesses to fund climate change solutions.

ASB’s Rural Manager, Ben Speedy, says the bank has not changed its lending criteria to the rural sector but offers environmental compliance or low interest loans for onfarm environmental improvements and to meet environmental legislation.

“As part of that, we’re also working closely with customers providing support to make sure they are prepared for the level of investment needed going forward to maintain appropriate environmental standards,” Speedy said.

A Rabobank spokesperson says managing climate challenges are not new for farmers and it is helping them adapt to these challenges.

“Our approach is to get alongside clients individually and support them to make their businesses more sustainable commercially and environmentally rather than simply changing our lending criteria,” they said.

That involves developing a snapshot of their business’ ability to meet regulatory requirements and consumer expectations.

“This includes how they’re faring with their agronomic, environmental, including climate change impacts, social and workplace performance,” they said.

From this information the bank has learnt more than half their clients have a comprehensive farm environment plan,

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about a third are voluntarily monitoring and protecting plant and wildlife biodiversity on their farms, two-thirds have completed at least half their applicable riparian planting and a third have forestry plantation eligible for carbon credits.

An ANZ bank spokesperson says environmental impacts were a consideration when assessing loans.

“For example, in the agriculture sector when customers buy properties in areas of low rainfall, we ask about their financial resilience to climatic events like drought and rainfall variation,” they said.

The bank is working on an enhanced climate risk management framework that aligns with regulatory requirements and will include estimates of the potential financial impact of future extreme weather events.

“In coming years, we will seek to identify geographic areas most exposed to climate change risks,” they said.

“This may help us identify higher incidences of a lack of insurance or under insurance.”

FMG’s chief product and pricing, underwriting and claims officer Nathan Barrett says the specialist rural insurer will continue to rely on its own modelling

and assessment of areas exposed to heightened natural risks.

As an “advice-led insurer” it views each case on its merits and in accordance with established risk appetite “Given we take an advice-led approach and price each client’s insurance based on their individual needs, we haven’t had a need to change any of our cover criteria at this stage,” Barrett said.

“That said, we’ll continue to monitor clients’ needs and adapt any policy in the future if need be.

The Insurance Council of NZ Chief Executive, Tim Grafton, says it’s inevitable premiums and excesses will rise in the coming decades due to the effects of climate change, but those increases will be incremental.

“Insurance costs will increase year-onyear to reflect the changing climate risk, particularly to risk of frequency or severity to any sector or individual,” Grafton said.

Agriculture’s exposure to the effects of climate change was no different to other sectors and Grafton says those seeking cover will need to take steps to reduce their risk, such as ensuring buildings and stock are not exposed to flooding.

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SECTOR RESIDENTIAL PROPERTY MANAGEMENT

RTA Amendment Act 2020 HAVE WE GOT OUR HEADS AROUND THE DATES?

Jo Rae, Head of Property Management, REINZ

There has been a notable increase in media coverage of how the new changes will only compound pressure on the lack of rental property across the country. REINZ made submissions to the Select Committee on behalf of members with concerns about some of the proposed changes in the RTA Amendment Bill i.e., removal of the no cause 90-day termination, unfortunately without success in this particular case.

Most of the changes came into effect on 11 February 2021. However, there are some rules that will not apply to tenancies that had already started prior to this date.

For all fixed-term tenancies granted before 11 February 2021, the current rules for ending tenancies apply. The new rules for terminating fixed-term tenancies will only apply to fixed term tenancies granted or renewed after 11 February 2021. A tenancy is granted when it is agreed, which is likely to be before the tenancy start date (look to when the tenancy agreement was signed).

For all periodic tenancies, a termination notice given before 11 February 2021 under the current rules is valid. Termination notices given after 11 February 2021 must use the new rules.

If there are proceedings in the Tribunal that commenced before 11 February 2021, the rules in the Amendment Act do not apply.

A no cause 90-day termination notice given before 11 February 2021 was valid as the new rules had not yet come into effect.

The Amendment Act provides that tenancy agreements cannot prohibit assignment of a tenancy (unless the tenant is in a social housing tenancy). This rule does not apply to existing tenancies granted before 11 February 2021 that prohibit assignment.

Notices for anti-social behaviour or rent arrears under the new rules in the Amendment Act were not applicable before 11 February 2021.

From 11 February 2021, if a tenant requests consent to make a minor change, the

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landlord cannot withhold consent. The landlord must respond to the request in writing within 21 days. They can notify the tenant that they require more time to consider the request but must still respond in a reasonable time frame. The tenant can apply to the Tribunal if the landlord declines the request and they would like to challenge the landlord’s decision.

From 11 February 2021, if a tenant requests consent for the installation of fibre broadband with their landlord, the landlord must respond to the request within 21 days.

The landlord must accept a request to install fibre unless an exemption applies.

The termination ground of a tenant physically assaulting a landlord, and the ability of tenants to terminate a tenancy because of family violence, have a different commencement date. Both of these provisions still require regulations to be made.

It will be vital for property managers to stop and review the date a tenancy was granted before issuing notices or responding to emails. This may also cause confusion for the tenant, with many tenants already under the impression that the Amendment Act changes are now in play along with the requirement for all Healthy Homes Standards to be in place.

Other key dates for Healthy Homes Standards: 1 July 2019 – All rental properties must be insulated, where reasonably practicable, in ceiling and underfloor. All new or renewed tenancies must include an Insulation

RESIDENTIAL PROPERTY MANAGEMENT SECTOR

Statement, along with a Statement of Intent to comply with Healthy Home Standards.

27 August 2019 – Landlords must provide insurance information in any new tenancy or renewed tenancy agreement including excess information and any variations on the excess.

1 December 2020 – Most new or renewed tenancy agreements need to also include a comprehensive Healthy Homes Compliance Statement. This statement outlines each standard that is required under the Healthy Homes Standards being heating, insulation, ventilation, moisture ingress and drainage, and draught stopping. Failure to provide this statement carried a fine of up to $500 with a larger fine of $750 from 11 February 2021. Landlords who commit an unlawful act for failing to meet their obligations in respect of cleanliness, maintenance, smoke alarms, Healthy Homes Standards, buildings or health and safety requirements will carry an increased fine of up to $7,200.

1 July 2021 – all private rentals must comply within 90 days of any new or renewed tenancy after 1 July 2021.

1 July 2023 – all Kāinga Ora (formerly housing New Zealand) houses and registered community housing providers must comply with the Healthy Homes Standards.

1 July 2024 – all rental homes must comply with the Healthy Homes Standards.

For a full review of the new regulations: https:// legislation.govt.nz/act/public/2020/0059/latest/ LMS294929.html

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SECTOR RESIDENTIAL PROPERTY MANAGEMENT

Tax considerations for residential property investors and property managers

RESIDENTIAL PROPERTY MANAGEMENT SECTOR

For many of us, the 2020 – 2021 summer holidays were a time of quiet reflection to revitalise and recharge after what can only be described as an unusual 2020. We have battled with a global pandemic, taken part in a record setting election result all while a hot property market continues.

While COVID-19 has seen some tax changes and increased flexibility when dealing with the Inland Revenue, there has been very little change that has any real effect on residential property investors or property managers (in the tax world).

While a hot property market alongside a low interest rate environment presents many opportunities, it is still important to seek advice from your tax advisor before acting on any plans. Here we mention three key considerations that we see for residential property investors and property managers in this current environment.

have been subject to the bright-line rules.

Inland Revenue has extensive access to land information through the land transfer tax statements that are completed with every sale and purchase and the various land records held by Land Information New Zealand (LINZ). We expect this review activity to continue as Inland Revenue obtains further data.

Residential bright-line rules

This review activity from Inland Revenue should serve as a friendly reminder that before you take advantage of the current market and decide to sell a property, restructure or even simply change ownership between partners – do discuss the matter with your tax advisor first.

Sometimes waiting just a few mere days can be the difference between your capital gains being taxed or not.

All property investors should be familiar with the residential bright-line rules. These were introduced to supplement the existing taxing provisions by deeming properties that were not a person’s main home, that were sold within a certain time period after buying it, to be speculative purchases and therefore any gain was to be treated as taxable income. While these rules were further reaching than we believe Parliament intended, they are here to stay and the Reserve Bank has even floated the idea of extending the rules to purchases and disposals within a ten year period to try and cool the housing market. The current rules for properties purchased after 29 March 2018 apply where a property, not your main home, is purchased and sold within a five-year period (the “bright-line period”).

We have also recently seen long awaited review activity from the Inland Revenue identifying properties and taxpayers where they believe transactions should

Interest deductibility A key consideration for a property investor who has debt, is how to structure that debt in the most efficient manner. In the current low interest rate environment, we are fielding a number of calls about structuring debt for home improvements against rental property investments. At its most simplest, interest costs incurred from borrowing money are only deductible to the extent that those funds were used for the purposes of the rental property. This is the

Ashleigh Gilmour, Associate Director, Moore Markhams Hawke’s Bay

case irrespective of what the debt may be secured against. Where rental properties are owned in an individual’s name, there are very few options for restructuring debt for interest costs to be a deductible expense.

There are greater opportunities for other ownership structures, dependent on your specific circumstances.

If you are looking at making changes to your debt profile or purchasing a new rental property, discuss your options with your tax advisor to ensure that your interest costs are going to be allowed as a deductible expense.

Ring-fencing of residential rental losses Many of us will remember the golden days where you had negatively geared rental properties to create losses and receive large tax refunds from your PAYE paid from your wages. This was viewed as disadvantaging owner-occupiers and first time home buyers and the Government moved to change this to remove the perceived bias between investors and owner-occupiers.

