REINZ Real Estate Magazine - Winter 2022 by reinz_info

RealEstate WINTER 2022

A REAL ESTATE INSTITUTE OF NEW ZEALAND PUBLICATION

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The property management edition • 2022 National Property Managers' Day • Megatrends in real estate — ready for tomorrow? • Managing vendors' expectations in a changing market

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RealEstate WINTER 2022

A Real Estate Institute of New Zealand Publication

IN THIS ISSUE OUT & ABOUT FEATURES SECTOR GROUPS EDUCATION EVENTS TECHNOLOGY INDUSTRY INTEREST STORIES FINANCE LEGAL OBITUARY

08 12 30 38 42 43 46 48 56 58 66

MEGATRENDS — READY FOR TOMORROW?

18 20 26 30 35

ŌTAUTAHICHRISTCHURCH — A GROWING CITY CH-CH-CHANGES — A SHIFT IN MARKET SENTIMENT

48 52 56 62

DIGITAL MARKETING INFLUENCE MARKETING AND THE POWER OF RECIPROCITY A ROBUST FINANCE STRATEGY IMPACT OF THE RUSSIA SANCTIONS ACT 2022 ON AML CDD

PUTTING HOUSING IN ITS RIGHTFUL PLACE THE CARBON CREDIT CURRENCY A TENANT’S PERSPECTIVE

THE RULES OF DISCLOSURE

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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 Email: info@reinz.co.nz www.reinz.co.nz

Chief Executive Jen Baird. Please refer all queries in first instance to Kirsty Loader, Ph: 09 356 1752, kloader@reinz.co.nz

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Events

Holly Adams, Events & Sponsorship Executive Ph: 09 356 1755, hadams@reinz.co.nz

Communications

Editors

Marie Cahalane, Editor-in-Chief; Eilish Emery, Editor; eemery@reinz.co.nz

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Education

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ISSN 2324-3791

Technology

Miles Fordyce, Chief Digital and Innovation Officer Ph: 09 356 1761, mfordyce@reinz.co.nz

Finance

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

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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.

Are you ready for your annual trust account audit? The final date for REA to receive your agency’s annual audit report is 14 July 2022

JULY

Have you: • told REA who your auditor is, and given us the details of each of your trust accounts? • sent your trust account records up to 31 March 2022 to your auditor? • alerted your auditor to any issues that you know of? • checked with your auditor when they plan to start the audit? It is important to get your audit report to us on time as breaches of the Audit Regulations can result in fines or disciplinary action. If you haven’t already, contact your auditor to get the process started.

For more information visit www.rea.govt.nz or call us on 0800 367 732 or email info@rea.govt.nz

CEO UPDATE

Winds of change in the market Jen Baird Chief Executive, REINZ

The market and sentiment has shifted — it’s an interesting time for agents, vendors and buyers to navigate. As always, I am proud to see the resilience and adaptability of our members nationwide who continue to shape our robust profession.

Headwinds that gathered over 2021 — including rising interest rates, reintroduction of LVRs, changes to the Credit Contracts and Consumer Finance Act (CCCFA), and changes to investor taxation law are impacting the market. Price growth has eased in many regions, sales activity is down, buyer demand is subdued, and there has been an increase of stock on the market. Read more about the shift in market sentiment on page 20. The change of pace requires adjustment, and it’s the role of real estate professionals to have honest and transparent conversations with their vendors and buyers — REINZ Ambassadors provide valuable advice on how to have those conversations on page 22. While we can’t predict the future, we can prepare for the most likely outcomes. For that reason, it is fundamental for the profession to be forward-looking and identify trends happening here in New Zealand and beyond and gauge how they may affect real estate. REINZ recently commissioned research to identify and explore the megatrends likely to impact the real estate market over the coming decade. Understanding these trends and their short-term and long-term effects gives us insight into where the market may be heading, the challenges and opportunities likely to arise, and importantly, what we can do to ensure an enduring and future ready profession. Jump into the nine megatrends we’re tracking on page 14. There’s been exciting developments in the property management sector recently with progress on the long called for proposed regulation of property managers. REINZ has actively engaged with the Ministry of Housing and Urban Development (HUD) on the regulation of the property management sector. In early February, the Government released a discussion

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document outlining proposed regulatory options. In April, I hosted a live webinar with panellists from MBIE to run through this proposed regulatory framework. Read more about the progress of the regulation on page 60. With so many changes occurring in the property management space — and more to come — we felt it important to take a moment to step back and recognise the dedication and resilience of property managers over the past year. REINZ is delighted to champion the first National Property Managers’ Day on Wednesday 6 July — we hope you’ll mark the day and the people it celebrates with us. Read about what the day will entail, how you can get involved, and some inspiring profiles of property management champions on page 12. REINZ filed strong and detailed submissions on the review of AML/CFT legislation and has engaged extensively with the DIA. Our advocacy was strongly supported by the significant response to our request for feedback and our members’ unanimous opposition to the proposed introduction of due diligence on purchasers. An initial feedback session to officials from the DIA was held, along with further consultation with the real estate industry in April. Read more about this on page 62. As we head into the colder months and experience a slowing market, it is important to take care of yourselves, and those in your team. It’s been a busy and challenging time for the profession over the past year, so now is a great time to check in with yourself and those around you. As always, if there is anything REINZ can do to assist, please reach out to us. Ngā mihi, Jen Baird

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OUT & ABOUT

City Sales celebrates 25 years in business Auckland real estate agency City Sales celebrated 25 years in business on Friday 1 April. Now led by Scott Dunn, the team celebrated with an awards evening on Ponsonby Road where James Mairs once again took the top salesperson of the year. Maryanne Wong and Lucy Piatov were highly commended also, as was Jenny Daniels who runs the property management department. City Sales is an independent agency which specialises in Auckland apartments, it was founded in 1997 and was the first agency to specialise in the marketing and sale of apartments. The company holds its residence on Karangahape Road and many of its staff have been with the agency for more than a decade. “It has been a challenging 12 months with lockdowns and constant regulatory changes, but I could not be more proud of this team,” says Dunn.

Leading ladies of real estate inspire hundreds Groups of enthusiastic and aspiring real estate professionals from around Australia and New Zealand, celebrated International Women’s Day in their own ways while tuning in to hear from some awe-inspiring women who are breaking through barriers in their fields. The Journeys webinar was the second of its kind to be streamed internationally, organised by the Leading Ladies initiative within the Ray White Group, designed to connect and inspire women in the real estate industry. Hosted by Ray White’s Head of Organisational Development Natalie Hortz, the online webinar featured four guest speakers; Professor Sharyn Rundle-Thiele, Rayni Jerram from Ray White Bundoora VIC, Michele Cresswell from Ray White Annerley QLD and Jody Fewster from Ray White Cottesloe | Mosman Park WA.

Property Brokers announces new Regional Manager and Rural Manager for Canterbury Property Brokers is excited to announce that Tony Quayle has stepped into the role as Property Brokers’ new Canterbury Regional Manager. Tony brings a vast amount of real estate and leadership experience to the role. Having already been with Property Brokers for over eight years, Tony knows the company inside and out and is a champion of the brand's values and culture. Property Brokers is also delighted to announce that Gareth Cox has accepted the role of Canterbury Rural Manager. Canterbury Rural has been a leader within Property Brokers for years, and Ashburton has won the Rural Office of the Year award at the REINZ Awards for Excellence on multiple occasions. Gareth has an established rural pedigree and a wealth of experience in real estate — he was the West Coast Area Manager and will continue in that role as well as growing the Canterbury Rural team.

Bayleys expands its commercial and industrial property market presence in Canterbury Leading Canterbury real estate agency Bayleys is expanding its commercial and industrial sales and leasing footprint in Christchurch — with the acquisition of firm MB Cook Ltd to create the biggest sector-specific team in the region. Bayleys Canterbury Chief Executive Officer Pete Whalan said the merger with MB Cook Ltd would further expand the agency’s presence in Christchurch’s commercial and industrial property markets — ranging from retail spaces and office blocks, through to development landholdings, warehouses, and manufacturing plants. “We’re excited about the MB Cook’s experienced sales and leasing team joining the Bayleys brand — bringing with them decades of experience and networked connections in the greater Canterbury region. With support from Bayleys’ national and international marketing initiatives, the MB Cook team joining the brand will now add even more value to their vendor relationships — ensuring the maximum value is achieved for their vendors in the sale process,” says Whalan.

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OUT & ABOUT

Ray White New Zealand’s newest brand ambassador After winning three Olympic gold medals, retired champion rower and road cyclist Hamish Bond (MNZM) is joining the Ray White New Zealand team as a brand ambassador. Bond took home the Olympic gold in the men’s pair at London 2012 and Rio 2016, before leading the men’s eight to gold at the Tokyo 2020 Olympics. Joining the team on 1 April, Hamish Bond is Ray White New Zealand’s brand ambassador for the next three years. “It has been a dynamic and challenging environment for everybody these past couple of years so I’m looking forward to establishing a long-term partnership with good people,” says Bond. “I think there are certain synergies between business and sport, but further than this, what I appreciate about Ray White is their solid values and desire to bring benefits to all those whom they transact business with,” concludes Bond.

Harcourts ‘most trusted real estate brand’ New Zealanders have voted Harcourts the most trusted real estate brand this year for a remarkable ten years in a row, making Harcourts the only real estate brand to achieve this honour since the real estate agency category was established in 2013. Harcourts Managing Director Bryan Thomson attributes the long-running trust that New Zealanders have in Harcourts to the commitment its people have to their clients. “We recognise that trust doesn’t happen overnight — it’s earned every time we serve our clients and our communities. That’s why we’ve been constantly adapting and innovating, enabling us to provide outstanding service to our clients through some of the most challenging years in our 134-year history,” adds Thomson. “It’s at times like these when our charitable arm — the Harcourts Foundation — really shines, providing much needed support to local community groups and making a real difference to the lives of others through the generous donations of our people across the country,” Thomson concludes. The Reader’s Digest Trusted Brands survey has a long-established reputation as the premier measure of brand trust in New Zealand and around the world.

Century 21 Te Awamutu — a first quarter star Century 21 Gadsby Realty in Te Awamutu has won several key awards for Century 21 New Zealand’s first quarter of 2022. “Our Te Awamutu office continues to do an absolute stellar job for both buyers and sellers alike. They are true real estate stars in the Waikato. Gadsby Realty represents all the success a Century 21 franchise can achieve when you work hard and put unbeatable service first,” says Tim Kearins, Owner of Century 21 New Zealand. The Century 21 franchise on Te Awamutu’s Alexandra Street took out Top Office for the Quarter for Units (the number of properties listed and sold). At the same time, its co-owner Rebecca Fraser won Top Principal for the Quarter for GCC (Gross Closed Commission) and a Platinum sales award. Gadsby Realty sales star Eli Gadsby won Top Salesperson for both Units and GCC, while Julie Elliot of Gadsby Realty was awarded Century 21’s Property Manager for the Quarter. Century 21 New Zealand is currently on a franchise ownership drive. The company has identified many untapped locations with opportunities in the likes of Hamilton, Tauranga, and Auckland’s North Shore. “Despite the challenges of 2022, Century 21 continues to deliver for Kiwis up and down the country. We’re now seeking other proven real estate business owners and high-performing salespeople to join our family and take their careers to the next level,” says Kearins.

WINTER 2022

OUT & ABOUT

Barfoot & Thompson win at International Property Awards Barfoot & Thompson was recognised as the Best International Real Estate Agency (over 20 offices) at the prestigious International Property Awards 2021/2022 held at London’s Savoy Hotel. After winning Best Real Estate Agency Website, Best Real Estate Agency (over 20 offices) and Best Real Estate Agency Single Office (Pukekohe), all for Asia Pacific, Barfoot & Thompson became eligible for the esteemed International Awards joining the other regional category winners. Barfoot & Thompson Directors and CEO Chris Dobbie thank and congratulate the Barfoot & Thompson team for the ongoing success achieved at these awards. They also acknowledge the many loyal and repeat clients that come to Barfoot &Thompson when they know they want to buy or sell. Managing Director Peter Thompson says: “Our business is all about people and getting it right for our clients. We have many people who have only ever bought and sold with us. That repeat and referral business is fundamental to us and to real estate. The communities we are in support us, and we back them all the way.”

Ray White Canterbury number one fundraiser for Ronald McDonald House Charities On foot, bike, waka ama, and kayak, the Ray White Canterbury team travelled 5,000km in March to raise $15,339 for Ronald McDonald House Charities as part of their House to House fundraiser for March. The 21 teammates had a goal to raise $4,410 by completing 4,410km ($1 for every km) but with some healthy internal competition, managed to smash these figures to raise nearly triple that amount, placing Ray White Canterbury as the number one fundraising organisation nationwide. Ray White Canterbury Relationship Manager Alice Mackenzie said the team spirit was strong in Canterbury and the group had a great time getting to their goal. “We have a strong team culture across the entire Ray White brand in Canterbury and pulling together from different offices for our chosen charity really emphasised the comradery among our amazing people,” Mackenzie said.

Love thy neighbour As the old saying goes, ‘being a good neighbour is an act which makes life richer’. That’s certainly the case for Harcourts sales consultant Ming Liu, whose good deed in her local North Shore suburb has caused quite the stir amongst her grateful neighbours. The Harcourts Cooper & Co consultant recently decided to quietly thank her neighbours and clients in Long Bay with ‘pay it forward’ coffee — presenting $1,500 to local coffee shop Little Local and asked them not to take anyone’s money until it had run out. Ming described her actions as a way to “brighten the day” of her neighbours after a long period of COVID-19 fatigue. Ming has lived in Long Bay for a year but has worked in the suburb for Harcourts Cooper & Co for the past five years. One of the company’s top performers, Ming says her acts of generosity won’t stop with free coffee.

Harcourts Cooper & Co enjoys final event of 2021/2022 Beach Series

Next on the list is $2,000 towards a community library for Long Bay, which Ming says will bring the neighbourhood even closer together.

Harcourts Cooper & Co and the local community were delighted to take part in the final event of the 2021/2022 Beach Series in the orange light setting — adding to the celebratory feel of the evening. The Harcourts Cooper & Co Beach Series is an all-ages Beach Run & Walk, 10km Multi Road Run, Stand-Up Paddle and Ocean Swim series. With so many community events cancelled due to COVID-19 restrictions, people were overjoyed to partake in ten of the 18 scheduled Beach Series events which occurred over summer on Tuesday evenings from the beautiful event base of Takapuna Beach. The final night being in the orange setting meant that the Harcourts Coffee & Cone van could be back at the event (with donations going to Breast Cancer Cure), and free ice-creams for all were enjoyed on a stunning autumn evening. The evening included a fancy-dress theme, and the community enjoyed an event that was beginning to feel a bit more like how we remember them!

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OUT & ABOUT

SPOTLIGHT

LJ Hooker Waihi Beach sponsors local pro surfer LJ Hooker Waihi Beach is getting behind Levi Stewart who is currently ranked as one of the world’s top 50 surfers and ranked 17th in the Men’s Qualifying Series for the 2022/2023 year. As a Waihi Beach local, LJ Hooker Waihi Beach Principal Gary Alway saw Stewart's raw talent and drive to recovery after he broke his back in two places at a surfing competition in 2013. “Levi Stewart is one of those remarkable Kiwis, who, despite being told he may never walk again, had the courage and conviction to keep his dream alive of competing with the best surfers in the world,” Alway said. “Knowing Levi has also worked with Surfers Healing, (a US based grassroots non-profit organisation that exposes children with physical difficulties to the unique experience of surfing), further demonstrates that he has the character and attributes of not only being a world-class athlete, but also a great sporting ambassador for New Zealand.” The support Stewart is receiving from his hometown allows him to chase his dreams on the international stage. “Securing this sponsorship keeps the immediate goal alive of being selected again for the New Zealand Surfing Team and to compete at the International Surfing Association’s World Surfing Games to be held at Surf City, El Salvador,” says Stewart.

Harcourts raises more than $520k for Hauraki Gulf at Whale Tales auction Being part of the Whale Tales phenomenon in Auckland over summer has been a huge privilege for the business owners who took part, Harcourts New Zealand Managing Director Bryan Thomson says. More than $520,000 has been raised by the auctioning of the 80 1.8m high tails that have been dotted around Auckland public areas. Aucklanders have enjoyed seeing the tails during the warm months, and the response to the trail and other events designed for audiences across the country has been gratifying for Harcourts — presenters of the event. “We have enjoyed the chance to give Aucklanders a treat after such a disrupted two years,” Thomson says. The tails — part of a World Wildlife Fund fundraiser to protect the Hauraki Gulf and its population of Bryde’s Whales, have been accompanied by another 80 smaller tails — many of them donated by Harcourts and decorated by schools and community groups across the region. After being blessed by tangata whenua at the waterfront, Harcourts’ award-winning auction team auctioned each tail on 2 May.

Barfoot & Thompson North Shore branches donate $20k to Starship In April, Barfoot and Thompson’s North Shore Branch Managers and Birkenhead Salesperson Tim Roskruge, presented a cheque to Starship's CEO for over $20,000 from their Soul Agents fundraiser in July last year. The managers’ outstanding fundraising efforts have helped support the development and launch of Starship's Neonatal Intensive Care Unit — a ground breaking New Zealand first in family-centred care for premature babies. WINTER 2022

FEATURE

REINZ champions 2022 National Property Managers’ Day REINZ is championing New Zealand’s first National Property Managers’ Day on Wednesday 6 July 2022 — recognising the dedication and resilience of property managers nationwide.

Property management is no easy feat — balancing the management of someone’s largest asset and someone’s place of residence, and supporting both landlords and tenants. REINZ is aware of the hard work and tireless hours our property management members put into delivering great service. Having gone through a couple of challenging years, property managers have shown resilience and capability of adapting their work. We want to celebrate with a day dedicated specifically to the heroes themselves — by sharing stories, support and recognition.

Jo Rae Head of Property Management, REINZ

Zack Cathcart Property Manager, Lodge City Rentals

Jo has worked in the property management sector for several years.

Recognised as the top property manager at Lodge amongst many other highperforming colleagues, Zack has worked hard in building his property portfolio and ranking in the business. Despite working in the sector for several years, Zack says he’s constantly kept on his toes and learns something new every day.

Starting as a receptionist for Bay Realty Ltd in Ponsonby, Jo progressed on to trust accounting and property letting. It wasn’t long before she realised that the small property management department of the highly successful sales office wasn’t as much of a priority as she had hoped. So, Jo approached the owner of the business and asked if he would sell her the rental roll — all 25 properties. Being in her early 20s with next to no business experience, Jo began her property management journey and enjoyed the interaction with landlords and tenants, and the satisfaction that came with seeing her rental roll grow. Jo remained a business owner until December 2020 before selling and joining REINZ. Her passion for the sector is immense and working at REINZ has given Jo the opportunity to support and increase the resources for others in the profession. “Yes, we rent out homes, but we deal with people from all walks of life and backgrounds, and having the skills, awareness and empathy to communicate confidently through both the good and bad is vital,” Jo says.

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“No day is ever the same. Every day has its new challenges — the landscape of the sector is constantly changing with legislation and tenant notices to name a couple,” says Zack. Previously working in business banking, Zack always had an interest in the investment side of property and understands how difficult it is to get onto the property ladder. “I know how much a home or investment property means to someone, so I strive to manage my owners’ properties as if they were my own,” he adds. Zack sees the future of the sector becoming more regulated — as he believes it should be. He believes that property managers should be licensed considering their level of responsibility in managing tenants, owners and their property investments. As the sector continues to grow, he also looks forward to property managers being more recognised.

FEATURE Having the skills, awareness and empathy to communicate confidently through both the good and bad is vital. Jo Rae

Catherine Goodwin CEO, Goodwins Property Management Catherine is a fourth-generation realtor having entered the property management profession in 2005 after stepping away from a legal career. Her father, Ashley M. Goodwin is soon to celebrate a successful 50 years in real estate, and her Great Uncle Horace Cassidy owned real estate offices in Takapuna and Avondale — remaining active in his career well into his late 80s. Horace served as President of REINZ and was later awarded Life Membership for his services to the profession. But Catherine and her family’s story in real estate started with her greatgreat-grandfather, who commenced his real estate journey in Whanganui after immigrating from Ireland and relocating to Auckland in the 1920s. “We understand that my great-greatgrandfather was operating only one of three real estate agencies in Auckland at that time,” Catherine says. Undeniably passionate about the sector, Catherine says that relationship management is a fundamental aspect of the role. “For me, it’s about the length and quality of relationships. With landlords we’re often managing their most valuable asset — we’re a part of their retirement plan. When I look at tenants, it’s the variety of tenants we look after. It’s providing quality accommodation for people with so many different reasons for why they are tenants,” says Catherine.

Grace Wu Managing Director, LJ Hooker Mount Albert Grace has been working in property management for 12 years — however, a couple of years ago, she mustered up the courage to move from employee to business owner by opening her own property management office and pursuing her passion. Being a property manager brings her joy — particularly being able to solve issues and provide solutions to owners and tenants. Property managers are a conduit — bringing people and hopes together — a core part of this is ensuring healthy, safe and secure homes. As Grace says, “It’s satisfying helping people live in a better housing environment.” Grace explains that no matter how much experience you have, there is always room for improvement. Having experienced a change in tenancy laws with emergency legislation in the 2020 COVID-19 lockdowns, Grace and her team realised they needed to increase their knowledge, systems and procedures to deal with a multitude of challenges. “While we all have property management qualifications and regularly enrol for training and conferences, we believe you can never be too experienced to learn more,” she says.

No day is ever the same. Every day has its new challenges — the landscape of the sector is constantly changing with legislation and tenant notices to name a couple. Zack Cathcart It’s about the length and quality of relationships. With landlords we’re often managing their most valuable asset — we’re a part of their retirement plan. Catherine Goodwin

National Property Managers’ Day — Wednesday, 6 July 2022 Join REINZ for a celebration and opportunity to connect with property managers in your region — with speakers, lunch and networking opportunities to boot! REINZ is hosting events in:  Auckland  Wellington  Christchurch  Queenstown For more information and to buy tickets, head to www.nationalpropertymanagersday.com. WINTER 2022

FEATURE

Megatrends — ready for tomorrow? Identifying the potential for change — and the implications of change — is a key driver of decision-making. Megatrends are structural shifts, they are longer-term in their nature and their effects cause real and irreversible change in the world around us. An awareness of megatrends offers real insight — helping us to build today for tomorrow.

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FEATURE Megatrends generally take a global perspective that is not tied to one industry. REINZ commissioned a Megatrends report that focuses on real estate business in New Zealand. The nine megatrends identified are hybrid working, digitisation, the rental reality, wealth inequality, skills shortage, climate, sustainability, urbanisation, and generational expectations. Understanding these trends and how they are likely to evolve over time can reveal challenges and opportunities and, importantly, what we can do now to ensure an enduring and future ready profession.

1. Hybrid working Before COVID-19, we were seeing a shift towards hybrid working, as people sought to create a balance between work and life through flexible working and the adoption of technology. Over the past two years this trend was accelerated. Now, many employers are coming to terms with a more remote approach to working. The impact on real estate is multi-faceted. Within commercial real estate, high-rise offices remain a big question. But while some heralded the ‘death of the highrise’, this seems an overstatement. The challenge will more likely be for employers navigating the transition and creating workspaces that incentivise employees to engage with their companies and return to the office and the central businesses that support them. Reduced requirements for employees to be in the city will see those able to transition to dual occupancies — a home outside of the city centre and a smaller dwelling in the city for office days. Evidence points to an increased preference for outer suburbs, and more buyers and renters making a ‘home office’ a key consideration when looking for a property.

2. Digitisation Again, while not new, the rate of digitisation was accelerated through the course of the pandemic. In practical terms, it means the automation of many simple work tasks, the enhancement of others through PropTech, and a shift in ‘sought after’ skills. For the real estate profession, this is likely to mean many ‘back-office’ functions will be digitised, while the sales pipeline will continue to require personal relationships. Within the industry, engaging the real estate workforce will require managers to place more trust in technology to enable employees to communicate and collaborate effectively. There are some key areas where technology will come to the fore:

 Blockchain: Blockchain contracts will almost certainly become mainstream — connecting buyers and sellers and enabling new ownership structures.  Transparency: There is already a growing expectation for freely available data, and an opportunity for agents to add value by analysing and providing it to clients in a format that meets their individual needs.  Hybrid transactions: COVID-19 changed how properties are sold and rented, and as with hybrid work, it is likely that property will be sold in a hybrid fashion — enabling non-traditional residential property buyers to acquire property, such as institutional investors.

3. The rental reality Falling homeownership rates mean an increase in those renting. However, uncertainty remains a challenge for renters — the sector will need to adapt to accommodate. This may include longer secure tenancies, increased freedom to customise the dwelling and increased budget for improvements. Major changes in this segment include a shift towards build to rent. While in its infancy in New Zealand, we are likely to follow the global trend. With 40% of Kiwis now renting — a figure expected to increase to 60% by 2043 — the build to rent asset class has the potential to play a central role in our futures. WINTER 2022

FEATURE For years, small-scale investors have been buying residential rentals geared at families. However, institutional investors are increasingly beginning to invest in residential real estate — a trend accelerated by COVID-19. It is seen as a defensive rebalancing of portfolios, but equally important, the industry is also addressing the need in society for more affordable housing.

4. Wealth inequality In New Zealand, 70% of household wealth is held by just 20% of New Zealand’s households. Increasingly, wealth inequality is fundamentally tied to those owning residential assets and those renting them. COVID-19 had a disproportionate impact on lower wage employees. While knowledge workers have discovered the benefits of fluidity between work and home, blue collar workers continue to have fewer options. For real estate, this could exasperate the wealth divide between suburbs and regions.

5. Skills shortage A 2021 survey found that nearly a third of young Kiwis planned to move overseas for greener pastures. Commentators, including Tony Alexander, note that, "If employers think it's bad at the moment, they ain't seen nothing yet.” A New Zealand Work Research Institute survey found 60% of New Zealanders said COVID-19 changed their work priorities; ranking working remotely (42%), better health and wellbeing support (44%), and increased salary (44%) as their top considerations. Despite existing flexibility for agents and earning potential, agencies report a high turnover of newer agents due to the difficulty of prolonged periods with little income and difficulty getting listings when competing with more experienced agents. Agencies attracting back office and rental staff will need to compete with other sectors for employees in the establishment years. The role of agents is moving from gatekeeper of information to a trusted guide who can help vendors and buyers seamlessly navigate the property market and provide professional analysis into the nuance of the market.

6. Climate There is a big opportunity for real estate leaders in the convergence of energy and property. The property industry is wellpositioned to drive disruption in the energy market and grab a piece of the $6 trillion carbon capture market. (See page 30 on carbon sequestration).

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Real estate and the broader property profession must recognise climate risk as a core issue. Recently, a SeaRise website was released providing detail on projected sea level rise around New Zealand and shining a light on areas around our coast that may be impacted sooner rather than later. As such, planning should account for continual bigger and more destructive floods and storms as well as rising sea levels. The potential for regions in New Zealand to become ‘uninsurable’ will have clear impacts on real estate in those areas.

7. Sustainability Increased consciousness has produced growth in green investments in real estate. Tenant space requirements, Governmental regulations, and demands for socially responsible investments (SRI) are primary motivations.

Additionally, homebuyers want and will pay more for sustainable features — from solar and windows to features that improve air quality. With generations Y and Z being more sustainability-minded, this trend is expected to become more relevant to all industries over the coming decades and further accelerate the green housing agenda.