From 1 April 2019 for the 2019/20 and later income years, any “loss” incurred from rental properties is ring-fenced, to be carried forward and offset against future income derived from the rental property or residential bright-line income.

The information contained is of a general nature only and does not take into account your specific situation and circumstances. You should seek professional advice before acting on any material. While all reasonable care is taken in the preparation of the material in this communication, to the extent allowed by legislation Moore Markhams Hawke’s Bay Limited accepts no liability whatsoever for any reliance on it. All opinions, conclusions, or recommendations are reasonably held at the time of print but are subject to change without notice.

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SECTOR RESIDENTIAL PROPERTY MANAGEMENT

REINZ Residential Property Management Training Offerings:

THE BEGINNER’S GUIDE TO PROPERTY MANAGEMENT

REINZ had a significant amount of feedback from members, managers and business owners who were looking for a beginner course in property management.

A number of property management owners had told us that they were employing staff who are brand-new to the industry rather than experienced property managers for a number of reasons:

management office. This is also an excellent pathway for those moving onto the NZ Certificate in Residential Property Management (Level 4) if required.

• It is very difficult to recruit experienced property management staff – many are staying in their companies for longer

The New Zealand Certificate in Property Management (Level 4)

• There is a shift from employing experienced staff to employing those new to the sector • Employing brand-new property managers allows the organisation to ‘shape’ the role/person to fit with the organisations culture, processes, and systems etc.

• It allows for fresh ideas and fewer pre-conceived ideas about ‘how it should be done’ • With a raft of changes to the Tenancies Act, there are people leaving the industry and not enough qualified, experienced property managers left to fill those gaps. The next option for employers is to take on staff totally new to the industry.

Managers and business owners do not always have the time or resource to induct new staff sufficiently. In order to support our members, REINZ has created an introductory practical training programme for those new to property management (i.e., less than 6 months experience). The programme focuses on what you need to know from a practical perspective when you first step into a property

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REINZ and Skills also offer a Residential Property Management qualification.

This is a 7-12-month online programme as well as four practical workshops with engaging and experienced speakers. This will provide a formal qualification to back up the practical experience that many in the industry already have. The course is best suited to someone with at least 12-months experience. With the Labour Government committed to reviewing industry standards, we are seeing a marked increase in property managers wanting to enrol in The New Zealand Certificate of Property Management.

• Improve your skills and knowledge • Increase your confidence when dealing with clients • Understand your obligations and responsibilities as a property manager • Ensure your team is up to industry standards • Work towards your REINZ property management accreditation.

Visit the REINZ Education portal, for more information on both courses, or to register.

RESIDENTIAL PROPERTY MANAGEMENT SECTOR

Methamphetamine

– MORE CLARITY REQUIRED FOR LANDLORDS AND PROPERTY MANAGERS Jo Rae, Head of Property Management, REINZ

Caught between a rock and hard place is how many property managers feel when it comes to dealing with methamphetamine and rental properties, and these feelings were made loud and clear in a recent REINZ survey of property managers.

Under the Residential Tenancies Act 1986 (RTA), landlords must provide the premises in a reasonably clean condition ensuring they comply with health and safety. Tenants must not use the rental property for an unlawful purpose - this includes smoking or manufacturing meth.

If landlords rent out contaminated properties, they may be breaching their obligations under the RTA. They may also be breaching other legislation such as the Building Act 2004 and the Health Act 1956.

Here’s where it starts to get confusing…

We recently surveyed REINZ members and the majority said their Tenancy Tribunal decisions in regard to contamination were based on the Gluckman Report. Less than 4.3% of decisions referred to NZS: 8510.

Unfortunately, this is resulting in owners only being able to recoup decontamination costs for areas with readings above 15ug/100cm2.

The flow on effect being many landlords now simply don’t test, are frustrated and don’t understand the current system. This is a real concern for incoming tenants/ property managers who may be unaware of existing positive readings.

Whilst not law, the methamphetamine testing and remediation standard NZS 8510 is considered best practice at 1.5µg/100cm2. The Standard was developed by a Standards Development Committee consisting of various representatives from Central Government such as the Ministry of Health, Ministry for the Environment and Housing New Zealand Corporation.

However, most Tenancy Tribunal rulings now use the Gluckman Report as their ‘yardstick’ and refer to methamphetamine levels below 15µg/100cm2 as being unlikely to give rise to any adverse health effects.

Additionally, if a landlord finds themselves in a situation where their property has had meth contamination, they will have a very difficult time trying to prove who caused this if a pre-tenancy meth test has not been undertaken.

The difficulty arises where a property has been tested prior to a tenancy commencing with clear meth readings, then post tenancy it is tested and records meth readings up to 14µg/100cm2.

Each insurance company is currently taking their own approach in regard to methamphetamine, and landlords and property managers need to look at individual policy wording as approaches range from some based on the Gluckman Report, to the NZ Standard or even some other level as insurers determine for when damage has occurred.

Based on how the Tenancy Tribunal considers contamination levels, it will be unlikely that the landlord of the property will be able to recoup any decontamination costs from the tenants.

But is if fair?

The question landlords are now asking, is whether it’s fair that an owner wanting to ensure they keep their home meth free will need to undertake remedial work that may or may not be covered by their insurance policy?

Who pays the Insurance excess for that decontamination?

Generally, if the Tribunal feels they have sufficient evidence on the balance of probability that the tenants caused the contamination, this will be awarded to the landlord (treated like careless damage), and the same applies with most retesting costs.

Tenants who smoke, sell or manufacture meth in a rental property are using the property for an unlawful purpose. The fines associated with this breach have now increased up to $1,800.

What are REINZ Property Management members calling for?

REINZ Property Management members would like to see one fixed methamphetamine standard that is ruled on consistently and a set of rules that relate specifically to residential tenancies. This would provide clarity to both parties.

The industry is still waiting on a full review of methamphetamine safety levels within the meth-testing standard to be undertaken. Whether this will result in the regulations being officially changed we do not know. Many property managers still continue to operate in line with NZS: 8510.

The Residential Tenancies Amendment Act 2019 allows for regulations to be developed to set out: •m aximum acceptable level for meth contamination • processes for testing • decontamination of rental properties.

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SECTOR BUSINESS BROKER

Fuelling up for the future

Service stations are evolving but remain an attractive and profitable business and a highly popular choice among buyers, including those going into business for the first time.

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Jayson Hayde, National Director of Business Sales, Bayleys Real Estate

Prashant Vijan, Business Sales Broker, Bayleys Real Estate

Revenue may have dropped over the past five years due to global volatility in crude oil prices, but margins have increased for the 1,300 full-service and unmanned outlets across New Zealand.

“Location, business history and performance through fuel and shop sales are the most important factors for buyers when a service station comes onto the market.”

Bayleys business sales expert Prashant Vijan says service stations are considered a profitable business if they have two or more revenue streams – fuel, plus convenience shop sales and possibly a cafe, which can generate higher margins for the retailer.

The market is increasingly competitive for shop sales and Prashant says shop areas must be well presented, supplied and stocked with a good range of products, as people tend to impulse-buy at service stations. When run well, this can be a profitable side of the business for operators.

“They are attractive for people getting into business for the first time because they feel it is a safe commercial enterprise environment,” says Prashant.

Whether fuel or shop sales are the most profitable also depends on the service station’s location, but both sides are important. Generally, fuel revenue will be

BUSINESS BROKER SECTOR

LOCATION, BUSINESS HISTORY AND PERFORMANCE THROUGH FUEL AND SHOP SALES ARE THE MOST IMPORTANT FACTORS FOR BUYERS WHEN A SERVICE STATION COMES ONTO THE MARKET.

up to $2.5 million, depending on fuel sales and earnings before interest, tax, depreciation and amortisation (EBITDA), he says.

For new-builds, it can start at over $3 million and the barriers to entry are high, as it depends on land availability and existing development in and around the site.

“In a well-established residential area there would be challenges in trying to get consent and build a service station, although it’s not impossible.”

The rise of self-service stations has been the biggest change for the industry.

Minnows among the giants – Gull, Waitomo and Allied – specialise in unmanned pumps and have established successful business models by cutting overheads so they can offer cheaper petrol.

Prashant says they now face the prospect of every brand offering fuel discounts. “It negates that model a bit and that is where operators look at maximising value by having the forecourt and fuel sales as well as the grocery and shop sales.

higher, but at a lesser margin, while shop sales may be at a lower volume with a higher margin.

“It could almost be a 50/50 split, so that’s why buyers look at how the shop is performing and not just fuel sales,” Prashant says.

A cafe adds further value, as proven by BP’s extremely successful Wild Bean cafes. “The coffee component is important as people see it as a convenience during the day.”

Whilst there is always strong demand for major brands like BP, Mobil and Caltex, other brands like G.A.S., Challenge, and NPD are equally being preferred by potential buyers.

If you’re selling, you’ll need to be able to show would-be buyers how well the business is performing in its catchment area. Presentation of the forecourt and shop is important, as is the availability of the business books and financial history.

“Banks are generally asking for a three-year history from a potential purchaser, and evidence of shop and fuel turnover, before lending 50% of the sale price – leaving a buyer to either use equity from their property or raise the money by another means for their 50% share,” says Prashant.

“Another major trend recently has been the large number of older stations being revamped and refreshed into a modern facility with a new forecourt and smart shop design, as people do consider that and don’t want to pull up to a tacky looking service station,” Prashant says.