8. Urbanisation Increasing urbanisation in New Zealand is expected, particularly in Auckland which will likely continue attracting people from rural towns and, to a lesser extent, other cities and immigrants who predominantly move to Auckland. Globally the long-term trend is for a proliferation of megacities, supported by regional hubs. Due to New Zealand’s small population with a relatively low population

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growth likely and limited land availability, megacities are unlikely. Instead, the ability to enjoy a suburban and semi-rural or rural lifestyle will continue, especially for knowledge workers who can increasingly work remotely. Improved housing choice, diversity and equity in cities that combined cater to different price brackets and ages, enables people to stay in one area longer. The diversification of urban property also supports more properties transacting, with empty-nesters able to remain in their community but downsize to free-up the family home for the next generation.

9. Generational expectations As new generations move into homeownership, they bring with them new generational expectations. Generation Z (those currently aged 10-25) and

Millennials (26-41) make up 43% of the New Zealand population and both share a heightened commitment to sustainability. They will also expect property to the level of their parents. The ‘coming of age’ generations are balancing these expectations with affordability, access to finance and changes to the property landscape. If affordability remains an obstacle and institutional investment in residential real estate

continues, the consequence may be that an increasing number of young people will be locked out of homeownership. Those whose parents are able and willing to provide the bank of mum and dad will continue to enable entry to the property market. However, the rise of the bank of mum and dad will create an inequitable situation and potentially cement longerterm wealth inequality, with many young people seeking greener pastures abroad.

For the full report, which includes specific areas or elements within each megatrend where REINZ and the wider profession can take action visit: www.reinz.co.nz/Media/Default/Reports/Megatrends Report/ REINZ Megatrends Report - 2022.pdf. Or to receive a copy, email mcahalane@reinz.co.nz. Visit the SeaRise website here: www.searise.nz.

WINTER 2022

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ŌtautahiChristchurch — a growing city Lianne Dalziel, Mayor, Christchurch City Council

Ōtautahi-Christchurch is going from strength to strength as a city, and our population is growing as more people discover the benefits of living and working here.

We are an attractive option for those looking to relocate. Those who call Ōtautahi-Christchurch home can enjoy an unrivalled lifestyle, good employment opportunities and access to a diverse landscape and range of outdoor activities right on their doorstep. House prices in the city are also more affordable than those in the country’s other large city centres. In 2021, the average house value in the city was around six times the average annual income, whilst in Auckland and Wellington City it was eight and ten times respectively. There’s also the easy commute in a city where nearly every destination is no more than 20 minutes away along with access to four world-class universities.

Planning ahead Our growing population is driving demand for more homes. Over the next 30 years, it’s predicted we’ll need over 50,000 more houses in Ōtautahi-

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Christchurch to ensure everyone has a place to live, and we’re planning for that now to provide for future generations. We are proposing changes to our District Plan to accommodate our continued growth and prosperity. These District Plan changes will affect how and where our city grows, how we move around, the type of housing we live in, and how we adapt and respond to climate change and coastal hazards. We need to make sure that we can cater for growth by putting more houses in the right parts of our city — and we need to respect mana whenua values and protect aspects that make us unique, so people continue to want to live and thrive here.

National direction Some of the changes to our planning rules are driven at a national level via the National Policy Statement — Urban Development (NPS-UD) and the Resource Management (Enabling Housing Supply and Other Matters) Amendment Act. Through these,

FEATURE the Government has set a clear direction on how towns and cities should develop. Under the Act, in most urban residential zones of the city, we must enable medium density housing. That means people will be allowed to build up to three houses per section, and up to 12 metres high (usually three storeys depending on design), without a resource consent. The NPS-UD requires even greater levels of development — both residential and commercial — to be allowed within and near the central city, suburban commercial centres and mass rapid transit stops. A hierarchy of commercial centres is proposed with different zones around these that will enable increased building height over and above 12 metres.

Indicative illustration only: Medium Residential Standards (three units and 12 metres max.)

Building more houses on our existing footprint will bring benefits. It means we don’t need to build houses on the precious, versatile soils on our suburban fringe. The closer people live to work and school, the less travelling we need to do, which results in fewer emissions.

for intensive housing development. Some areas have qualities — known as Qualifying Matters — which mean rules enabling increased development will not apply, or the level we enable increased development will be limited and remain subject to resource consent approval.

Not all areas suitable We are conscious that people have concerns about the impact these changes will have on the character of their neighbourhood and their homes. While we are following the Government’s direction to enable more housing, we are also working to protect areas of the city that we believe are not suitable

These include coastal areas, where there is a high risk of flooding or erosion as sea levels rise, as well as special character or heritage areas. There are also some areas where infrastructure constraints exist.

Change brings opportunities Changing the way we do things is challenging and sometimes it is hard to imagine how our future may look.

But change also brings opportunity. Re-thinking some of our planning rules will allow more housing choice to accommodate the growing diversity of people who choose to live in our city. With families getting smaller and people getting older, living preferences are changing and we need more, and different types of, housing stock to suit everyone. It’s important to remember, although these changes allow for more housing to be built, this won’t happen city-wide overnight. Ōtautahi-Christchurch will gradually evolve as our population grows and demand for more and different types of housing increases.

Indicative illustration only: Medium Residential Standards (three units and 12 metres max.)

Planning rule changes

We’ve been gathering feedback, during April and May 2022, on four draft plan changes aimed at preparing Christchurch for future population growth. The feedback will be used to shape the Housing and Business Choice, Heritage, Coastal Hazards and Radio Communication Pathways draft plan changes ahead of formal consultation in August 2022. Learn more at ccc.govt.nz/haveyoursay. WINTER 2022

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Ch-ch-changes — a shift in market sentiment Jen Baird, Chief Executive, REINZ

REINZ statistics show a common theme in 2022 — a market that is consolidating at a new pace. The headwinds gathered in 2021 are making their presence felt; we see sales activity down, prices moderating, while more stock on the market — and thus more choice for able buyers — is easing demand. We explore the shift in market sentiment, and what this means for buyers, vendors and agents.

2020 and 2021 saw extraordinary growth in residential property prices across New Zealand in a competitive market driven by low interest rates and listings, and high demand. We saw this prolonged period of fast-paced activity and significant growth culminate in a national record median price of $925,000 in November 2021. Over the past months, REINZ data shows a market returning to a more settled pace. Property prices have come off their November 2021 peak in most regions and the headwinds we monitored closely have combined to ease upward pressure on property prices and soften demand, resulting in a drop in sales counts.

A buyer’s market? Over the last year, we’ve experienced several changes in the market. Rising interest rates, new tax legislation, the reintroduction of LVRs and tighter lending criteria exacerbated by changes to the Credit Contracts and Consumer Finance Act (CCCFA) in December, have added further to affordability pressures and hampered access to finance. At the same time, there is a significant increase in stock levels causing an easing of pressure on the supply and demand side of the market. Unlike the end of 2021 when stock was scarce, this year has seen more choice for buyers. In a typical buyer’s market where supply outweighs demand, this would enable buyers to set the pace and

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negotiating terms. However, the current market environment has blocked some buyers from the market — specifically those who are not backed by equity or for whom access to finance is an issue. Despite the easing of price growth, house prices are still higher than they were a year ago. Agents are telling us that uncertainty continues to linger in the market — a culmination of COVID-19 restrictions and the prospect of further changes to the lending landscape including rising interest rates and corrective changes to the CCCFA expected in June. The continued impact of COVID-19 is still seeing many people choosing to stay home or isolate — further contributing to a decline in buyer presence.

FOMO no longer — FOOP takes over Not too long ago, the market was fuelled by a fear of missing out (FOMO), however, this has now been usurped by a fear of overpaying (FOOP) among buyers. Our April survey with economist Tony Alexander stated that FOMO is essentially nonexistent, with only 6% of agents reporting FOMO on the part of buyers. As the shift in sentiment sets in, and buyers are less willing, or unable, to pay the prices we saw toward the end of 2021, vendors should consider if their expectations will meet the market. Our analysis of the current property market is driven by statistics and intelligence from those in the profession, but the New Zealand property market is influenced by

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The property market is run by emotion, and for many Kiwis purchasing property is not just a property choice, but a fundamental life choice. what we consume around us — whether it be conversations with friends, families, colleagues, or the media. The property market is run by emotion, and for many Kiwis purchasing property is not just a property choice, but a fundamental life choice.

The reality for vendors It’s important for sellers to stay close to their real estate professional and have in depth conversations to understand how the market is changing. This will enable them to make informed decisions through their sales process — it may mean tempering their 2022 price growth expectations and how quickly the sale will happen. The market has changed, but it's important to remember that prices are relative — for the majority this means buying and selling in the same market so while you may get slightly less than your expected sale price, the price of the home you buy will also be affected by the market.

To really understand what all this means in your suburb or town, sellers should look to align themselves with an agent and company who truly understand the current market conditions.

Managing your vendors’ expectations For those in the real estate profession, conversations change as the market does. Agents support their vendors achieve their desired outcomes in this environment by regularly communicating what is currently happening, the shift in balance between supply and demand, and the challenges buyers are facing. Sometimes this conversation is to temper their expectations and while it might not be what your vendor wants to hear, knowing the market will enable you to maximise their sale opportunity. It is important to recognise there may be additional pressure on agents newer

to the profession and who may not have experienced the pressures of the slower, changing market. Ours is a supportive profession, with many new skills to learn as the market changes, experienced agents, trainers and the team at REINZ are there to guide those who may need additional support. In the following article, REINZ Ambassadors provide their advice for navigating this changing market, and how to best manage the expectations of vendors. Part of that is building trust and connections, which we cover in our upcoming virtual training day Prospecting for future business, which takes place Wednesday, 15 June. In the digital arena, Australian keynote speaker Lee Woodward and Founder of the Real Estate for Good Initiative Julia Dyer share strategies for success in a market where agents need to stay visible and relevant. Head to www.reinzeducation.co.nz to learn more. WINTER 2022

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Managing vendors’ expectations in a changing market In a changing market, it is crucial for real estate professionals to communicate with vendors and manage their expectations around price and how quickly a sale will happen. Your REINZ Regional Ambassadors share their advice and strategies on best practice.

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FEATURE The luxury of selective vendor timing — strategically choosing when a property is brought to market — can be an advantage for some. Darryl Marshall current market and how they believe it will impact buyer enquiry and the sale price. Be cautious with what historical data you present, list with facts and sell on emotion. It is essential you educate them about investing in a quality marketing campaign — this is where you can put forward your skills as a marketer and negotiator. To look for buyers, trail back through your database and call every buyer you have interacted with in the past 12 months. Make appointments with those who have not yet bought and provide your best customer service so they want to keep working with you.

Tania Greig Head of Academy & Network Performance Coach, Harcourts Auckland REINZ Ambassador for Auckland It is vital for agents to have a strategy for the listing process that is focused on helping vendors understand that the high prices achieved at the end of last year may not be attainable in the current market. Managing owners’ expectations is a key part of the strategy and is easier if the relationship is based on trust and professional respect from the beginning. Your clients must feel you are a team and that you have their best interests at heart — that will enable the most effective sale. To create this level of trust, use the words ‘we’ and ‘our’ rather than ‘you’ and ‘yours’. Part of your listing conversation should be uncovering their perception of the

Buyer feedback for your vendors is essential. Let them know you’ll be giving them honest feedback from the market. Ask buyers directly, ‘What do you think a property will sell for?’ — worded this way, you will get an objective opinion from them. Share this with your vendors in your reports and at your meetings. Keep track of what is happening around your listing and ensure your vendors know how much similar properties are selling for during their campaign. You should also keep them informed about new stock that has come to the market that they will be competing with. If a listing price needs to change due to feedback, ensure you market this change widely and inform buyers again. This will show your clients the increase in activity is a result of your honest discussions with them. Always refer to a change as price movement not a price drop. You may be spending more time working with your clients and customers than you were previously, however, ensure that every working day includes some lead generation activities to protect your future business.

Buyer feedback for your vendors is essential. Let them know you’ll be giving them honest feedback from the market. Tania Greig

Darryl Marshall (FREINZ) Vining Realty Group Ltd, Bayleys REINZ Ambassador for Nelson Agents should inform vendors of the active purchaser demographics of their specific marketplace and how that directly reflects on their expectations. The luxury of selective vendor timing — strategically choosing when a property is brought to market — can be an advantage for some. Factors such as season, tourist/ visitor volume, recreational and agricultural are all buyer elements that need to be addressed by the agent providing different vendor property classifications and price expectations. Past local knowledge that can be substantiated and future local knowledge that can be assessed provide an informed platform that is even more critical to vendors in changing times. Sales strategy: auction, tender, deadline, etc. all have a market presence that need to be expertly assessed by an agent in conjunction with the level of relative buyer activity. It is essential to reflect the specific property and the target market group in your strategy as that will further impact the vendor’s expectations. Constant communication with vendors remains essential for an agent to ensure sellers make an informed decision and achieve optimal market results. WINTER 2022

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Rachel Dovey General Manager – Sales, Whalan and Partners Ltd, Bayleys REINZ Ambassador for Christchurch Communicate with your clients well and often — it can be challenging when open home attendance is lighter, and properties are on the market for longer periods of time. It is important to reassure vendors and provide practical feedback with face-to-face meetings. Think about modifying parts of the campaign to get a different result. Traditional campaign methods that have worked in the past may need to be reviewed, improved or tweaked. With an increase in the numbers of properties on the market, salespeople should be advising their clients to prepare and present their homes to the highest standard possible, so they stand out from others in the market. Prepare well, thoroughly check the LIM and any building reports. If there are potential outstanding issues, ensure that they are remedied prior to coming to the market so you remove any potential objections from buyers. Make it easy for buyers to connect with their potential home.