Buyer demand for service stations is as strong as ever and purchasers are not seeing them as a sunset industry despite growing interest in electric and alternativefuel vehicles.

Prashant says the transition to these technologies will play out over time, and service stations will continue to evolve for the new environment.

Prices for service stations vary across New Zealand. In the Auckland region, existing stations can range from the mid-$500,000s AUTUMN 2021

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SECTOR COMMERCIAL

New Plymouth riding regional New Zealand’s success

Benet Carroll, Director Colliers New Plymouth

New Zealand’s commercial property market is experiencing a prolonged period of growth with many of the regional centres reaping the rewards. The city of New Plymouth, perched on the west coast of the North Island, has benefited from a recent influx of investor capital and a surge in development.

In March 2018, when Colliers established the New Plymouth office, the commercial property landscape was very different.

Industrial land values were sitting at $70 to $90/sqm while around 15% of the primary industrial precinct sat undeveloped and unwanted by developers and owner occupiers.

Yields being achieved for prime assets averaged approximately 7.5% and the majority of investor demand was from retiring farmers.

Fast forward to post-COVID 2020/2021 and things have changed dramatically.

Land has been absorbed to a point where there are few options left. Prime yields have compressed to a new benchmark of 5.5%, with strong demand coming from aggressive non-local investors chasing the comparatively higher returns than they obtain in the main centres.

New Plymouth appeals to investors because of the underlying strengths of the region. The economy is underpinned by agriculture, construction, the petrochemical industry and

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manufacturing, with the latter being the region’s largest employer. In terms of productivity, Taranaki’s GDP per employee measures $157,000 which is 34% higher than the New Zealand average and one of the top performing regions in the country.

The wider Taranaki economy is performing extremely well, bolstered by a residential and infrastructural construction boom.

Net migration is increasing, reflected in the number of residential building consents which are up 30% on last year.

Several multi-million dollar developments are planned to start in 2021, including the redevelopment of the Taranaki Base Hospital.

The Government has committed $300 million to undertake this significant project.

At the time of writing, there are 19 industrial development projects consented for or under construction in New Plymouth’s primary industrial precinct of Bell Block, which covers an area of 260ha.

The majority of development is being undertaken by owner occupiers though there is an increasing appetite driven from speculative builders.

COMMERCIAL SECTOR

New Plymouth with Mt Taranaki in back ©Sky View Photography

Colliers has brokered some of the region’s key sites. Properties of note include the $13 million The Warehouse in the CBD, and property at the Valley Mega Centre, the region’s largest retail park.

In December 2016, Colliers sold the 7.4ha ex-Ravensdown Fertiliser site at the northern entrance to the city. The prominent site was sold to developers, who plan to construct a multi-unit retail park, an upgrade that will be great for the city, creating jobs and going someway to retaining local consumer spending.

In the last six weeks of 2020, Colliers brokered seven sales with a combined value of $14 million showing how buoyant the market is. This included the two largest industrial sales of the year. A 2ha property leased to a multinational petrochemical company sold in an off-market sale to an Auckland investor. The other, a vacant industrial facility with a site area of 1.3ha, was sold to a local steel fabricator. Both sales represented market yields in the mid 5%, reflecting purchasers’ increased appetite to invest in industrial stock, and the growing confidence in the region.

There is increasing enquiry from national bulk retailers for large format stores. In December 2020, more than 2,000sqm was leased to Australasian retailers who had identified New Plymouth as a growing consumer base.

Looking forward, we would anticipate that 2021 will see a similar level of investor demand. There are several A-grade investments coming to the market which will see new benchmarks being set on prices. Of the four campaigns run at the beginning of 2021, each received multiple offers and fierce competition among local and non-local investors.

With the opening of Colliers’ New Plymouth office and subsequent new offices in Katikati and Cromwell, the company now has 23 offices nationwide. Colliers is a leader in property services including commercial and industrial sales and leasing, real estate management, valuation, and rural and agribusiness advisory and sales.

Benet Carroll studied a Bachelor of Business Studies, majoring in Property Valuation and Management before working as a property valuer and then industrial sales and leasing broker in the Colliers Wellington office.

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EVENTS

Key 2021 Events – Save the Date RPM Conference

REINZ Auckland Golf Tournament

Join us for our 2021 Residential Property Management Conference: ‘People, Purpose & Passion’ at Life Central on 23 September, proudly sponsored by Skills. Built to celebrate all the amazing work that the property management profession does, the 2021 REINZ Conference will be focusing on the people, purpose & passion of the property management industry, as we network and share knowledge through a series of interactive sessions. Suitable for business owners, property managers and administrators, there is something for everyone with plenty of opportunities to learn and grow.

Join us for the 2021 REINZ Golf Tournament on 13 May at the Akarana Golf Club, Auckland. This event is open to all REINZ members, partners and clients. The entry fee includes green fees, prizes, your first drink and after-match platters. The match will be played as a four person Ambrose style with a shot gun start at 12.00pm.

Book today: reinzgolf2021.eventbrite.co.nz Registration closes on 7 May unless sold out prior.

Tickets are available from: www.reinzconference.com/tickets Keep an eye out at www.reinzconference.com for updates.

2021 REINZ Awards for Excellence North Island Rural Seminar REINZ are pleased to bring you the North Island Rural Seminar for 2021 on Tuesday 15 June at The Verandah, Hamilton.

Entries for the REINZ 2021 Awards for Excellence will open on Monday 3 May. Hosted by MC Brooke Howard-Smith, join us in Auckland for another fantastic night celebrating success across the industry.

Tickets will be available soon.

Tickets will be released soon.

REINZ Bowling Tournament Join us for the 46th annual REINZ Bowls Tournament on 15 March. Play will commence at 9.00am at Balmoral Bowls Club, 14 Mont Le Grand Road, Balmoral, Auckland. Please register the whole team in a single entry. The tournament is open to all REINZ members, their salespeople and administration staff, family and friends are also welcome. At least one player from each team must have a REINZ ID number.

Tickets are now available from: 2021bowling.eventbrite.co.nz

REINZ Auctioneering Championships Join us as the School competitors, Rising Stars and Seniors compete for New Zealand’s Auctioneering Championships title, proudly sponsored by Property Press. The event will be held at Events on Khyber, Auckland on Sunday 20 June – Tuesday 22 June. This event is free to attend and registration is only required if you wish to compete.

Entries are open now: auctioneering2021.eventbrite.co.nz

To find out more about any of these events, please contact events@reinz.co.nz 40

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EDUCATION

2021 Continuing Professional Development with REINZ 2020 has definitely changed the balance of our in-person and online participant numbers. We appreciate the adaptability of our members in the past year as we navigated through the impact of COVID-19 to the education offer.

REINZ has seen a sharp increase in online take-up for CPD training, and we are experiencing really strong interest with in-person verifiable training. REINZ invites all members to attend our online and/or in-person CPD training again this year.

We have scheduled 20 events across the country with our experienced trainers.

Many attendees talk about wanting to come to in-person training, as it is a great opportunity to connect with like-minded professionals. They also find being away from the office ensures total focus as well as the opportunity to take part in personal development without the day-to-day interruptions.

REINZ is aiming to take steps to help the environment and in a move towards this, the REA is now making their workbooks available in an ebook format to us.

In order to support this step, our learners can now register with the ebook option for use on the training days and to be saved for future reference. Both options of the workbook are available to you as you register.

Please find the REINZ in-person training dates and locations at www.reinzeducation.co.nz/Course

3-4 March

Christchurch 1

The Atrium - Netball Centre

17-18

North Shore

Fairway Events Centre

17-18 March

Queenstown

The Mecure

14-15 April

Auckland 1

Events on Khyber

5-6 May

Thames

Thames Civic Centre

19-20 May

New Plymouth

Novotel

26-27 May

Hamilton

Hamilton Working Mens Club

2-3 June

Invercargill

Ascot Park

23-24 June

Timaru

The Grosvenor

30 June-1 July

Whangarei

Semenoff Stadium

7-8 July

Taupo

Millennium Hotel

28-29 July

Nelson

The Trailway Hotel

4-5 August

Rotorua

Holiday Inn

11-12 August

Paihia

Scenic Hotels

18-19 August

Palmerston North

Copthorne Hotel

1-2 September

Dunedin

Edgar Centre

8-9 September

Auckland 2

Events on Khyber

15-16 September

Tauranga

Club Mount Maunganui

20-21 October

Christchurch 2

The Atrium - Netball Centre

1-2 December

Auckland 3

Events on Khyber

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EDUCATION

Real Estate Qualification Suite Review Belinda Woolrych, Education Director, REINZ

Qualifications are a key component to the ability to practice as a real estate agent in New Zealand and equip licensees with the requisite knowledge and training to support their participation as a licensee in the real estate profession.

It is important that the qualifications meet the training and education requirements for real estate agency work in New Zealand and are well designed to meet educational standards and expectations. REINZ has been supporting and working closely with Skills (the qualifications standard setting body) and the REA. We have all worked together assisting the review of the existing qualifications and design of a new qualification suite, that is fit for purpose and supports a robust and fulfilling career pathway in real estate.

The real estate industry and general public were invited to consult and feedback on this proposed design over the last month.

Many interviews and submissions have been worked through from across the country and was representative of a significant number of real estate brands. We are pleased to share the new design of the qualification framework has been generally well received and the feedback was very constructive.