Andy Stewart (AREINZ) Residential Salesperson & Company Auctioneer, Professionals, Palmerston North

Vicki Collins (MREINZ) Salesperson, Property Specialists, Wellington City Real Estate Ltd

REINZ Ambassador for Palmerston North

Those of us who have been in the industry a while have seen the property market ebb and flow. The market is cyclical and will inevitably turn again. The key is to put the hard yards in now so you’re still here and ready for when it does.

Sales consultants appraising properties need to ensure that comparable properties used in the appraisal are recent and relevant. Historical sales may be misleading and inflate seller expectations. Current competitive listings on the market are now a more relevant factor in establishing an initial marketing price. Vendors should be aware of where their property sits in comparison to comparable current listings, and the options available to them for marketing a property to achieve a successful sale. This is to ensure that their property is competitively priced to avoid it being left on the market while other properties sell. Once the property is listed on the market, honest, accurate and factual feedback from the sales consultant to the vendor is vitally important. The hard conversations regarding marketing progress and pricing need to be discussed early so the property is competitively positioned to sell.

Once the property is listed on the market, honest, accurate and factual feedback from the sales consultant to the vendor is vitally important. Andy Stewart 24

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REINZ Ambassador for Wellington

So how do we work in this market? The answer is, the same as any market. You stick to the basics, and you work smarter, harder and a little longer to get a result. Motivation needs to be identified. Houses will always sell if people are truly motivated. People look to move for many reasons — a change of circumstances, jobs, retirement, relocating, downsizing or upsizing. Take the time to find out why they’re looking to sell. If their motivations aren’t strong enough, manage expectations and suggest now may not be the right time to sell. That doesn’t mean walking away — stay in regular contact and give them advice on how to prepare their home so that it’s in the best condition when it is the right time to sell (which will keep your name top of mind). It’s all about managing expectations and getting them to set realistic targets — the market isn’t what it was, but we can still achieve a result if they really want one. When the market is booming, we’re so busy working in our business that we don’t have time to work on our business. Take the time to implement a lot of improvements you haven’t been able to do previously due to time constraints. Work on professional development and improving business practices and processes so that you can work even better once the market turns again.

FEATURE those fresh to the game, it is important to be prepared for change. A significant part of dealing with change, is acceptance at an early stage and adapting to a new way of doing business. First rule — don’t panic. It’s harder than it seems — some buyers will feel your fear, and this will also impact their approach to you as an agent, and the purchase. Second rule is confidence — not based on recent success, but off the back of gaining an understanding of what lies ahead. This is the perfect time to increase your profile to be seen and be remembered.

Charlie Elley Manager Consultant, Licensed Branch Manager, Property Brokers West Coast REINZ Ambassador for West Coast Agents who have been in the game for longer will understand this cycle and what it means for them and the vendor. For

Educate your vendors on the new reality and lower their expectations — it is vital to not hide behind false expectations or promises you cannot keep. After having these harder conversations, you can establish a new selling point and aim to exceed it. Work as a team with your vendor and together you can achieve what others may not.

Work as a team with your vendor and together you can achieve what others may not. Charlie Elley

With expats returning and borders re-opening, owning a real estate business that’s part of a global network is increasingly important. As the largest real estate company in Asia-Pacific, Century 21 is on a recruitment drive to open more franchised offices throughout the country. There are some great opportunities out there, and now is the time to set up shop. We’re actively seeking proven real estate business owners and high-performing salespeople keen to take their careers to the next level.

There are opportunities for franchisees to open a start-up or rebrand their existing agency. Further, property buyers’ access to Century 21 Financial only strengthens the brand’s appeal. Since the pandemic, overseas searches of local listings have increased via Century 21’s global website which can be translated into 19 different languages. Our global reach also means we have access to the latest learnings, technology, and real estate developments. That’s great for new franchise owners and agents!

To find out more about the benefits of becoming a part of Century 21’s global network, visit www.c21.co.nz/joining-century-21 or contact Tim on (0274) 495-547 or tim.kearins@century21.co.nz WINTER 2022

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Putting housing in its rightful place

David Norman, Executive Advisor | Infrastructure, Investment & Economics, GHD

A bipartisan announcement on new Medium Density Residential Standards (MDRS) brings forward and relaxes development rules across high growth cities in New Zealand. But how will the infrastructure needed for this denser development be funded? Should developers expect to pay more?

The Government and opposition have jointly announced a plan to accelerate increased housing density across a wide range of properties in high growth cities.

The good news The new rules must be applauded on several fronts. Firstly, they will stimulate more development closer to jobs, existing public transport and amenities. We have already seen a remarkable shift toward brownfield (existing urban area) development and away from far-flung greenfield development as Auckland’s current zoning rules came into force. Secondly, development in existing urban areas uses existing infrastructure more efficiently. While the increased density will trigger demand for more infrastructure, some latent capacity exists. Further, more development around town centres, rapid transit nodes and wherever land prices (the best indicator of demand) are high, adds to the vibrancy of those neighbourhoods. Lastly, compact development means lower emissions and congestion per home delivered.

Still too much leeway? The new rules still allow for broad qualifying matters (such as heritage sites and natural

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hazards) to prevent the relaxation of zoning rules. The exemption must be appropriate, but ‘appropriate’ is still left to the individual authority to define and defend. In Auckland, two main qualifying matters that NIMBYs (Not in My Backyard) appeal to are special character and volcanic viewshafts. The special character rationale has also been applied in Wellington and will likely crop up elsewhere. Auckland’s 2016 zoning rules left a lot of low-density zoning closest to the city centre. Around 30,000 mostly central dwellings (about one out of every 18 Auckland homes) were deemed to be of special character during that rezoning process. Because these rules restrict development closest to jobs, public transport, and amenities, they also force the city to develop in a more congested, car-oriented, higher emissions way. Further, the city has limited development in highly desirable parts of the city where housing could be closer to jobs, public transport and other amenities because of over 80 volcanic viewshafts. Viewshafts are not about protecting access to these sites, which have cultural, environmental, and social value, but about where people should be able to see volcanoes. As an economist, I help people evaluate trade-offs. In this instance, we must ask how much we want to limit people

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accessing homes closer to jobs, public transport and other amenities to protect these other things. Preserving best in class historical buildings and the most prominent volcanic views undeniably has value, but so does housing more people safely, and closer to jobs, public transport and amenities. What is the right mix?

A two-speed real estate market? What do these legal changes — to be introduced late in 2022 — mean for the real estate market? In Auckland at least, a two-speed market is emerging. Overall sales counts and prices have fallen since the peak in 2020 and 2021. But properties with enough land to be redevelopment opportunities still appear attractive. We may see speculative buying of properties with large sections that developers believe will be up zoned to five storeys under the MDRS. Buyers will aim for properties they are confident will be up zoned, before the changes to get the windfall gain once the planning lever

is pulled. We saw this in neighbourhoods such as Panmure and Mount Wellington in Auckland before the new zoning rules were introduced in 2016.

A warning One detail that the MDRS and The National Policy Statement on Urban Development (NPS-UD) rules don’t tackle is where the money for the infrastructure to enable this density will come from. Infrastructure is expensive, and councils have traditionally not charged the full price of new infrastructure to the properties that benefit from it. Those who buy properties before the zoning rules change often do so on the assumption that the general ratepayer will pick up the tab for most of the cost of the new infrastructure. But this is bad economics, violates the beneficiary pays principle and is financially unsustainable for many councils. Encouraging signs have emerged from Hamilton and now Auckland, development contributions that come closer to the true cost of development infrastructure.

Expect councils to sharply increase development contributions and/or place targeted rates on properties that benefit from the windfall gains of a zoning change, and factor this into any price paid for land.

Preserving best in class historical buildings and the most prominent volcanic views undeniably has value, but so does housing more people safely, and closer to jobs, public transport and amenities.

David Norman is Executive Advisor at GHD in the Economics and Strategy team. He was Chief Economist at Auckland Council for 4.5 years to May 2021. To learn more about the new development rules, head to: www.beehive.govt.nz/sites/default/files/2021-10/Final-factsheet-19-10-2021_0.pdf.

WINTER 2022

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Building or renovating? Patience is a virtue

Ian Lamb, CEO, CBS Co-op

Shortages in materials and labour are putting a strain on the construction industry. For those looking to build or renovate, building consent delays, supply chain problems, and the increasing cost of building materials are crucial factors to consider when planning a project.

In 2021, 48,899 new residential dwellings were consented — a record high, according to Statistics New Zealand. The previous record was in 1973 with 39,766. Between then and now, the average annual number of new dwellings consented was 25,000. This increase has resulted in significant consenting delays around the country and although the problem has been raised by industry groups with Government and local councils, there is no quick-fix — key personnel shortages remain a significant issue.

Why the shortages? While some local councils have improved their response times, the problem remains and is significant in New Zealand’s main centres. The delay in building consent times has a fundamental flow-on effect for consumers, adding significant costs to construction. This comes at a time when New Zealand and the rest of the world have experienced two years of intermittent lockdowns, resulting in local and international supply chain disruptions. With roughly 25% of building materials imported, COVID-19 restrictions have meant that many of these products are now in short supply or simply unavailable. The shortage of materials is another factor contributing to building consent delay, as applications for amendments are made to substitute key products. Even locally manufactured products such as timberframing, GIB and steel are all in short supply, which has contributed to a substantial

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increase in the cost of building materials across the board. As a result, we are now paying international prices for all building materials, where previously locally produced materials, such as timber, were cheaper. Consequently, the construction sector is now operating in an environment of consent delays, high demand for building materials, coupled with supply chain disruption and high inflation. For the consumer, this means that what was previously a six-month process — from planning to moving in — is now an 18-to24-month process.

What can people do right now? Unfortunately, there are no simple remedies to these issues. However, there are some factors to be aware of. To ensure a timely response to a consent application, it is imperative the consent includes all of the required information, thereby minimising potential requests for information (RFIs) from Council. A major component of any construction project is the cost of building materials, and in this environment, cost and availability are key. CBS Co-op, the builders co-operative, was set up for SME builders, tradies, property developers, and landlords alike, delivering competitive pricing and access to products, including building materials, fittings and appliances. Whether choosing a group-home builder, or local builder, CBS has levelled the playing field in the construction industry nationwide.

FEATURE For the consumer the real concern is how much it will cost and how long it will take. It is crucial they talk with their builder and designer to understand the timing of the consent process in their area. Time to consent will impact on the duration and cost of the build — keeping in mind that material costs increase with inflation. A general understanding of the consenting environment, the availability of the materials to be used and, where possible, substitutions, should all be discussed and agreed upon. It’s important to understand what can be fixed in terms of price and what can’t. With rising costs, it’s important to seek legal advice regarding your construction contract. The contract should identify the person or organisation responsible for the building consent application and include a limit to the number of RFIs.

What to expect going forward In the medium-term the issue of resource consents will be addressed as local councils expand their resource consent teams, particularly with borders open. Further, with councils themselves noting a slowing in the market, it is anticipated that dwelling consent levels will reduce. As for the supply chain, as the world opens up again and transport routes return to pre-COVID conditions, suppliers anticipate

supply chain pressures will ease over the next 18 months. The construction industry has been actively looking for alternative and substitute products. Long-term this may allow the construction sector to consider a wider range of products, which will increase choice and competition in some product categories. Regarding the current inflationary environment, it is expected that the Reserve Bank will in the short-term look to increase interest rates with a view to achieving their goal of the 1 to 3% inflation target. In April, the Reserve Bank of New Zealand announced a 50 basis points increase to the OCR to 1.5%.

What does this mean for the sector? Inevitably, the number of new dwellings being built will slow down. Material shortages and limitations will slow the delivery of current builds and may have a knock-on effect to future projects.

The economy slowing and an increase in mortgage rates will make it harder for some to get into the housing market and will impact on all dwellings, new and existing. It has been reported that the record capital growth of the past is falling away, with some areas across the country flatlining.

Advice to those planning to build Incorporate potential delays into your planning and employ an experienced builder who will regularly communicate about the planning and building process, and provide realistic expectations. Make sure that key milestones and costs (where possible) are documented and seek legal advice regarding your building contract. Building in the current dynamic environment is a challenge, but with agreed outcomes documented, a wellmanaged project can result in the successful delivery of a new build.

The construction sector is now operating in an environment of consent delays, high demand for building materials, coupled with supply chain disruption and high inflation.

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SECTOR RURAL

The carbon credit currency Sam Mander, Environmental Consultant, The AgriBusiness Group

Indigenous forest land and the carbon sequestration opportunity for New Zealand landowners always seems to be downplayed — deemed too expensive, too hard, or inferior compared to exotic forests. Sam Mander, Environmental Consultant at The AgriBusiness Group, debunks this myth and provides an understanding of how to identify the indigenous carbon opportunity.

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Kanuka, manuka, regenerating native vegetation or planted native restoration sites hold a significant opportunity for carbon sequestration. But fundamentally, where the opportunity really lies in this space is where a natural seed source is present. Land with naturally regenerating indigenous forest requires no capital input, eliminating the usual barriers of expensive planting regimes and delicate forest management. We don’t want to discourage the planting of new native areas, particularly around areas of ecological

significance, but to capitalise on the low hanging fruit, landowners must take advantage of existing native seed stocks and develop these areas to accelerate the growth of regenerating New Zealand’s indigenous landscape.

Determining eligible indigenous forest land Indigenous forest areas are eligible to enter the Emissions Trading Scheme (ETS) if they meet the Ministry for Primary Industries (MPI) forest land definition.