This proposed qualifications suite underpins a comprehensive and thorough

Licence

career pathway in a professional’s journey through real estate, right from the entry point to the senior levels. It also supports a licensing framework that, along with the qualifications, not only enhances our industry now, but well into the future.

Skills is now working on the submission of the qualification framework documentation to NZQA. Our collaborative project group of REINZ, Skills and the REA will be working on inviting all training providers who want to deliver these qualifications to participate in taking this qualification framework and developing new material to offer our participants into the near future, as our next step. You can stay in touch with the project progress through our In The Know updates to members.

Please find more information on the project here https:// skills.org.nz/blog/real-estatequalifications-review-consultation/

NZ Certificate in Real Estate Level 6 (NZCertRE L6) (previously Agent)

Pathway

50 credits

• No additional time in service requirement

Licence

NZ Certificate in Real Estate Level 5 (NZCertRE L5) (previously Branch Manager)

40 credits

• 3 years service required to apply for licence • Stepping stone to Agent, must complete • Available for full or partial enrolment

Licence

NZ Certificate in Real Estate Level 4 (NZCertRE L4) (currently Salesperson)

50 credits

School leaver 18+/ University Graduate (RPL may apply)

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Professional/ 2nd career

OBITUARIES

Audre Joan Ramsay Audre Joan Ramsay passed away on 23 December 2020 after a prolonged illness.

Audre started her working life as a school dental nurse and talked fondly about her friendships of the time and the many children she saw in the clinics. Audre married Murray Ramsay and later became the mother of Rachael and Richard.

In 1985, Audre began her real estate career working for Challenge Realty Geraldine. She later became a branch manager and achieved AREINZ status in 1992. In the early 90s, Audre also changed brands to LJ Hooker.

Audre purchased LJ Hooker Fairlie, Temuka and Waimate offices and opened her new Twizel office a short time after her husband Murray passed away. She then went on to open another office in Tekapo.

Audre was very proud of all of her ‘working family’ and would often say at Christmas functions: “Well goodness me, how did we manage to have all of these people working for us?”

Audre had a quiet but strong presence in her hometown of Geraldine, often known for her kindness when someone needed a helping hand. She was a strong supporter and sponsor of many country shows and local community events.

Audre will be missed by her work family as well as her much loved and treasured family, Rachael, Paul, Richard and Kim, and her precious granddaughters Millie, Isla and Anna. How very proud she was of you all.

Sandra Wilson It is with deep sadness that we report the death of Sandra Wilson, a longstanding Associate member of the Real Estate Institute of New Zealand since February 1993.

Sandra was a very well-known personality in the real estate industry with a career that spanned just on forty years. Initially in Palmerston North, where she owned a very successful agency, and was an active member of the Institute’s Manawatu/Wanganui regional committee.

Around twenty years ago Sandra moved to Auckland and continued her real estate career with Harcourts. Phil Freeman, former owner of Harcourts Blue Fern Realty Ltd., states: “In the 10+ years Sandra worked with Blue Fern, she was a central factor in establishing the high levels of compliance, client service and staff productivity we enjoy. But more than that, her wonderful personality, glamorous presentation, and range of snack recipes on Friday afternoon created an office culture second to none. For us, she became the benchmark of what makes a superb Branch Manager.”

As a graduate of Massey University’s Real Estate Diploma Programme, Sandra developed a keen interest in real estate education, and continued to tutor new entrants to the industry for many years. In recent times, Sandra also completed a stint as a member of the Authority’s Complaints Assessment Committee. Her wide network of colleagues and contacts was legendary. Sandra was a treasured mother and grandmother and is survived by her three sons, Greg, Mark and Alistair, their partners and children.

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Say something no one else can say

In the upper end of any market, high-quality marketing and advertising with international reach is a key ingredient a lot of homeowners want. Imagine walking into a listing presentation with confidence, knowing you are backed by the professional quality of New Zealand Sotheby’s International Realty.

Or being able to show your clients the relationships we have in 74 different countries that enable you to market their property internationally.

That’s something only agents affiliated with New Zealand Sotheby’s International Realty can say.

Be part of this exceptional network. Let’s have a conversation Call Chris Jones, General Manager Sales & Franchising on 021 795 194.

nzsothebysrealty.com Each Office Is Independently Owned And Operated. Browns Real Estate Limited (licensed under the REAA 2008) MREINZ.

TECHNOLOGY

New technologically advanced automated valuation model from REINZ REINZ is in the process of launching its most technologically advanced product yet – a new automated valuation model (AVM) which uses advanced modelling and deep machine learning techniques to produce accurate and up-to-date sales price predictions for residential properties across New Zealand.

Property valuation plays an integral part in the end-to-end real estate sales process, not to mention the value that this information brings to other sectors such as banking, government, insurance, capital investment and economic forecasting.

While there is of course a place for an indepth property valuation to be carried out by a registered valuer in person, in an age of data-driven decision making, and a demand for instantaneous information, the industry has become accustomed to the presence of AVMs producing an ‘on the spot’ estimate when required.

REINZ has already been producing an AVM estimate for a number of years. However, with new and updated technology, we had an opportunity to create a superior AVM for our members.

Generally, AVMs ingest different data points and use different methods of calculation to produce an estimate. Due to these variances, along with other influences that can impact a property’s sale price e.g. emotional drivers, we typically see AVMs producing a ‘range’ or a confidence rating to caveat the accuracy of the generated predicted selling price.

Most AVMs on the market don’t have access to the most up-to-date sales data in order to make their calculations. However, REINZ’s unconditional sales data provides a key advantage and therefore increases confidence levels in making accurate and informed valuation predictions.

The REINZ ‘next generation’ AVM can generate sale price predictions using a

multitude of data sources such as historical sales records dating back to 1991, recent council valuations nationwide, historical valuations from councils, census data, house price indices and more. Using complex methodologies, it then feeds data about the property, together with metadata about the quality of this data, to produce a predicted sales price for that property.

The new REINZ AVM will cover more properties in the market and provide: • more accurate estimates that are - closer to actual sales prices - within a narrower range - with less time lag to detect changing trends.

It will achieve this by: • Using more data point inputs • Using more sophisticated models and algorithms • Using more up-to-date data • Using machine learning to continuously improve.

From guiding vendor and purchaser expectations, to being a local market expert, having an accurate understanding of the current value of a property is one way of ensuring that you have all the important data you need. With the REINZ AVM available in the Statistics Platform and PropertySmarts, members will be able to access the brandnew AVM data at their fingertips through our established channels.

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TECHNOLOGY

5 reasons real estate agents should use video

Kylie Davis, HomePrezzo

Video has been labelled the ‘next big thing’ in real estate for about five years with most Kiwis watching online videos daily, but still many agents are reluctant to embrace it. Whether it’s the time it takes to create one to a suitable quality, the fear of seeing yourself on the screen, or the fear of not knowing what to say, it’s time to get ready for a close up. Here are five reasons why.

1. You’ll reach a new audience The overwhelming majority of first home buyers are now Millennials and Millennials watch more than 1.5 hours of video online every day. Millennials are also big on using mobile video to help them understand how to ‘do’ things and research buying decisions. When you create video content about your property market, you’re making it more accessible to a whole new generation of property buyers and sellers.

2. It makes important information easier to remember A team of neuroscientists from MIT has found that the human brain can process entire images that the eye sees, in as little as 13 milliseconds. In fact, viewers retain 95% of a message when they watch a video compared to just 10% when reading it in text. With something as important as a property transaction, being able to understand and remember how the market is performing can go a long way to helping sellers and buyers feel confident about what they’re about to do.

3. It will improve the effectiveness of your email marketing The use of video in emails more than doubles click-through rates according to Hubspot, while subject lines with the word ‘video’ in them are opened an average of 7% more than emails without. In addition, instead of using an image in your email, marketers recommend using a thumbnail from the video in your email linking to the

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video. This small change can increase click through rates alone by 21%.

4. It will improve the reach of your social media marketing According to Sproutsocial, videos account for just 11% of Facebook posts and yet Facebook videos have increased to eight billion views across the globe every day.

Video posts also have 135% better reach on Facebook than photos. Twitter also claim that posts with videos on their platform are six times more likely to be shared than other posts.

5. It will improve the performance of your website Forrester research shows you have a 53% better chance of getting your page to the top of the search results if you have video on it because of the way the Google algorithms favour video. Meanwhile 84% of marketers say their website traffic increased due to video, with 80% stating it also increased the time spent on their site.

Automatically combine REINZ data straight from the REINZ Statistics Portal to create an informative, local suburb video in just minutes – then share it across your own social media channels, straight to your potential customers and clients, visit statistics.reinz.co.nz/home to claim your free seven-day trial.

POWERED BY:

Instant Local Suburb Guides Update your sellers and buyers on how their local suburb is performing with the new Local Suburb Guides from REINZ and HomePrezzo.

FREE 7 Day Trial

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Create reports with the latest REINZ property market data. Individuals can sign up for $30 a month for the first 3 months, then $49 per user thereafter

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Personalised with your brand colours, logo and photo

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Create reports for as many suburbs as you want in just minutes to send to your contacts.

Access Local Suburb Guides and Videos via the REINZ Statistics Portal today!

TECHNOLOGY

More great features now available in PropertySmarts

Deborah Dunning, Product Manager, REINZ

PropertySmarts is an all-encompassing property information platform developed exclusively for REINZ members to quickly create professional up to date Comparative Market Appraisals.

Merging property information from several specialists across property title, sales, mapping, listing and imagery in one-easy-to use platform, benefits users by reducing the time often required to gain a complete look at property for appraisal documentation and day to day activities like prospecting.