What is carbon sequestration? Carbon sequestration is the process by which carbon dioxide is absorbed during photosynthesis, and is stored as carbon in biomass (trunks, branches, foliage, and roots). Source: nzfoa.org.nz

RURAL SECTOR MPI’s forest land definition states that forests must:  Reach at least one hectare in area  Reach at least 30 metres average width  Have species that can grow five metres high  Have the potential to reach 30% canopy cover  Meet the above as of 1 January 1990 or after  Have met all of the above as of 1 January 1990. If a landowner has property that has manuka, kanuka, mixed podocarps, or areas they are thinking of planting native species (including in riparian zones — the interface between land and a river or stream) carbon credits can be earned if the areas meet the forest land definition. One carbon credit is equivalent to one tonne of carbon sequestered; therefore, the tonnes of carbon sequestered by the forest each year are the total number of annual carbon credits available. Tonnes of carbon are calculated on a per hectare basis, and the value of one tonne is equal to the current carbon price ($76/NZU/tonne).

You’re typically looking for a natural seed source present with conditions that favour natural dispersion, growth and succession. Any native species can be included if it has the potential to reach five metres in height at maturity. The most common example of opportunity is regenerating kanuka and manuka forest land areas. To earn carbon credits, landowners need to electronically map the land to certain standards and capture aerial imagery to prove the forest area meets the forest land definition. The value of credits a landowner can receive and for how long they will receive them largely depends on the species growing on the land. The MPI carbon lookup tables determine that indigenous forests can earn carbon credits from sequestration in the first 50 years of growth.

How to assess the native forest area This can be a difficult process for landowners; fortunately, professional forestry companies and environmental consultants like myself have developed methods for assessing forest land definition and providing the result of the assessment to MPI for a successful ETS application.

The value of credits a landowner can receive and length of time they will receive them largely depends on the species growing on the land. Depending on the forest scenario, we use a combination of ground vegetation sampling, plotting, and integrated drone imagery to determine and prove this. In most cases, this is where an expert may need to be involved. A recent example is a property with an indigenous natural seed source. An assessment found it had 35 hectares of post-1989 indigenous forest land that had regenerated since 1990, with a forest age of approximately 17 years. Forest species were predominantly kanuka, manuka, among other mixed podocarps. Carbon credits can be claimed for the remaining 33 years of carbon sequestration. Economically speaking, at the current carbon price, this equated to an average annual cash flow of $16,000, or cumulatively, $539,000. In summary, the opportunity to earn carbon credits for indigenous forest land is significant, particularly where a natural seed source is present. The property mentioned above is among many that we have worked on which provides a great example of the type of property that is common around rural New Zealand and one that holds value from indigenous carbon sequestration. Planting trees to offset carbon isn’t a silver bullet against climate change. However, carbon credits allow landowners to balance the scales for those unavoidable emissions on the path to reduction and has potential to generate financial benefits for those who wish to engage in these sustainable practices.

If you’re interested in learning more about carbon sequestration, get in touch with Environmental Consultant, Sam Mander on 027 305 8549.

WINTER 2022

SECTOR COMMERCIAL & INDUSTRIAL

Hotel sector ready to welcome more visitors

Dean Humphries, National Director of Hotels, Colliers International

The New Zealand hotel and tourism market underwent an unprecedented period of growth between 2013 to 2019, underpinned by strong international visitor numbers — reaching a record 3.9 million in 2019. The arrival of COVID-19 dampened demand over 2020 and 2021, but the hotel industry is now raring to go and ready for an influx of visitors.

Despite the tourism industry experiencing a significant decrease in demand, a recent report published by the International Monetary Fund acknowledged New Zealand’s sound management of the COVID-19 crisis was instrumental in cushioning the wider economic impact. This included the Government contracting 34 major hotels for mandatory isolation purposes — MIQ hotels — which provided financial assistance to the sector, while ongoing domestic leisure and corporate demand also remained in play for much of this period. With international borders progressively reopening, the Tourism Export Council of New Zealand estimates international

The Real Estate Institute of New Zealand

demand will return to pre-COVID levels within approximately four years. This is supported by a recent release by the International Air Transport Association that expects traveller numbers in the AsiaPacific region will reach 2019’s pre-COVID levels by 2025. New Zealand will see a record 58 hotels, circa 8,230 rooms, completed between 2018 to 2024, adding a range of quality hotel options. As border restrictions ease and overseas visitors return, a robust recovery is anticipated over the next 18 months with the medium to long-term prospects of the hotel sector remaining positive.

COMMERCIAL & INDUSTRIAL SECTOR Strong investment demand Following a record year of hotel sales in New Zealand in 2021, the industry is set to take another step forward in 2022. More than $400 million in hotel deals were settled in 2021, representing a staggering 33% increase on the previous highs of 2010 and 2015 — with both recording $300 million in sales. The record result is nearly three times the 10-year average of $150 million per annum. The sales included high-profile assets such as the five-star Sofitel Queenstown, 280-room Rydges Wellington, and the recently completed luxury lifestyle hotel QT Auckland. Factors contributing to the increase in activity vary, but the pandemic was one of the main drivers in the market. Whilst there have been very few distressed sales, some owners have been more motivated to sell, especially if a buyer presents a fair, nondistressed offer. Over 80% of hotel transactions were to domestic purchasers, due largely to the inability of international investors to enter New Zealand due to border closures. In the five years preceding COVID-19, international buyers made up 50% of all transactions. Existing hotel investors were the most active in the market, looking to grow portfolios both geographically and by segmentation.

NZ Hotel Holdings — a force to be reckoned with One of the big players to emerge in the past three years is NZ Hotel Holdings, a strategic partnership between the $60 billion NZ Super Fund, The Russell Property Group, and Lockwood Property Group. This entity remained the most active investor in 2021, purchasing three strategic assets worth over $250 million. Since the commencement of the partnership in 2019, the portfolio has amassed a total of seven hotels comprising close to 1,400 rooms and is now the fourth largest hotel investor in the country by room count.

International influx — visitors and investors In 2022, we expect to see international investors re-enter and dominate the market after a two-year hiatus. A large amount of offshore capital is keen to invest in the New Zealand hotel sector as the country continues to be a highly attractive investment destination due to its transparent legal system, safe geopolitical

More than $400 million in hotel deals were settled in 2021, representing a staggering 33% increase on the previous highs of 2010 and 2015. status, and strong relationships with leading global economies.

and offshore parties looking to secure a position in the country.

This has always helped drive strong investment demand in the property sector, including hotel and tourism assets.

In almost all cases, these investors predict tourism will rebound strongly post-COVID-19 and so will investment returns. Hotel yields also remain above other key asset classes offering attractive post-COVID-19 stabilised returns of 6 to 8%.

Furthermore, investment demand is fuelled by the limited availability of quality hotel assets for sale and a range of private and institutional demand from domestic

WINTER 2022

Join us for the TENANCY MASTERCLASS CONFERENCE bringing the property management industry training and education, balanced with one heck of a party

5TH OCTOBER 2022 CORDIS HOTEL Auckland

RESIDENTIAL PROPERTY MANAGEMENT SECTOR

A view from the other side — a tenant’s perspective

Jo Rae, Head of Property Management, REINZ

Jo Rae, Head of Property Management at REINZ, provides a tenant’s perspective on the rental experience. Renting can be stressful, particularly for first-time renters. As property managers, it is our job to make the process as smooth as possible, informing and educating renters on their duties and rights to ensure they achieve the best possible outcome.

It's November 2021 and a group of firsttime renters from out of town are looking for a property in Wellington — marking their big move from university halls to their own property. They know their deadline to secure a tenancy is quite a way off — midFebruary 2022. However, they are worried they will get caught up in the new year rush and miss out on a property or have to make do with temporary accommodation until they secure something permanent. The young renters start their search early and are encouraged to see plenty of properties available to rent via social media. With little experience in the rental market, they don’t realise that many of these properties are being advertised by the current tenants who are trying to assign their leases. This can happen when university has ended but the tenancies have fixed terms that don’t end until the new year or groups have disbanded, and they want to get out of their current lease situation early.

and any historic damage that has not been addressed could inadvertently become their responsibility. In this instance, our first-time renters only become aware of this situation by chance when meeting with a colleague who knows a property manager. They decide to try and avoid an assignment situation and enquire about properties through property managers and private landlords. Despite it being November, they find there are generally 20 people or more waiting at each appointment. There is very little mention of Healthy Homes Standards at any rental viewings, experience appointments being cancelled last minute, and long waits to hear back about applications they have made.

Risks for new renters

After two weeks, which in hindsight, isn’t particularly long, they have an application accepted on a fully furnished apartment. There is little face-to-face interaction from the property manager, and for the most part everything is done online due to COVID-19 restrictions.

An inexperienced tenant may think the landlord is aware of the potential lease transfer but, in many cases, it hasn't been talked through with the owner of the property. If they do take over an assigned tenancy, they may be unaware it makes them fully responsible for that property

It is assumed they know about arranging power and gas connections for the first time. While a provider of this type of service gets in touch with them, it isn't explained they aren't a part of the property management company, which leaves them confused. The tenants are asked WINTER 2022

SECTOR RESIDENTIAL PROPERTY MANAGEMENT

for power/gas meter readings and as they have not been back to the property since they viewed it, they don’t have this information or know how to find it. It hasn’t been explained to them that the landlord’s insurance does not cover their contents. Some of the group decide to get the most basic contents cover for their computer, phone and other similar valuable items.

Putting yourself in their shoes — and how you can help Financially they have made the decision to secure a property almost three months earlier than they need to avoid the unpredictability of the new year rush. They have learned a lot on their first-time renting journey, but the experience could have been far more informative.

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As professionals, you will deal with a wide range of tenants who have varying levels of understanding of the Residential Tenancies Act. We have the opportunity to show them what great customer service looks like. With 40% of the New Zealand population renting, which is expected to increase as house prices continue to rise, it is important to remember that we are in a privileged position by being able to assist people into homes at what can be an incredibly stressful time. REINZ has written a firsttime renters guide to assist tenants — this can be found on the REINZ blog: www.blog.reinz.co.nz/ blog/reinz-first-time-renters-guide.

RESIDENTIAL PROPERTY MANAGEMENT SECTOR

Making rental data work for you Wallace Tapera, Digital Customer Advisor, REINZ

REINZ understands how busy it can be as residential property manager — juggling tenants, landlords, rental appraisals, maintenance and often, a tonne of admin. We want to help make your work as efficient and effective as possible, and our Residential Property Management Portal does just that. Wallace Tapera, Digital Customer Advisor at REINZ, provides a rundown on how our platform can support your everyday work.

REINZ has a statistics portal specifically for residential property managers. Included in your membership, it provides access to current and historical listings, and helps you to discover key trends in the rental market, find an overview of a particular suburb and create quick and easy reports and appraisals. Property management members can log in via the REINZ website and search for market data from the Ministry of Business, Innovation and Employment and realestate.co.nz listings. From here, you will find various professional rental reports that can be customised for specific regions. In addition to rental data, we have census data and information on aspects including school zones. Below are some key features of the residential property management portal.

Search Rental Properties function The Search Rental Properties function allows you to access current and historical rental listings. This gives you the ability to search for a specific address, suburb, city, or nationwide with the option of showing your results on the default map view or a table view. You can then download and export a PDF of the results of your search.

Market Intelligence report Our Market Intelligence tool is an effective way to find current trends in the rental market, providing the

most up to date rental data. It allows you to generate reports on regions, wards, cities, suburbs or nationwide. The results of your search can also be downloaded and exported into a PDF report.

Location Profiler The Location Profiler provides an overview of a chosen area, including a map view, school zones information, census data and rental data. You can use this function to compare rental data between two areas. This data can also be downloaded and exported into a PDF report.

RentalSmarts In 2020, REINZ launched RentalSmarts — an online tool that enables our property management members to quickly create a professional report of comparable rental properties and build an appraisal using artificial intelligence. It provides the most up to date, market-leading data on past and active rentals. Rental appraisals can be a time-consuming process for even the most experienced property managers. Visit statistics.reinz.co.nz/home landing to get started. REINZ’s Digital & Innovation team are always available should you require an online demonstration or some training. You can contact Wallace at wtapera@reinz.co.nz with any questions or to set up training. WINTER 2022

EDUCATION

It’s always a great time to learn Chris Campbell, Head of Education, REINZ

In the real estate profession, the education opportunities are endless. We’ve been refreshing our training and courses, and assessing opportunities for improvement. There are some exciting times ahead in this space.

REINZ courses and training are developed to engage learners at all levels and of all learning styles. We use animation and narration to appeal to visual and auditory learners. There is also supported and independent learning both online and in-person including workshops, webinars, and training. As the new Head of Education at REINZ, attending my first face-to-face verifiable training events allowed me to meet many wonderful individuals. I had open discussions about current professional sentiment and gained insight into several key areas that require action in the education space. It also brought to my attention how we approach our training delivery.

Blended learning I have always been an advocate of blended learning. Research suggests that blended courses better motivate learners and can provide superior learning outcomes. However, the literature says how a course is taught is as important as whether the course is blended — or not. That’s why we attend to both. Blended learning expands our trainers’ tool kit, allowing them flexibility to choose from a wider selection of learning activities. It means they incorporate case studies and roleplay, for example, which can improve your learning experience and achieve better outcomes by making it easier to retain the information presented.

Making those vital connections Face-to-face training will always be a great way to build connections — alongside peers, trainers and course materials — and opens up opportunities for more interactive learning activities. Meeting colleagues and peers and discussing current market trends is a great way to connect and learn what’s happening across your networks and beyond.

The Real Estate Institute of New Zealand

Check out what trainings we have available for you and/or your team below or via the REINZ education portal. And as always, please reach out if you have any questions, queries or feedback — we’re ready and available to support you and your learning pathway in any way we can: education@reinz.co.nz.

REINZ 2022 verifiable training Whether online or in-person, we’re here to deliver an engaging programme of verifiable training. If you haven’t already done so, book now and complete your required verifiable training at your own pace and avoid the end of the year rush to complete.