Existing highly rated PropertySmarts features include

for branch managers to comply with regulation is the inclusion of a functionality called ‘Usage Reporting’.

The new feature provides branch managers with an overview and access to all appraisals created by their sales agents, making it easier to carry out their supervision responsibilities when it comes to ensuring appraisals meet the requirements of the Client Care Rules.

Photo galleries from realestate.co.nz Provides the user with the advantage of gaining a visual perspective of the property before even stepping inside.

This oversight will also assist managers track appraisal to listing conversion rates for sales performance management.

Title preview Unique to PropertySmarts this feature delivers a preview of the front page of the Title, so you’re confident you’re referencing the correct information whilst talking to the right people.

Suburb Insights revamped

REINZ unconditional sales Ensures clients receive appraisal estimates based on the most up-to-date sales information.

Street report Conveniently presents information in a layout that assists users with the all-important day to day activities like prospecting.

Adding to these are some exciting new enhancements designed to not only benefit real estate agents, but also their branch managers.

Exciting new enhancement for branch managers Primarily for the benefit of making it easier

The new Suburb Insights section, formerly called Suburb Statistics provides a holistic view of property activity and sales performance at a suburb and regional level and is automatically included in PropertySmarts appraisals.

To equip users further we have included more insights such as demographic and census information, monthly listing trends, median days to sell along with monthly median price growth and decline.

Not only has the data been enriched but the design improved with optional colours and icons available based on user preference, they can even choose what to include or exclude when it comes to insights displayed.

Agents can use this information to support broader conversations with their clients

around market activity, competition, demand and go to market strategies.

AVM Soon to be released is the addition of the new REINZ Automated Valuation Model (AVM). Set to be included under the Property Details page, the feature will benefit users by providing insight into the estimated value of a property without needing to go through the appraisal process.

A handy feature for real estate agents to access during daily activities and property research, the REINZ AVM updates monthly and is based off the latest property sales available, and when displayed against a property, will include an estimate rating between one to five, with five being the greatest confidence and one being the least.

This feature will further enrich the data and provide quick and useful insights for users.

Getting started – one-month free trial available* As REINZ members, your feedback is invaluable and appreciated. Support and guidance is also available if you’re considering PropertySmarts and have questions around the product, points of differences, integration capabilities, template design and training.

We have a variety of subscription options available and a one-month free trial with support and training to get you started.

Simply contact REINZ today!

* Trials are activated at an office level by the Branch Manager and for a free period of one month only. Excludes offices already subscribed to PropertySmarts or who have cancelled their subscription in the last 4 weeks. Offer expires 31st March 2021.

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PropertySmarts NZ’s most up-to-date property information tool Utilising our up-to-date data, real estate professionals can prepare a quality CMA in PropertySmarts with ease and speed.

The best value property information tool in New Zealand.

N mo ow re inc ru lu ra de ld s at a!

FREE 2 Week Trial

Find. Compare. Build. Done!

Contact us for your Free Trial - Get PropertySmarts today!

Call us toll free on 0800 473 469 or email membership@reinz.co.nz

PropertySmarts is exclusive to members of REINZ.

TECHNOLOGY

Building a smart city – from the ground up

Ten years on from the Canterbury earthquakes, Christchurch is forging a new cityscape as a smart city of opportunity.

In Christchurch, we are exploring new technology and approaches to help make our city a smarter, safer place in which to live, work and play.

By using sensors and smart technologies we can now access real-time data on all sorts of things that allow us to better understand how our city is functioning.

That understanding supports our planning and decision-making. It helps us to identify and create business opportunities and cement Christchurch’s place as a sustainable 21st century city.

In recent years, we have worked collaboratively with several private and public sector entities to champion technological advances that make our city safer and more connected.

We have developed a Christchurch-specific web app, SmartView, which is becoming an essential digital destination for city residents and visitors alike.

The app provides access to a range of real-time information about the city – from where to find local mountain bike tracks and check that they are open, to the number of spaces available in car park buildings or the nearest bus stop and the time of the next arrival.

Users can also check air quality, how best to get places, get weather updates or find out what is happening in the city or discover street art, among the many options.

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Michael Healy, Programme Manager, Smart Christchurch

In-built disaster response and resilience Smart Christchurch’s earthquake response network, EQRNet, is centre stage in the fields of disaster response and emergency management, making the city a better, safer and more resilient place.

The dense network of seismic sensors spaced across Christchurch measures earthquake intensity and delivers immediate information on the likely building and infrastructure response.

Smart Christchurch has installed the urban network of seismic sensors to boost the city’s earthquake resilience, with 150 sensors at critical infrastructure points across the city.

Developed in partnership with Canterbury Seismic Instruments, EQRNet instantly compares localised shaking to every building’s design and the New Zealand Building Code limits.

The network then provides information to building and infrastructure managers, emergency teams and the public, enabling a rapid response to an earthquake.

EQRNet gives first responders the real-time, relevant information they need to prioritise their actions and keep people safe.

It also provides valuable data on ground movement to engineers, research organisations and authorities to help understand and enhance the resilience of buildings and infrastructure.

TECHNOLOGY

Map and track graffiti

Making connections

Graffiti across Christchurch is being “mapped and tracked” using innovative technology to help identify offenders and cut costs to ratepayers.

Each year we host an annual innovation showcase that makes better connections to a smarter city.

The direct cost to the City Council of graffiti clean-up work is close to $1 million annually.

However, this does not include costs incurred by property owners, such as utility companies.

The Smart Christchurch Graffiti Recognition trial tracks graffiti activity using data from the public and contractors to help curb building damage and identify repeat offenders to Police.

It also helps to identify repeatedly targeted sites.

The technology analyses photographs of graffiti to map offending, with most reports of graffiti vandalism coming via the Council’s Snap Send Solve smartphone app.

By capturing key data to identify repeat offenders, a city can cut the huge clean-up cost, negative impact on neighbourhoods and damage to buildings and property.

The technology uses a machine learning and algorithmic identification technique, and then matches graffiti images that show key similarities.

We are currently trialling the technology for 12 months, with the early results looking positive.

The bins utilise smart sensors that detect rubbish levels and alert maintenance contractors when nearing capacity so that the bins can be emptied on demand.

As technology evolves, a city must be in a position to take advantage and that advantage and advancement lies in the innovation developed in the gaps between industries and sectors such as design, engineering, education, and government.

The smart bins prevent rubbish overflows – ensuring well-maintained public spaces – and optimise the waste collection service.

Our Innovation Expo opens the doors to the connections that can bridge those gaps.

Smart Christchurch’s innovative new parking occupancy sensors – installed at EV-charging parking sites – will allow drivers to check the availability of public chargers.

A smart city strives to strengthen all connections with local technologyfocused businesses and organisations and encourages the technological skills of younger generations.

A smart city also recognises that a range of youth-centred activities – such as e-sports and open-tech opportunities – teach many skills, including communication, teamwork and greater mental agility and adaptability, along with stronger analysis abilities.

For any smart city, connection, collaboration and communication are the keys to empowering people to build a sustainable, supportive and successful economy.

Solar power lays waste to rubbish A built-in solar cell-powered compactor means that Christchurch’s Bigbelly bins can swallow up to five times more rubbish than a standard waste bin.

Gearing up to maximise EV charging

The sensor data will also reveal if drivers are using these spaces for longer than allowed or any need for more spaces to meet demand as people opt for electric vehicles.

Interactive map bears fruit An online food map – accessible via SmartView – reveals where people can find free fruit and nuts growing in public spaces in Christchurch and across Banks Peninsula.

Nearly 7,000 Council-owned trees that produce fruit or nuts feature on our Smart Christchurch map, pointing urban food foragers to the right locations.

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Tax doesn’t mean taxing your brain Susannah De Bievre, CEO, Beany

The “unprecedented” tax year is coming to an end. Many businesses are operating in a manner that would be unthinkable 18 months ago. Costs are scrutinised more closely.

Tax incentives were established. Additional financial support became available.

It’s time to take a breather. It’s time to reduce your 2021 tax bill. It’s time to consider positive changes going forward.

Ideas for reducing your tax bill 1. New Healthy Home Standards start from 1 July 2021, and there’s fantastic motivation for landlords to spend money bringing rental properties up to (exceed) compliance requirements.

Business assets purchased for less than $5,000 before 17 March 2021 can be immediately claimed as an expense for tax purposes. This includes items such as heating units, extractor fans and range hoods.

The tax incentive applies to all business owners, so if you’re considering upgrading your mobile devices, installing a security system, buying a car, refurbishing the office, or anything

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in between, take advantage of the government’s generosity and purchase before 17 March!

All things must come to an end - after this date, the threshold reduces to $1,000.

100% deductions If you purchase any asset for less than $5,000 before 16 March 2021, it can be fully claimed against your income for the year ended 31 March 2021. Assets can include your desk chair, table and the computer you use for work.

From 17 March 2021, the deductibility limit reduces to $1,000.

You can also claim 100% of maintenance costs relating directly to your home office area, such as new carpet - the $5,000 or $1,000 thresholds don’t apply.

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Partial deductions You can probably also claim a portion of your rent/mortgage interest, electricity, rates, and insurance, along with your telecommunication bills - landline, mobile and internet charges. The amount you can claim depends on the floor area used for business. So if your ‘home office’ is 20 square metres and your home is 200 square metres, then you can claim 10% of your expenses.

Positive changes for 2021!