Complete list of available verifiable training topics: 1. Balancing fiduciary obligations and fairness to the buyer (mandatory) 2. Know the property (mandatory) 3. Methods of sale 4. Communication: Channels and documentation 5. Physical property inspections 6. Issues beyond the boundary 7. Supervision 8. Trust accounts 9. Business appraisals — sales 10. Commercial sales and leasing — ethics 11. Marketing 12. Agency Agreements 13. Conjunctional sales 14. Buyer experience 15. Disclosure: obligations to your client and customer 16. Legal ownership and tenure (title)

EDUCATION

Online verifiable training Our 16 online verifiable modules include the latest mandatory REA topics and electives for 2022. Individual modules are available for purchase, or you can opt for one of eight packages (10 hours per package), including sector-specific packages for Commercial & Industrial and Business Broking. Choose between live online training with one of our expert trainers, or self-paced packages — you know how you learn best.

Face-to-face verifiable training We’ve organised our in-person training as Destination Events taking REINZ education to some of New Zealand’s most popular towns and cities. Verifiable training includes a REINZ industry update for a comprehensive, sectorwide education experience.

each other and are aware of the signs that may harm our colleagues, family and/or friends. That’s why we are introducing the GoodYarn programme to our non-verifiable training schedule. GoodYarn is an evidence-based, peerdelivered mental health literacy programme with three key aims:  increase awareness of signs and symptoms of common mental illnesses  build confidence in starting a conversation where you are concerned; and  improve knowledge of where and how to get help. The feedback from companies that have experienced this GoodYarn training is that it:  helps create a more caring workplace culture

Our members love the benefits that come with face-to-face training — time out of the office and learning by discussion. Considering COVID-19, we are closely monitoring the situation of each event to determine the likelihood of postponement.

 Enables them to develop a sense of contribution and collaboration.

New non-verifiable training programme — GoodYarn

Prospecting for future business — virtual training event

Faced with continuous change, especially in our sector where the market is so variable, it is essential we make time for

Changing market, changing customer expectations. To ensure a healthy pipeline, you need to stay relevant and top of mind.

 Provides personal development to staff  Helps staff to keep themselves well

Prospecting for future business is a fullyinteractive virtual training that takes a fresh perspective on prospecting — sharing new techniques and strategies for connecting with people to shape your business for tomorrow. Led by experts in their fields — including Australian keynote speaker Lee Woodward — we invite you to come with your questions and leave with a 10-point programme for prospecting, the knowhow to effectively incorporate your social contribution into your marketing, and Kiwi success stories. Register through the Education Portal, or email education@reinz.co.nz.

New real estate qualifications REINZ and Skills are currently working on delivering the level 5 and 6 New Zealand Certificates in Real Estate. The emphasis will be on level 5, as this is the newest qualification and will provide a pathway for those who want to become an agent in New Zealand. REINZ’s vision is to create a blended learning approach for both qualifications. This will involve face-to-face workshops, along with some live online assessment delivery. We hope to communicate a complete syllabus as soon as possible. WINTER 2022

EDUCATION

Property management training and qualification for all levels Whether you are at the beginning of your property management journey or want to continue professional development and upskill, we have you covered. Your pathway to property management may begin like in the diagram below — and REINZ will be with you every step of the way.

Interested in residential property management

The Real Estate Institute of New Zealand

REINZ beginner’s guide to residential property management (15 hours)

Works as a property manager

EDUCATION Beginner’s guide to residential property management This is a fully online programme that can be completed remotely and at your own pace. Practical and engaging, the course covers the basics of property management and takes approximately 15 hours to complete. The course is divided into three blocks of learning: 1. Getting the basics right 2. Property management practicalities 3. Understanding regulation.

New Zealand Certificate in residential property management (level 4) REINZ is working with Skills to provide members and non-members with the opportunity to advance their career by studying the level 4 qualification. To enrol, you must be actively working in property management in either a paid or voluntary

New Zealand Certificate in residential property management (level 4)

capacity, and you will also need to make sure you have someone working in the industry who can support and mentor you as you study. The programme duration is 12 months, comprising content and assessments that are completed online with Skills and four practical, engaging and hands-on workshops to reinforce the learning.

Property management workshops For the level 4 qualification, we run four property management workshops throughout the year, driven by our Head of Property Management Jo Rae and featuring our in-house legal counsel and speakers from across the industry — from practicing property managers to Government officials. These are available for everyone to attend and are free to those who are signed up for the level 4 qualification.

Continuing professional development with REINZ workshops and courses

Upcoming dates for 2022: Wednesday 22 June

Wellington

Thursday 25 August

Auckland

Wednesday 9 November

Auckland

Property management webinars and courses REINZ also provides relevant webinars and short courses on current changes to legislation. These include Healthy Homes Standards, RTA updates and inspections, situational awareness and much more.

REINZ beginners guide to commercial property management REINZ launched a beginner’s guide to residential property management in 2020, and since then we have been working to add more ‘beginner’ courses to support those moving from real estate or property management. Our newest addition, the REINZ beginner’s guide to commercial property management, is now available for enrolment. The three-part course shares foundational guidance to help you develop a deeper understanding of commercial property management and the difference between residential property management. It also provides an overview of key aspects of a commercial property manager’s role and responsibilities. The course is a fantastic baseline to build on for anyone starting as a commercial property manager or for residential property managers looking to take on commercial property. The course is divided into three modules: 1. Differences between residential and commercial property management 2. C ommercial property managers' roles and responsibilities 3. Basics of the job.

Contact education@reinz.co.nz if you’re interested in enrolling your team in the beginner's guide to commercial property management course. Please note that this course is completed online. You will be awarded four non-verifiable hours upon completion.

WINTER 2022

2022

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AUCTIONEERING CHAMPIONSHIPS

19 – 21 June 2022 Events on Khyber, Auckland Free to attend. Live streamed on Facebook.

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TECHNOLOGY

Comparison — a thief of joy? NOT WHEN IT COMES TO BUSINESS Miles Fordyce, Chief Digital & Innovation Officer, REINZ

Benchmarking — a form of comparison guided by data and key performance indicators allows you to understand where your business sits among competitors. With this comes the ability to identify opportunities and risk indicators, and above all, it enables data-driven decisionmaking to improve your business in the long-term.

The desire to compare oneself to others is an innate human trait that naturally extends to the business context. How are you doing compared to similar businesses, and where are the trends, outliers and exceptions? How are your marketing campaigns and targeted activities influencing your business? Where are your opportunities for growth, expansion, or to pivot?

Benchmarking and real estate Benchmarking in real estate is no different, and with various operating models across the industry, benchmarking is made all that more difficult. Franchise versus head office, centralised versus decentralised, how do you collate, share and make relevant these data?

Many real estate businesses already use benchmarking to a degree. Providing consistent reporting across an entire brand and the ability to drill into the detail across each office — and even regionally — to understand the overall trends and comparisons of business performance is key. Additionally, ensuring the data is segmented to ensure privacy and competitiveness also needs to be balanced with the need for transparency and flexible analysis. In a changing market, it is important now more than ever for business owners to ask themselves whether their results have been driven by a holding a competitive advantage, the current market conditions — or a combination of both.

WINTER 2022

TECHNOLOGY When analysing business performance, real estate businesses should be delving further into:  Aspects of the business that are exceeding market trends and delivering a competitive advantage  Aspects of the business that are underperforming against others in the industry  Trends that may help inform plans and goals for future planning and success. Using benchmarking to help understand these fundamental performance indicators will enable real estate businesses to put their focus on the right aspects of their business, contributing to effective growth.

REINZ’s Interactive Benchmarking Dashboard At REINZ, we have been working on ways to enable ‘within brand’ benchmarking to allow managers and franchise owners to see and measure their operational performance against other branches and against the industry in general. Taking a phased approach, we are currently rolling this product out to REINZ members —

piloting with brand leaders and franchise owners to use across their brand, regions and suburban offices before making it more widely available. We’re committed to empowering our members to make incisive business decisions supported by the best real estate data in the country. Our Interactive Benchmarking Dashboard will enable real estate businesses to understand their market environment and track business performance with confidence. Watch this space.

In a changing market, it is more important now than ever for business owners to ask themselves whether their results are driven by holding a competitive advantage, the current market conditions — or a combination of both.

REINZ RentalSmarts

Access via REINZ’s Statistics Platform https://statistics.reinz.co.nz/home FREE for REINZ property management members create rental appraisals in a matter of minutes!

The Real Estate Institute of New Zealand

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

INDUSTRY

Nadine Thomas, Head of Engagement, Insights and Education, REA

Developing effective supervision systems TO PROTECT YOUR TEAM, AGENCY AND CLIENTS

Proper supervision of salespeople is a requirement set out in section 50 of the Real Estate Agents Act 2008 (the Act). Proper supervision is much more than simply a compliance obligation. It’s one of the best investments an agency can make towards reducing conduct risk and consumer harm, preventing potential complaints and developing the skills and capability of its workforce.

Our licensing stats tell us there’s been a major influx of new salespeople into the sector over the last couple of years. It’s positive to have new people, skills and talent entering the profession, particularly when the labour market is tight across many industries — but it also puts a spotlight on the importance of effective supervision practices within the real estate sector. Ultimately, the purpose of the Act’s supervision requirement, and the Professional Standard on Supervision (the supervision standard) developed by REA, is to help prevent harm to clients and customers. In practice, effective supervision does this by ensuring oversight and responsibility around professional conduct in relation to real estate work. It also helps enable skills and knowledge transfer within businesses, supporting licensees in developing their professional competency within the agency environment and promoting best practice. Salespeople are also entitled to expect proper supervision for their own protection and development.

What does ‘proper supervision’ mean? The Act says that salespeople must be ‘properly supervised and managed’ by a branch manager or agent, such that they are working under sufficient ‘direction and control’ to ensure competence and compliance with the requirements of the Act.

The Real Estate Institute of New Zealand

Essentially, the quality of any supervision system or practice is determined by its effectiveness. REA developed the supervision standard to provide more detailed principles for licensees regarding proper supervision. All licensees should be familiar with these principles, which include:  Anyone holding a salesperson's licence must be supervised when doing real estate agency work, regardless of how long they have been in the industry  A salesperson with less than six months’ real estate agency work experience cannot prepare sale and purchase agreements or provide advice to clients about their legal rights and obligations  Supervision is not the same as employment line management  Remote supervision is allowed if it meets the requirements  Supervisors may supervise more than one salesperson. How many will depend on the supervisor’s capacity and capability and the competence of each salesperson  Supervisors may change the nature and degree of supervision as a salesperson demonstrates increased competence. The standard recommends a written supervision plan/agreement to ensure a salesperson understands how their

INDUSTRY

supervision will operate. We also recommend designated supervisors keep supervision records in addition.

The template can then be adapted for each salesperson, potentially using a tiered approach that a salesperson can progress through over time.

Developing a good supervision policy and plan

Remember that effective supervision is about more than having a plan and ticking off requirements. The supervisor and salesperson need a relationship based on good communication and the ability to raise issues with each other proactively.

A well-documented approach to supervision within an agency that forms the basis for tailored individual plans can be useful for all parties. This could be a standard agency template outlining specific supervision requirements, for example:  how many team meetings the staff member must attend  the frequency of one-on-one meetings with supervisors  the types of appraisals that need to be reviewed by the supervisor (all, or only very complex appraisals)  the oversight/review requirements for preparing marketing plans and budgets, and drafting sale and purchase agreements.

Raising the bar on supervision The challenges of the current market make this an ideal time to review your agency’s supervision policies and practices to ensure they are robust and effective. We’d suggest doing this regularly anyway and taking a consultative approach within your team. Maximising the capability of supervisors themselves is key. Only people holding Branch Manager or Agent licenses can be supervisors, and supervision is a skill in itself that can be trained and developed. REA has developed a 1.5-hour Supervision module as a new elective topic for verifiable

Continuing Professional Development in 2022, which we highly recommend for new and even experienced supervisors, particularly if you’re looking to refresh your overall systems and policies. Longer-term, it’s important to consider succession planning and progression within the business. Enabling people to step up to higher-tier licenses provides more supervisor options, to spread that workload and/or maintain an effective supervision ratio as your salesforce grows. The recent refresh of the Branch Manager and Agent qualifications aims to facilitate that professional pathway, and those new opportunities will become available later this year. Most of all, remember that supervision is a practice, not just a policy. To be effective, it should be ongoing, proactive and tailored to your circumstances, with the objective being a fairer, safer conduct environment with more confident participants — vendors, buyers and salespeople alike.

Recognising the importance of supervision and our changing sector, REA is undertaking a review of supervision across different business models, and we will consider whether any changes to the supervision standard may be required. If you would like to contribute to this review, please email industry@rea.govt.nz For a copy of the Professional Standard on Supervision, more information on the Supervision CPD topic and list of approved training providers, see rea.govt.nz.

WINTER 2022

INTEREST

Digital marketing UT WITH THE OLD AND O IN WITH THE NEW

Jan Rivera, Communications & Marketing Assistant, REINZ

While COVID-19 posed significant challenges for the real estate profession, it provided an opportunity to build and strengthen relationships with buyers and vendors, as well as brand reputation and awareness using digital marketing. Jan Rivera, Communications & Marketing Assistant at REINZ, discusses the importance of weaving digital marketing into your day-to-day work.

When COVID-19 arrived on our shores in 2020, the real estate profession had to adapt to a different way of doing business. The digitisation of traditional sales methods and implementation of new ways of working enabled real estate professionals to continue to serve their customers as alert levels — then traffic light settings — changed. Technology made it possible to advertise and sell a property remotely. Part of this was how we communicate and engage with prospective buyers and sellers. Embracing flexibility, the profession leveraged digital marketing to reach an online audience.

Quick digital marketing wins With technology increasingly at the heart of our lives and with so many potential touchpoints to engage existing and potential vendors/ buyers, an omnichannel approach to your marketing strategy is crucial. By carefully creating and curating your engagements, you can increase visibility and create constant contact. Where to start? Fortunately, there are some quick wins.