2. Runner up for best government tax incentive is taking a tax loss from the 2020 or 2021 year (not both) back to the previous tax year. Let’s say you had taxable income in 2020 and paid tax. A loss made in 2021 can be carried back to offset your 2020 income. This notional reduction in 2020 taxable income means that you’ve overpaid tax and it will be refunded.

b. Advertising – are you getting a good return for your buck? These days, newspapers, brochures, and other print media are becoming obsolete.

3. Run through your receivables listing and overdue invoices. If you’re unlikely to be paid, write off the bad debt before 31 March. If you’re not sure how to do this, provide your accountant with the customer and invoice(s) and they can do it for you. Writing off bad debts means you’re not paying tax on income you don’t expect to receive.

4. Print out a list of business assets or ask your accountant to provide this information. You’re bound to discover items that have long since been scrapped, given away, or are too damaged to be used. These assets can be written off, reducing your taxable income and your tax bill. Unlike bad debts, this doesn’t need to be done prior to 31 March.

5. “Bright-line” on residential properties has been with us for a few years now.

This capital gains tax in disguise has subtle intricacies and has caught a lot of people out. Before buying or selling a residential property (even your own home), you need professional advice.

Don’t rely on what your mate says, or what you read in an online article – the financial consequences can be disastrous. There’s no going back once title has changed.

1. Increasing sales is one way of improving profit – the other way is to reduce expenses. Run a Profit and Loss account from your accounting system and take an hour or two to investigate expense lines, such as: a. Subscriptions – do you use all of them?

Are there some you can live without?

c. Bank fees can add up – if you don’t use all of your bank accounts, consider closing one or two down. d. Interest expense – going into overdraft can result in large penalties and incur a high-interest rate. Would a (revolving) loan facility be better?

2. Accountancy fees – does the cost of your accountant include meetings that you don’t need? If you’re paying for unwanted face-to-face time, ask your accountant for a different package or consider using one that’s 100% cloud-based with no meetings (and no overheads).

At Beany, we have an accounting service package which is perfect for real estate agents! We also have a special deal for all REINZ members.

Other Beany accounting packages can be found at beany.com/pricing. We’d love to discuss the most appropriate option for you, so just get in touch.

3. Using an accounting software package that does what you need is vital to businesses. The start of a new year is the perfect time to switch to Xero (or other accounting software). We’ve found Xero to be ideal for small to medium-sized businesses. It’s user-friendly and has a great online support website with stepby-step guides and short, manageable tutorials (usually between two and five minutes) to follow.

A variety of pricing plans are available directly from Xero. There is also the Xero CashBook plan (only available through accountants), which is ideal if you don’t need all the bells and whistles - great for real estate agents!

4. Non-accounting software can automate and integrate many processes with ease.

Your existing software may have functions you didn’t know existed. Perhaps your apps could be integrated with each other, your bank account, and/or your accounting system. Customise your current systems and research others that could streamline the way you work. a. H ubdoc is free to Xero subscribers – it captures receipt data and records the transaction in Xero b. A list of property and realty apps and commissionaires that can be integrated with Xero can be found at apps.xero. com/nz/industry/property-realty c. The softwareconnect.com website provides reviews of real estate accounting software 5. Are you on track to pay the annual amount of $1,042 into KiwiSaver before 30 June? The government will contribute up to $521 each year – an investment return of 50%! Check out sorted.org.nz for more information.

If you’re unsure about implementing any of these tips or want to talk them through with someone, contact us at support@beany.com. Sue is a qualified Chartered Accountant.

Not only has she worked in well regarded professional accountancy practices over many years, she has in addition, owned small businesses of her own. This gives Sue great insight into just how demanding, and rewarding, small business ownership can be. Beany.com.

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Invest in personal branding and social selling

Ben Paul, Founder, The BD Ladder

In any sales role, the oldest rule has always been that people buy from people. This is absolutely true, and even more so in the real estate business. Whether in the commercial or rural sectors, where you’ll need relationships with senior buyers and decision makers, or, in the residential space where you’ll need a great reputation and lots of relationships within your designated sales area.

Many agents will be operating under a franchise or larger brand, which has a central marketing machine. This central operation is mainly responsible for creating brand awareness, and is ultimately aimed at enhancing brand reputation in the market.

Very rarely will it enhance the reputation of individual agents or brokers.

So, with a need for face-to-face interaction to grow your sales, or for new reps to get that all important first listing, it will be more important than ever for those responsible for closing deals to have strong online personal brands, and to start employing social selling/social networking tactics.

How to develop an online personal brand The basic foundations If you have a bio on your company/local agency’s website, now is a great time to revisit it. It is quite likely that it is out of date and could do with improving. The next step is to ensure that these bios have links to your key social media channel, at the very least this should be your LinkedIn profiles.

It always looks good from a branding point of view if your personal LinkedIn profile has a company banner visible. If you have the ability to edit this banner, I’d recommend listing the areas you cover e.g. commercial office space Auckland CBD, or residential sales Te Anau.

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The profile itself should make it obvious from the get-go what you do, and what potential value you’ll bring your clients. Your summary should be written in the first person, it is a social networking platform after all, and you certainly don’t talk about yourself in the third person at a networking event. It pays to keep your profile, and the key ones in your business, up to date and relevant.

Start a news/article sharing programme Being passive on LinkedIn doesn’t work.

So, to start building your own, or your key people’s personal brands, you’ll need to start sharing some relevant content. It pays to mix up this content. That means you shouldn’t just push out your own company’s articles and material. Instead, share some relevant industry news, market trends and articles showing trends overseas that may come here, as well as your own company information (such as the latest REINZ blog updates or current news stories). Once you get this balance right, you’ll start to get more views and comments on what you share.

Focus on creating and publishing content Articles, videos, or short posts when developing a personal brand are certainly effective. This is a key channel to help your target audience understand what you stand for, and who you help. If you’re a new agent, getting this right will help you to get a

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listing without having an established track record. Demonstrating your knowledge and hunger will help you to start gaining traction in your market.

Moving into social selling Like personal branding, this is a big topic, so I’m only going to touch on a few basics in this article to get you up and running.

Make new connections the right way One of the main aims of LinkedIn is to make connections that are relevant to what you do, and to those people you want to meet. When doing this yourself, or advising others, make sure that you always include a message with your invites to connect, particularly if you’ve never previously met that person. Make it relevant to them. As a good guide, saying that you read one of their posts, and found it interesting because of x, y or z (you’ll need to fill in the details here), noticed you were in the same industry and thought it would be a good idea to connect, is usually a good approach.

Then, whatever you do, do not, repeat do not then send them a message with a cut and pasted sales pitch. That will make them wish they never connected with you. Instead, continue the conversation, and through asking questions, building to a natural point where it makes sense to arrange a call or meeting, to discuss how you can help them.

Join some conversations It takes some time to explore the hashtags and groups on LinkedIn that are both active and relevant to you, or your key people, to participate in. Then, start joining in some conversations. Agree with what the author of a post has posted in a constructive way, and also offer some different points of view, in a similarly professional and non-confrontational way.

Once you have successfully done this, you will then be able to start some conversations, and you can even share the occasional article from you or your organisation, on the proviso that it is informative and will be valuable to those in the group who read it.

Start now for the long term pay-offs It may be the case that you are catching up on this. Last year’s lockdowns and the threat that we may have another one, may have made you realise that you need to have a better online presence. The advantage is that if you do put a firm plan and strategy in place, you will start to see some benefits in the short to medium term.

In the longer term, people will start to gravitate to you as a key source of information in the real estate industry.

That really is a huge value, as these activities help drive lead generation, and ultimately help you get more listings.

Ben Paul is the founder of The BD Ladder, a BD & Marketing consultancy focused on growing B2B companies. Ben has more than 20 years’ worth of experience delivering tangible results to B2B organisations, with a particular focus on professional services. You can get in contact with Ben via The BD Ladder’s website or by connecting with him directly on LinkedIn. AUTUMN 2021

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INTEREST

5 life-changing tips for real estate sales people Is poor time management impacting your productivity and mental health? Join the club!

It’s all too common for real estate salespeople to start their careers with enthusiasm and excitement, only to sabotage their goals… or worse, burn out or ruin their relationships - due to poor time management habits.

In this article, we explore how to get ahead in real estate, without risking your health or happiness.

5 Tips for Taking Control of your Time and Success 1. Observe how you naturally organise your time and action Are you strategic with your time? Do you focus on the strategies and tactics you need to achieve and maintain your goals in all areas of your life? Or are you racing through your days attending to the urgent, noisy tasks and ‘firefighting’ issues?

If it’s the latter, here’s a couple of things to consider: • The important stuff is usually much quieter in our heads than the urgent. If you don’t prioritise it, you risk the ‘noise of the urgent’ overtaking your life • Our mental and physical health and our careers are too important to leave to chance. Both are impacted by poor planning • You are ‘x’ number of years from retirement. The future may feel a long way off, but have you thought about how much money you’ll need to be able to retire and live comfortably?

Are you on track with building adequate financial assets to generate the kind of lifestyle you’ll need to live a long, happy retirement? If not, get clear… don’t leave your future security and lifestyle to chance!

If you naturally organise your time in a way that is ‘ad hoc’ (i.e., you’re disorganised with it), you need to rethink this! Thinking about it might feel hard or boring, but it’s so important. (If you struggle to do it on your own, get help to think it through. Seriously.)

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Jasmine Platt, Founder, Real Estate Leaders

2. Get clear on your goals This is such a critical one, and yet it’s one that so few people do well. Most people tend to rush around their lives – taking a tonne of action – and with a general hope for ‘progress’. But if you don’t have clear aims that are grounded in what really matters to you, you risk not achieving your goals, or adequately tending to your important relationships, your health - and any other important areas of life.

3. Make sure your goals are clearly thought through Know what you want - and why you want it. For example, don’t set goals like “to earn $300,000 a year,” if you don’t know what the $300,000 is actually for. It’s too arbitrary.

Work out what you actually want (e.g., pay off mortgage, put Mum in that comfortable rest home down the road, paying for Dad’s upcoming cancer treatment, pay for kids’ private schools for the next five years, etc) – and then work out how much money you need to cover those things.

You might discover you only need $200,000 – or, conversely, that you need $500,000. At that point you can re-evaluate your time and strategies for getting there.

4. Prioritise your personal “big rocks” If you haven’t heard it before, the term ‘big rocks’ refers to a well-known tale of a professor teaching his students about priorities and their use of time. He uses a jar as a representation of one’s capacity, and goes about filling it with big stones first, then smaller stones, then pebbles and finally sand until it’s full. He shares that if

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you don’t know what your ‘big rocks’ are, and prioritise them, you risk filling your life with smaller (less critical) ones first, ultimately sacrificing the biggest, most important ones.

• Strategic planning

We see this in real estate time and time again. Relationships with partners, children and friends and health going, unintentionally, by the way-side due to prioritising the urgent over the important.

• Weekly planning and scheduling

So don’t do that. Your health and relationships must come first. If these become compromised, it’ll affect your work.

Work can work around them. I promise.

• Development planning: Including CPD hours • Progress updates, managing your metrics • Planning your personal marketing collateral • Creating your personal marketing collateral • Contacting your database • Updating your database

Plan out your annual and monthly calendar by first putting in your maintenance ‘big rocks’:

• Regular scheduled networking appointments

• Dedicated time for your physical health

• Upcoming networking opportunities

• Dedicated time for your partner, kids and friends and family

• Blocked time for listing presentations

• Dedicated downtime for yourself.

• Upskilling/fluency practice

5. Next put in your “business big rocks” Quality of life is important, but in real estate, so too is business development activity!

You already know this!

Make sure you allocate adequate, dedicated time for the following “business big rocks” • Goal setting • Running your metrics

• Following up buyers after open homes Some of these should be repeat, standard diary appointments. Others will likely vary.

Some will be annual or six-monthly. Some quarterly or monthly. Others weekly, or even daily. The key is to just start however you think best - and reorganise your allocation of time as you need to, to make sure you’re on track with your goals.

Yes, you also need to attend to timesensitive activities. If you need to, you can move diarised appointments with yourself.

But if you don’t scaffold your time with your big rocks first, you risk them being ignored completely – potentially for months on end (especially if you don’t like doing them or don’t know how!)

Your time is a precious and limited resource. At the risk of repeating myself, if you’re not strategic and well-considered with it, you risk bypassing your health, relationships, happiness and/or your business growth altogether. And if you do that, there will be impacts! It’s not a question of ‘if’, it’s a question of ‘when’ and ‘how bad will they be?’

What can you do today to get started in taking control of your time and success?

Clarity and preparation is a million times better than regret.

If you’re a manager, and you’re wanting to do a better job of helping your salespeople to hit their goals, but don’t know how to do that, get in touch to find out about how we help managers to do just that.

If you’re a salesperson and you need a hand creating a more strategic, planned approach and accountability to help you to achieve your goals, get in touch for a free strategy session to see if and how we can help you.

Jasmine Platt is the Founder of Real Estate Leaders. As a high-performance specialist, she works with head agencies, branch leaders, franchise owners and salespeople to help them lift their results, make more money and win more of their time (and sanity) back in the process. To speak with her about how she can help you, email her directly at jasmine@realestateleaders.co.nz AUTUMN 2021

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YOUR s s e cc

u S

At Harcourts as a Business Owner, helping you achieve success is OUR COMMITMENT.

Harcourts provides you with the strength of our global brand, world-class training, industry leading technology and international awards and recognition. Established on the foundations of a strong values-based culture, our commitment to helping others achieve success provides you the environment to sustainably and profitably grow your real estate business.

Find where you belong.

harcourts.co.nz/joinus Harcourts Group Ltd Licensed Agent REAA 2008.

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Value-adding renovation ideas for $5k, $10k, $20k or $50k Planned properly, home renovations can help maximise a property’s value ahead of a sale.

But when it comes to knowing where to allocate the renovation budget, getting the balance right is a fine art. According to the experts and depending on your vendors’ budget, here are some projects that are likely to deliver good return-on-investment.

Karen Jackson, Managing Director, Lifestyle Finance

Approx. $5,000

Approx. $50,000

According to a 2016 survey from Finder.com.au, an untidy garden can put off 32% of buyers, with some dropping their offers as much as 25% if the property has poor street appeal.

If your vendors have approximately $50,000 to spend, they should be able to tackle bigger jobs or even a full interior renovation (provided they are conservative with their spending).

If your vendors are looking to improve curb appeal on a budget, cosmetic changes like a fresh coat of paint, basic landscaping and a new front door or garage door can go a long way in creating a great first impression.

Combining cosmetic changes and basic room upgrades, a $50,000 budget may cover a new flooring, painting and a refreshed kitchen. Other areas to consider could be double-glazed windows, insulation and a new ventilation system.

Approx. $10,000

In case of big renovation jobs, due diligence is key. Your vendors need to ensure that any changes and improvements are councilapproved where required, and completed by professionals. This is likely to have an impact on costs, planned and unexpected, so having a buffer in the budget is always a good idea.

With an investment of around $10,000, your vendors may be able to get new flooring installed to improve liveability and buyer appeal. Another option for this price point is to undertake a basic kitchen facelift. There’s plenty that can be done to bring new life to a tired-looking space, like repainting, replacing the kitchen benchtop, or installing new door panels and handles.

Approx. $20,000 While a new kitchen or bathroom are good earners, a full high-end bathroom or kitchen renovation is an expensive exercise, and the risk of overcapitalising can be quite high.

Having said that, in many cases a budget of $20,000 can be enough to cover the cost of a mid-level kitchen renovation, or the transformation of a small-to-medium-size bathroom with a new shower unit or stylish new cabinets.

When choosing fixtures and designs, it’s always important to keep the target market in mind; a kitchen design that works well for one buyer may not appeal to another.

Vendors looking at renovating their property? Get in touch

When it comes to giving properties a spruce-up, finding a balance between a high-quality renovation and staying within budget is all that matters. Our ‘Renovate Now, Pay Later’ finance tool is designed to help Kiwi vendors fund their renovation needs and maximise the sale price of their property. Head to www.lifestylefinance.co.nz/ renovation-finance, or give the Lifestyle Finance team a call on 0800 100 265 to get the conversation started.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.

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Nadine Thomas, Industry Insights and Engagement Manager, REA

Supporting buyers and sellers to navigate a hot market –

MEETING YOUR OBLIGATIONS UNDER THE CODE OF CONDUCT Rising prices, low stock and hot competition for property are highlighting what real estate professionals have always known – property transactions can be high pressure and extremely stressful. How do you best support buyers and sellers to navigate a challenging property market? As a licensed real estate professional, the Code of Conduct is here to guide you.

Rule 9.7 – give buyers time to seek professional advice Soaring demand and competition for property is driving a sense of fear of missing out, or FOMO. Some buyers may feel they need to move quickly or face missing out, but there are many risks, and when issues occur with a real estate transaction, the financial and emotional impact can be significant and long-lasting.

Before a prospective buyer signs a sale and purchase agreement, Rule 9.7 of the Code of Conduct says you must: • Recommend the person seek legal advice • Ensure they know they can seek other advice or information • Give them a reasonable opportunity to obtain that advice or information.

Encourage potential buyers to seek advice early, so when it comes time to make an offer, they have all the information they need to make their property decision with

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confidence. That could include speaking to their financial advisor or mortgage broker, checking in with their KiwiSaver provider or insurance company, and getting a LIM and building inspection report.

Rule 9.2 – do not put unfair pressure on a buyer or seller Real estate licensees are qualified and experienced professionals who must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work, according to Rule 5.1.

The Code of Conduct also says you: • Must not engage in any conduct that places undue or unfair pressure on the seller or potential buyers (Rule 9.2) • Must act in good faith and deal fairly with all parties (Rule 6.2).

An REA-commissioned survey of New Zealanders who had bought or sold in the 12 months to 30 June 2020 found 22% of

INDUSTRY

Guidance needed for overwhelmed home buyers and sellers More than 60% of New Zealanders say they lack the knowledge and information they need when trying to buy or sell property, according to our research. As a real estate professional, you’re in a powerful position to share information with buyers and sellers to help them navigate the transaction. Encourage them to visit settled.govt.nz, REA’s consumer website, to find comprehensive and independent guidance to support them through each step of the transaction.

people say they felt pressured to make quick decisions.

In today’s hot property market, both buyers and sellers are navigating a fast-moving and challenging environment. Consumers who are experiencing stress and anxiety could be vulnerable. Meeting the expectations in Rule 9.2 is critical, which means not placing unfair pressure on a buyer or seller.

Rule 10.7 – work with the seller to disclose issues and defects Openly sharing information is one way the seller can help to remove barriers to a swift and easy sale. You should have a frank discussion with the seller around the importance of disclosing all relevant information to buyers and the potential repercussions if they don’t. It is important to encourage the seller to be honest and up front throughout the process.