1. Website — your digital home Your website is a crucial opportunity to boost your visibility and sell you and your brand. Potential home buyers rely heavily on digital presence and search engines to find the best real estate agent for them. Build your website right; this includes a visual and professional brand that captures attention, a streamlined customer journey

The Real Estate Institute of New Zealand

and optimisation using SEO principles to ensure you are turning up in searches. People buy into people, and value market and local knowledge. Your website should reflect this. If you can provide local market insight, transparent market advice, home staging advice or other — leverage content marketing to build knowledge and confidence in your understanding of what’s happening. Be clear on your objectives. If your primary goal is lead generation, adapt your strategy — across all your channels — to match. From your social posts to your listings on property platforms such as realestate.co.nz, consider using links that redirect your audience back to the listing on your site. This helps you focus on your services for home sellers, for example, and ensure you are attracting your target audience. Don’t forget to track your performance to see what’s working, and what’s not, and identify where your visitors are coming from — this will help you to focus your efforts.

2. Social media — building an online community According to Statista, 82% of Kiwis were active social media users in 2021 and New Zealand was ranked in the top ten countries within the Asia-Pacific for social media usage. Not only does social media and digital marketing promote brand awareness, it also enables you to engage with your network by interacting directly and posting useful updates that set you up as a thought leader in your space.

INTEREST 5. Paid campaigns — target your audience Consider paid search or advertising on Google and social media platforms such as LinkedIn, Instagram and Facebook. If a real estate professional creates an ad targeting people interested in buying property, the platform will present the ad to any user that fits the persona and has interacted with anything real estate related. Have you ever searched a product on Google and then seen multiple adverts on Facebook relating to that product? This is a prime example of the power this type of marketing holds. It adds to your exposure, and repeat exposure keeps you front of mind.

6. Adapt and improve — face change with change

Where digital marketing trumps traditional methods is the ability to track performance, learn, refocus, and adapt quickly. Investing some time daily to interact on social media keeps your brand fresh in people’s mind. Providing content for regular posts and updates can be time consuming, consider following key channels sharing information that is valuable and relevant to your target audience and can help build your profile as a thought leader. The important thing is keeping your profile up to date so you can use social to connect with your clients and advertise properties.

3. Diversify and conquer — different strokes for different folks Your online strategy must recognise that the market is saturated — there is so much content out there vying for people’s attention. Visual assets are a great way of capturing attention — a picture says a thousand words — and video has really come to the fore and needs to be part of your digital marketing strategy.

4. Segment and target — personalising your messages Potential customers who are more likely to make a purchase can be easily segmented and brands can identify and target a specific audience with personalised marketing messages. Whether social media, paid ad campaigns, or email marketing campaigns segment your audience based on age, gender, location, interests or behaviours. Your understanding of your audience — built on your experience in the profession and the analytics from your channels — can be paired with customer segmentation to convert information into strategies and creative marketing approaches. It can also be used to inform the full customer journey from first digital engagement to appraisal and beyond. Interacting and engaging with an audience with personalised marketing messages helps you to resonate with your audience, and build awareness and, ultimately, loyalty.

Where digital marketing trumps traditional methods is the ability to track performance, learn, refocus and adapt quickly. When running a campaign, you can track its efficacy in real time to see where you should focus your efforts. Every digital platform provides brands with highly valuable metrics including, but not limited to, impressions, engagements, shares, views, clicks and time on page to track campaigns daily. If you are running a paid campaign, you can quickly see if you need to adjust tact of advertising budget based on their return on investment. For instance, you can spend $50 to run a social media advertisement for four days and adjust the amount to spend each day.

The great equaliser Digital marketing gives small brands with small budgets a fair playing field to compete with bigger brands with big budgets. Search engines don’t care about the size of the company, they will always prioritise content that best resonates with a search. Optimising your website, your content, your ads specific keyword phrases that users are likely to search when they are close to purchasing will help increase a brands’ rank on search engines for those keywords. In real estate, digital marketing generates a lot of these opportunities by allowing a brand to reach prospective buyers through a wide range of channels. In a market where remaining relevant and top of mind is fundamental to attracting buyers and achieving effective sales, ensuring a robust digital marketing strategy and online presence is key.

Want to learn more about how to revamp your digital marketing presence? REINZ offers marketing courses and webinars in the education portal at reinzeducation.co.nz. You can also email education@reinz.co.nz with any questions or queries.

WINTER 2022

INTEREST

Resiliency to the rescue Danielle Bethune, Talent Development & Career Consultant, H2R Consulting

The real estate market is changing. It’s critical to understand the change and be able to adapt to it. For real estate professionals, particularly those relatively new to the profession, who find themselves in a new, more challenging work environment resiliency — the ability to be flexible and recover quickly in the face of change — is vital.

After a period of sustained upward growth, we are seeing the property market turn and sentiment shift. As FOMO (fear of missing out) is replaced with FOOP (fear of overpaying), the environment in which we do real estate business and our interactions with customers change, which can take a financial and mental toll on us — impacting confidence, morale and resiliency. Like every market, real estate is cyclical. History tells us it will bounce back, but as we enter a period of more subdued growth, it is critical you strengthen your resiliency so you can ride the wave and continue to thrive in these changing conditions.

What is resiliency? Essentially, bouncebackability. Along with death and taxes, change and setbacks are inevitabilities of life. It is how we recover and emerge positively from them that determines our resiliency. This can be developed and help us to feel more optimistic, in control of our lives and hardy when facing setbacks — facilitating greater ongoing success. Say a sale you have been working tirelessly on falls through at auction, resulting in the vendor shifting companies. For an agent with lower resiliency, this may be an overwhelmingly negative experience, diminishing their confidence, wellbeing and effectiveness in securing the next sale. Whilst still a challenging experience for an agent with higher resiliency, they will be able to pick themselves up more quickly, shifting their focus to houses still in the pipeline.

Traits of resilient people: According to the A&DC Group, there are eight core characteristics of resiliency:  Self-belief: Confidence in your ability to overcome obstacles  Optimism: The belief that no matter how

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hard things get, they will turn out well in the end  Purposeful direction: Having clear goals you are committed to reaching  Adaptability: Willingness to alter your approach and behaviour according to changing conditions  Ingenuity: Belief in your ability to solve problems you face  Challenge orientation: Embracing challenging experiences, viewing these as developmental opportunities  Emotion regulation: Remaining cool, calm and collected during emotionally trying situations  Support seeking: Willingness to seek help and support during challenging circumstances.

Signs your resiliency may be slipping: Are you more irritable than normal? Not sleeping? Lost your appetite? Drinking more than usual? Isolating yourself or being overly clingy? Getting emotional over little things? Stopped doing what gives you joy? Everyone’s early warning signs are different. Getting to know yours is the first step in taking action. If you don’t know what yours are, ask your partner, colleagues or kids, as they probably have a fair idea.

What can you do? It is important to think about what strategies you can put in place to strengthen your resiliency levels, particularly if you have noticed these slipping. Below are some tips for developing each of the core resiliency traits:  Self-belief: Identify and talk to role models who manage well and have had ongoing success in challenging

INTEREST

conditions. Perhaps they will be an experienced agent who has been through many peaks and troughs in the market. Ask what they do to get through these times with their confidence intact.  Optimism: Listen to the dialogue in your head when you are explaining why something happened. What stories are you telling yourself? If they are overly critical, challenge your thinking by looking for evidence for and against that thought, and change it to a more realistic one.  Purposeful direction: Set clear goals and make a plan for achieving these. Ensure that these goals are realistic and aligned with current market conditions. Celebrate successes along the way by noting down your key wins and achievements each week. You can look back on this if you are having a bad day to maintain morale.  Adaptability: Accept the new reality and focus on what you can control. You can’t control the housing market, but you can control how you choose to respond and your actions.

Along with death and taxes, change and setbacks are inevitabilities of life. It is how we recover and emerge positively from them that determines our resiliency.  Ingenuity: Approach problems in a solutions-focused manner by thinking outside the box, generating new and creative ideas to solve problems.  Challenge orientation: Be willing to take yourself out of your comfort zone and see challenges as opportunities for growth.  Emotion regulation: When in a stressful or emotionally charged situation, a simple breathing technique can make you feel calmer and more grounded. The box breathing technique involves inhaling to a count of four, holding your breath to a count of four and exhaling to a count of four. There is a plethora of other techniques on mindfulness apps, such as

Headspace and Calm, both of which have free trials.  Support seeking: Resilient people know when to ask for help. Sources of support they use include friends, family, mentors and colleagues. Many organisations also have free EAP counselling services, so be sure to check out what your organisation offers. Incorporating a few simple steps to build resiliency will help to ensure that, as the housing market has historically done, you will bounce back from setbacks emerging stronger than ever. Resilience Model Source: The a&dc Group, The Resilience Questionnaire User Manual, 2012

H2R Consulting supports organisations with resilience coaching, recruitment, talent development, and change/career support. Learn more at www.h2r.co.nz.

WINTER 2022

INTEREST

Influence marketing and the power of reciprocity

Julia Dyer, Founder, Real Estate for Good, and writer of the REINZ Marketing with Purpose course

Have you ever given something and received something in return? Have you ever received something and felt obligated to give back? In this article, I will be taking a deeper look at the principle of reciprocity and how to make generosity your new business growth strategy.

When looking into marketing for today, we can see new behaviours emerging in business based on customer expectations are becoming the driving force for change. What we’re seeing is the emergence of the Connection Economy — an economy of prosperity, collaboration and infinite possibilities and based on trust, value alignment and reciprocity. It calls for us to draw on our emotional intelligence and connect through core values such as empathy, compassion, and kindness. Part of this is becoming more generous — many real estate business and professionals are already proficient in this. The good news is these altruistic leanings certainly and increasingly have an upside when building a sustainable business.

What exactly is reciprocity? Quite simply, reciprocity is an inherent human law that outlines the obligation we feel about returning a favour, a good deed or an act. If someone behaves in a certain way toward us, we feel the need to behave in the same way back. For example, if you invite me to a party, I should invite you to one of mine. If you come to my party with a gift, I would come to your party with a gift. If I do something for you, you owe me a favour. Generally, people say yes to those they owe. Every human being plays by this rule. Do not take without giving in return.

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This act of giving may not necessarily be an item; it can be sharing your time or knowledge or introducing a new client to a friend. It can be one of many things. All you need to do is tap into what they need and ask or identify how you can help. For instance, if you are looking to build partnerships and increase referrals, you can help others attract new leads and grow their business by promoting and referring them. In turn, they should do the same for you.

What goes around, comes around If you are looking to connect with existing clients or attract new clients, offer relevant information of value. When you listen and pay attention, you can find a way in. The people you nurture generously will naturally want to help you advance your circumstance. An example of this is when a real estate professional genuinely helps a buyer find their dream home, and it is evident there is nothing in it for them because the buyer has already sold. Even though the buyer cannot directly return the favour, they are likely to refer the agent to family and friends in the future, so the ‘debt’ is settled. If you give generously in the right way, you can expect to receive in return, and this will be a commanding aid in driving advocacy, referrals, and, ultimately,

INTEREST revenue. When there is the right intent, the principle of reciprocity is a powerful tool in acquiring new customers or developing existing customers.

An art to gifting If your gift is not appropriate, you can make people feel uncomfortable and they may shy away, knowing they cannot reciprocate. It is also important to note that if a gift is self-branded, it may be seen as a promotional item and not a genuine gift. Here are a few ways to make the law of reciprocity work in your favour.

1. Make your gift personal or relevant The customer should feel that your gift is offered individually. You can personalise a gift quite easily with a handwritten note — this can make all the difference.

If your gift has a story behind it and is helping to create social change, this will help to enhance the experience. You can also offer a client a selection or choice of items. You will learn a little more about them when they choose, and they will appreciate the gesture.

2. It’s all in the timing If you are looking to increase your conversion rates, it will benefit to gift early in the relationship, so the agent selection decision is influenced. An example you could use at your next appraisal could be offering five hours of free cleaning or a gardening voucher when they list with you — depending on what they prefer. The best thing about being generous in this manner is that you can help someone grow

their business and strengthen your referral relationships in the process. Now is the perfect time to reflect on how you are currently gifting and when and how you can improve this process. If you want to dive into this topic further and learn some additional helpful tips, join me at REINZ’s first virtual training day on Wednesday, 15 June — Prospecting for future business. To book your spot, head to reinzeducation.co.nz.

Julia Dyer is a Creative Marketing Strategist, Founder of Real Estate for Good and writer of the REINZ Marketing with Purpose Course, soon to be launched.

When there is the right intent, the principle of reciprocity is a powerful tool in acquiring new customers or developing existing customers.

WINTER 2022

INTEREST

Motivating your sales team remotely Jasmine Platt, Founder, Real Estate Leaders

Real estate salespeople have been in and out of offices forever. But in this time of significant disruption and change, keeping in regular touch with your salesforce and helping them stay motivated and focused on the right things is more critical than ever.

As a real estate leader, you must be able to manage these changes. Just because the work environment and market have changed does not mean you can’t succeed or take advantage of it and grow. The key is your team’s motivation. Now, that may sound a bit too simple. Motivation, after all, is such a broad topic. However, a well-motivated real estate team is a direct result of a well-led team — a team with competence, clear thinking, and confidence because of their leader's tools and strategies. After all, motivation, competence and confidence are inextricably linked. Let’s take a look at the best strategy for motivating a real estate sales team when working remotely.

Understanding your salespeople Firstly, when I refer to ‘team’, let me clarify that I’m really talking about individuals. Not everyone needs or is motivated by the same thing. Some team members will need very little coaching or training, while others will struggle without it. In fact, most sales team members will fit in one of three categories: 1. Autonomous: Your independent, selfmotivated high performers. 2. Budding: Those who need coaching and training to facilitate their thinking and build their competence and confidence — but have the potential to be great. 3. Costly: Those who cost more money, energy and time than they return you. While

The Real Estate Institute of New Zealand

these team members may be lovely people, they lack the right attitude, ambition and willingness to take responsibility for their development and success. Can you see each of your team members in one of those groups? With the ability to motivate your team the right way, you can move more of your team into the autonomous group and begin to build a culture where motivation is natural.