Under Rule 10.7 of the Code of Conduct, you’re not required to uncover all hidden

defects, but there is an expectation that a reasonably competent licensee will be able to identify common causes of hidden defects and discuss these with the seller.

For example, if a home was built between the late 1980s and the mid-2000s and has a plaster-style monolithic cladding system, a competent licensee will know to ask the seller about weathertightness issues.

If you suspect there is a hidden defect, Rule 10.7 requires you to get confirmation, supported by evidence, from the seller that the defect doesn’t exist, or you must tell potential buyers about potential significant risks concerning the suspected defect so they can seek expert advice.

Good disclosure helps reduce the chances of a sale falling through and minimises the risk of legal action after settlement due to non-disclosure.

You can read the Code of Conduct in full and find more information about your obligations at rea.govt.nz.

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AML: Expired passports guidance

Amesha Rama, In-house lawyer, REINZ

Real estate agents have now been reporting entities under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (‘AML/CFT Act) for just over two years.

A question that often crops up from agents to REINZ is: “A vendor has provided an expired passport, can we use it as part of our CDD (Customer Due Diligence) obligations?”

Amended Identity Verification Code of Practice 2013 (‘the code’) As agents will know, the code provides best practice for all reporting entities conducting name and date of birth identity verification on their clients. The code is not mandatory, however, it does constitute a safe harbour. If a reporting entity opts out of the code, it must inform its supervisor (the Department of Internal Affairs - DIA) and must adopt practices that are equally effective, otherwise, it risks non-compliance.

Part 1, Section 1 of the code currently refers to a passport as an example of primary photographic identification.

The Passports Act 1992 (Section 2) defines a passport as follows: “passport means a document that is issued by or on behalf of the Government of any country, and that purports to establish the identity and nationality of the holder; but does not include such a document that has expired or that has been cancelled.”

The AML/CFT supervisors consider the above definition to apply to a valid passport

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at the time a business relationship is established, and therefore, an expired passport does not meet the required standard for Part 1, Section 1 of the code.

However, Part 1, Section 4 of the code requires reporting entities to have an exception handling procedure in place for circumstances when a customer demonstrates they are unable to comply with the requirements outlined in the code. This means that an expired passport may still be acceptable as an exception handling procedure.

Something to note is that the DIA does not consider that accepting an expired passport on anything other than an exception basis, would meet the threshold of ‘equally effective means’ as mentioned above.

Guidance The DIA does not consider that there is a ‘maximum’ timeframe of expiry a reporting entity may accept as part of an exceptions handling procedure. Reporting entities should take a risk-based approach based upon the factors present at the time the passport is presented. A riskbased approach should be documented as part of a reporting entity’s AML/ CFT programme, and based upon risks identified in their risk assessment.

LEGAL

Questions that may help you determine the risk: How can the passport’s validity be determined? Can the relevant issuing authority (i.e. DIA) confirm whether expired passports were genuinely issued?

How long has the passport been expired for? Could the photograph still be relied upon to be a valid likeness of the individual presenting when considering the time elapsed since it was taken?

Why does the individual presenting the expired passport not have access to another form of valid ID i.e. a Driver’s License?

Can the individual presenting the expired passport provide other supporting forms of identification?

Does the individual have any prior history with the agency, or are they seeking to begin a new business relationship e.g. is this a previous vendor you have dealt with or is it a new one?

What is the impact upon not accepting the expired passport in terms of financial inclusion?

Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) regulations Timeframes to amend the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) regulations have changed. The Ministry of Justice originally aimed to have new regulations in force by December 2020, but this timeframe has been extended to July 2021.

This means that commercial licensees must continue to comply with the current regulations by completing their customer due diligence before undertaking any real estate agency work.

Once regulations are in effect, agents will be able to conduct customer due diligence on the landlord when an offer to lease is presented (rather than when they sign an Agency Agreement).

Audits will move from a two-year deadline to a three-year deadline once the new regulations come into force (1 January 2022 for real estate agents).

What is the risk level of the transaction or activity the individual is seeking to engage in?

Remember, you must ensure that you are satisfied that any identification you accept is reliable and accurate.

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Potential changes to the Unit Titles Act may be on the way…

Many issues have arisen with the Unit Titles Act and Regulations since the Act came into force in 2010.

Some further changes may be in the pipeline, in the form of the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill. This was introduced into Parliament in July 2020, but has not yet reached the First Reading stage. Although there may be further changes to this as it makes its way through the Parliamentary processes, we detail below some of the changes that have been put forward, as they will be of interest to many agents.

• Whether any part of the unit title development has weathertightness issues the subject of a claim or remediated without a claim, or earthquake-prone issues

• Improve the disclosure regime for prospective purchasers of units

• Financial statements or audit reports for the last seven years

• Strengthen governance arrangements

• Notices and minutes of meetings for the last three years including all supporting documentation

We summarise the changes as follows:

The Disclosure Regime All disclosure statements would, under the proposed changes, have to be “endorsed by” the body corporate (or developer) as being correct. This is different from the current position, where Vendors are required to sign the Pre-Contract Disclosure Statement solely, without any certification from the body corporate.

Currently a certificate must be provided by the body corporate confirming the PreSettlement Disclosure Statement is correct, but not for any other types of disclosure.

In practice, the signing and certification The Real Estate Institute of New Zealand

Additional information must now be provided in the Pre-Contract Disclosure Statement. This is the statement signed before an Agreement is signed:

• Whether the body corporate is involved in legal proceedings

• Ensure planning and funding for long-term maintenance of unit titled properties.

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procedure is often not done correctly.

The general purposes of the Bill are:

• Increase professionalism and standards for body corporate managers

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Lindsey Smith, Senior Registered Legal Executive, Rainey Collins

• The name and contact details of the body corporate manager • Body corporate levies for the unit for the current financial year • Details of any outstanding amounts • Details of any amounts held in credit for the unit • Proposed works under the long-term maintenance plan for the next three years and estimated costs • The next review date for the long-term maintenance plan; and • A summary of insurance held by the body corporate including the insurer’s contact details, the type of cover, premium, excess, specific exclusions, and statement as to where or how to view the policy.

LEGAL

Specific other information is also required as part of disclosure in off-the-plans sales.

The suggested change to the wording around weathertightness issues (where currently this only refers to situation where there has been a case through a court or tribunal) will widen the amount of disclosure needed in this area.

consistency for all those buying unit titled properties, so all have the same information at the outset.

Meetings

Additionally, disclosure about any earthquake-prone issues, along with financial statements and past copies of general body corporate minutes will be helpful for buyers to make informed decisions before buying.

Under the proposed changes, the quorum at a general meeting would be calculated based on those who are both entitled and eligible to vote. This means owners who have not paid their levies up-to-date cannot be counted towards the quorum (but those owners are still entitled to be present and speak at the meeting, as is the case under the current regime).

Many of these items under the current regime are requested as part of Additional Disclosure, or are gathered as part of due diligence by a buyer before they buy.

The suggested changes would ensure

Meetings would be able to be held by audio or audio-visual link (or a combination of different methods) if the method of meeting is approved in advance by special resolution.

Committees The Bill proposes that the body corporate chairperson be an automatic member of the committee, as well as being the committee chairperson. Currently they do not have to be the same person, and the chairperson of the body corporate doesn’t have to be part of the committee (although they almost always are in reality). The body corporate would otherwise be able to decide that the committee chairperson should be elected by the committee.

Another proposed change is that committee members would be subject to a code of conduct, which would be prescribed in the regulations. Additionally they would need to maintain a conflict of interest register, recording for example if they are conflicted due to benefiting financially from a decision.

Continued over leaf

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The Bill also provides for consequences of a conflict of interest and provides for failing to disclose a conflict of interest.

There are no conflict of interest provisions in the current legislation.

Body Corporate Managers The current legislation does not include reference to body corporate managers at all, the reference to ‘secretary’ in the previous legislation also having been removed. The Bill defines the role of a body corporate manager and sets out their functions and duties. These include acting in the best interests of the body corporate and disclosing any conflicts of interest. Body corporate managers would also be required to be members of an industry body.

Large and Medium Residential Developments The Bill introduces special rules for large and medium residential developments.

A large residential development is defined as one that has 30 or more principal units used as apartments. A medium residential

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development has 10 to 29 principal units used as apartments. The current legislation only provides the same rules for bodies corporate of all sizes (with the only difference being in relation to requirements to have a committee or not for those with nine units or less).

Under the proposed changes, large and medium residential developments must: • have a body corporate manager (noting that medium residential developments can opt out) • have the committee report back on delegations at every general meeting (noting again that medium residential developments can opt out) • have a long-term maintenance plan for a 30-year period that is reviewed every three years, or reviewed earlier if the body corporate becomes aware of something that affects the long-term maintenance plan. There is no opt out of this aspect • have their long-term maintenance plan peer reviewed by a suitably qualified

and experienced professional (noting that medium residential developments can opt out) • have a long-term maintenance fund.

There is no opt out of this, unlike the current legislation; and • audit their long-term maintenance fund.

There is no opt out of this.

Unit Title Disputes The fees for unit title disputes in the Tenancy Tribunal would be reduced to: • matters referred to mediation ($600 or $300 shared between the parties); and • matters referred to hearing ($1,000 or $600 shared between the parties unless a party has refused mediation, in which case that party is responsible for the fee).

This would alter the current ‘Category 1’ and ‘Category 2’ proceedings regime.

The next step is for the Bill to have its first reading in Parliament. Once progress is made, we will provide further updates.

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