Five steps of team motivation Let's look at the process to motivating your team consistently, even when they are working remotely. Step 1: Commit to being a great leader One of the most common misconceptions leaders have relates to their role. Many assume their job is essentially to keep the doors open, run regular sales meetings, oversee paperwork and compliance, and offer suggestions and the odd bit of encouragement and recognition. A great leader sees their role entirely differently. Instead of thinking the responsibility for sales exists ‘out there’ with their salespeople, they take ownership of results, recognising that their job, as the leader, is to have their salespeople win. Great leaders do the work to lead the team, and they're rewarded for it, not only with salespeople who win but also by becoming attractive offices for talent. After all, who doesn’t want to work for a leader who truly cares? Step 2: Set goals For your sales team to be motivated every day, they need to know what they are

motivated or working towards. What are they trying to accomplish? What matters? Leading the team requires facilitating their thinking. Have them create specific, tangible goals that are authentically meaningful for them. Intrinsic motivation will win the day! Step 3: Create a plan Once they have a meaningful sales target, how will they realise it? Goals don’t work without a clear path to achieving them. They will need to choose specific strategies and steps for attracting and winning listings and closing sales. Whatever their goal, there needs to be a clear path paved by predictable steps. A plan will help them control the actions they’ll take each day to achieve their goals. Step 4: Set up learning and development plans A learning and development plan (L&D

plan) is a specific strategy that you create with each of your team members that gives them an achievable path to the success they envision for their career and life. A well-constructed L&D plan helps to facilitate meaningful conversations about their strengths, weaknesses and where they want to go to work on their development. This allows you to plan relevant training and coaching to support their individual development needs. Step 5: Implement L&D plans through coaching and training Once you have their L&D plans, you must ensure that together you deliver on their development plan. As a leader, you must review these plans, schedule regular one-on-one coaching, and identify and provide relevant training. (Zoom is a handy, remote option, as is Miro — an online visual

whiteboarding tool to create slides for training or capture critical elements of your coaching discussions.) As you do the work to coach and train your salespeople actively, you will observe them get clearer in their thinking, become more productive, build increased confidence and independence and see actual results.

Unlock the mystery of motivation for your team Hopefully, you can now see a clear path toward improving motivation in your sales team. A more motivated, competent sales team will mean more listings and sales. In the face of the drastic shift to an increasingly remote work environment, the most engaged, confident, and motivated sales teams, led by intentional, committed leaders, will win.

If you need help implementing goal setting, learning & development plans, coaching, or training for your team, let’s chat. I’ve developed proven tools, templates, and strategies specifically for real estate leaders like you. With the right tools, you can motivate your team and grow your business no matter what the market or work environment is doing. Jasmine Platt helps real estate agency leaders to lead and grow successful real estate sales teams, make more money and win more of their time (and sanity) back in the process. If you’re a business owner and need help putting a business plan together, or you want to work through business planning with your sales team, visit www.realestateleaders.co.nz — or email jasmine@realestateleaders.co.nz. WINTER 2022

FINANCE

A robust finance strategy YOUR BEST ARMOUR AMID UNCERTAINTY

Hannah McQueen, Founder, enable.me

You’d be forgiven for nursing a dose of whiplash after the past year in real estate. From the rising prices and rampant FOMO that gripped the market in 2021, market sentiment has done a 180-degree turn in 2022. The introduction of the Credit Contracts and Consumer Finance Act (CCCFA), and the reintroduction of loan-to-value ratio restrictions suddenly made lending difficult to secure for an increasing number of borrowers. Not only this, but the first interest rate increase in seven years and the promise of more to come. Amid these conditions, how can buyers prepare their finances to purchase a home or an investment property with confidence? Here’s some advice that real estate professionals can pass on to uncertain buyers.

Focus on your personal finances While there are changes being hastily made to the CCCFA, the reality is that the better candidate you can make yourself for lending, the better your borrowing prospects. That means focusing on improving your financial situation — not just how much equity you have and how much you earn, but how much of that income you don’t spend. How much is left over is the important bit, which becomes even more important as banks start to test loans at higher interest rates. If your surplus is tiny, inconsistent, or non-existent — you become a riskier prospect for a loan. Your surplus can also be applied to improving your financial position, which makes your situation more resilient.

Look long-term, not short-term The relevance of market conditions at any given moment wanes when you’re investing for the long-term — but most people don’t

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have a financial plan for the next five weeks, let alone the next five years! It’s important to cast your mind back to other times when market sentiment has shifted — and what the impact of that period was. If, for example, you bought property in 2007 or 2008 before the Global Financial Crisis, then sold that property in 2009, it’s likely you’d have realised some of what amounted to about a 10% drop in property prices. Conversely, if you held on to that property that downturn would be less than a blip on your radar in the context of the gains you’d have made in the following decade or so. Being able to hold through a downturn is crucial — which brings us back to the importance of strengthening your personal financial situation, to give you that holding power.

Be cautious about ‘buy the dip’ advice The standard investing advice is ‘buy low, sell high’ which is fine, but often contrary to what people actually do — which is buy when prices are already rising, then panic and sell once they’re already falling. It also overlooks two things: we only recognise the bottom of the market in hindsight, and when the market is falling, the banks become even more circumspect about lending you money. That makes ‘the bottom’ a cash buyer’s playground — but a leveraged buyer’s nightmare. So, if you’re waiting for the bottom of the market, don’t overlook the impact of the credit crunch that usually accompanies it.

FINANCE

Evaluate your biases Every day I witness people’s cognitive biases and psychological responses to financial decisions, and while I’m no psychologist — it is fascinating. When faced with uncertainty, many simply freeze — opting to do nothing for fear of making a choice that could lose them money, overlooking that inaction can also be costly. We saw many examples of that in 2020, as people delayed decisions like buying a property, betting on the fact the market would fall, only for it to confound the experts and do the opposite in a big way. Economists Amos Tversky and Daniel Kahneman’s experiments in the 1980s led them to conclude that people fear a loss twice as much as they welcome a gain. It results in us focussing more on avoiding losing something rather than on the chance

of making something. So, if you’re feeling hesitant, it may be worth evaluating whether, in focusing on what you could lose, you’ve overlooked what you could gain.

Narrow your focus When much is outside of your control, the best response is to zero in on your own situation — what are you trying to achieve, what problem are you solving, what factors can you influence and what is your window of opportunity to act? Think through the potential consequences of your actions and the ramifications of inaction. Consider what an investment could return over time, rather than by Friday. Stop looking for hacks and quick fixes and instead make a longterm plan as dispassionately as you can — because a robust strategy is your best armour amid uncertainty.

Being able to hold through a downturn is crucial — which brings us back to the importance of strengthening your personal financial situation, to give you that holding power.

Hannah McQueen is a financial adviser, chartered accountant fellow, personal finance author, and the Founder of enable.me — financial strategy & coaching. This column is informational only and should not be considered personalised financial advice.

WINTER 2022

LEGAL

Ready for the Fair Trading Amendment Act 2021 changes?

Joyce Chiu, In-house Counsel & Advisory Services, REINZ

The one-year transition period before the Fair Trading Amendment Act (the Act) changes come into force on 16 August 2022 is drawing to a close. Real estate agencies should review their business-to-business contracts and trading practices before then to ensure they do not fall on the wrong side of the law. To provide new protections for consumers and small businesses, there are three significant new protections to address unfair practices, including:  S trengthening the ability of consumers to request uninvited direct sellers to leave their property — including using written notices  Extending the existing protections against unfair contract terms in standard form consumer contracts to also apply to business-to-business contracts valued under $250,000 per year  Introducing a prohibition against unconscionable conduct in trade.

Additional authority for consumers to require uninvited direct sellers to leave their property Under section 36RA of the Act, residents or someone with the authority of a property resident will now be able to direct people to either leave or not enter their property if the individual is there, uninvited, in the hopes of negotiating a listing or a sale. Directions include:  Anything verbal, written or in any other visual form

If the direction is specific — such as a resident telling a real estate agent not to return as they are not interested in the sale — the agent must not enter or re-enter the premises for two years. This is if their purpose is to negotiate an uninvited direct sale agreement. Upon receiving specific directions to leave the property, the real estate agent must do so as soon as possible. A breach of section 36RA could result in a fine of up to $10,000 for an individual or up to $30,000 for a Body Corporate. On top of these penalties, civil remedies will also remain available such as the court ordering a contract to be cancelled, varying a contract or directing the payment of compensation. Real estate agents should keep a record for two years of any property residents who direct them to leave. This is to ensure they do not breach the Act. If a real estate agent has allegedly breached the Act, they will need to prove the person who gave the direction no longer resides at the property, or that they received express permission to enter the property. Agencies should take this opportunity to remind salespeople that if there is a sign on the letterbox or front door saying, ‘do not knock’ or ‘do not call’, agents must follow these instructions.

 Directions audible or visible  It may be a general standing direction (e.g., a notice on a gate or front door directing salespeople not to call) or be a specific direction (e.g., a face-to-face spoken direction).

The Real Estate Institute of New Zealand

Unfair contract terms provisions extended to cover small trade contracts The jurisdiction for a court to hold that a clause is unfair and should not be binding,

LEGAL

will now be extended to apply to all small trade contracts in standard form.

Prohibition against unconscionable conduct

To be eligible as a small trade contract:

Section 7 of the Act stated that a person must not engage in unconscionable conduct. There is no clear definition of unconscionable conduct in the Act, as Parliament did not want to limit the circumstances in which this protection could be relied upon.

 each party to the contract must be engaged in trade on the same or substantially similar terms;  it must not be a consumer contract, and  the contract must not form part of a trading relationship that exceeds the $250,000 annual threshold when the trading relationship first arises. However, despite the change, real estate agencies can rest assured that the legal test for what is defined as unfair is fundamentally the same. A term is considered unfair if:  it would cause a significant imbalance in the parties’ rights and obligations under the contract  it would cause detriment to a party if it were enforced, and

However, unconscionable conduct is assumed to mean conduct that would be unfair, oppressive and goes beyond what is commercially necessary. In this sense, the courts may consider whether there was a good faith in the negotiations, a power imbalance, or if the parties acted to protect the other parties’ interests. It is vital when conducting negotiations and auctions, that real estate professionals ensure the parties have understood the terms of the contract and no unfair pressure has been placed on the parties.

 it is not reasonably necessary to protect the legitimate interest of the party. WINTER 2022

LEGAL

New RPM regulatory framework proposed

Jo Rae, Head of Property Management, REINZ

Melisa Beight, General Counsel, REINZ

After many years of advocating for regulation of residential property managers, REINZ welcomes the Ministry of Housing and Urban Development’s (HUD) discussion paper setting out the proposed framework for the regulation. Led by the Associate Minister of Housing, the Honourable Poto Williams, the proposed framework is encouraging.

While many property managers uphold professional standards and voluntarily undertake professional development training, there are still those in the profession who fall short of expectations. By introducing this piece of legislation, the Government aims to promote public confidence in the industry by providing transparency and consistency around the delivery of residential property management services. One in every three households in New Zealand identify as renters — and this is expected to grow due to rising house prices. Property managers currently manage 40% of these properties and this percentage is growing — hence our Call for Change campaign, which sought to raise awareness around the need for regulation, and our continued advocacy in this space.

Licensing individual property managers and property management organisations The discussion document states that there will be a code of conduct for property managers, entry requirements including a fit and proper person test, as well as continuing professional development of 20 hours each year. Property managers would be required to utilise trust accounts for all client funds which are audited or independently reviewed annually. Industry practice standards would also include compulsory indemnity insurance

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and public liability insurance. There will be a complaints and disciplinary system, and penalties for unsatisfactory conduct or misconduct. The regulatory framework proposes licensing only individual property managers. However, REINZ believes property management organisations should also have to satisfy the criteria. This would mean property management organisations’ actions are also subject to the same scrutiny as individual property managers. In addition, as property managers tend to be employees, it is entirely appropriate that their employer is required to have a suitable trust account for all client funds and to hold appropriate insurance (instead of expecting them to meet this requirement themselves).

REINZ’s submissions on the proposal REINZ’s public submissions were forwarded to HUD on 19 April 2022. For our members who wish to view our submissions, a copy can be found on the REINZ Advisory Resources page in the Advocacy drop down menu. We received over 328 individual members' feedback on the proposals. While there was disappointment that private and commercial landlords were not captured under the proposed model, moving forward with regulation can only be seen as a positive step for those offering professional property management services.

LEGAL REINZ supports HUD’s objectives, including the Ministry’s proposal that the regulator’s powers vest in a body independent of the property management industry. Specifically, our submissions supported REA’s mandate being extended to allow REA to regulate property managers and real estate agents. Our members’ feedback survey indicated 84% of members prefer REA as regulator. Although our submissions were largely supportive of HUD’s proposed framework, we were cautious in supporting HUD’s cost recovery strategy, where a significant proportion of the costs associated with the delivery of the regulatory system would be met through fees and levies. It was a strong point through our submissions that any costs prior to establishing the regulations should be consulted on with agencies and individuals in the industry to ensure the fees are commercially manageable and will not be on-charged to consumers — tenants and property owners. We are also concerned with the intended timeframe for the delivery of the proposed regulatory framework. We believe regulation is required urgently, yet the regulations are expected to come into force mid2026. REINZ’s position is supported by our readiness. We are able to support our members to ensure they meet the professional entry requirements through

continuing education and industry practice standards, which we hope will result in an earlier implementation date.

Getting property managers up to speed REINZ property management agency members must meet REINZ’s criteria. This includes having a dedicated trust account that is independently reviewed or audited annually and holding professional indemnity insurance. Our syllabus of educational workshops and training for the sector has grown significantly since 2019. We offer the NZ Certificate in residential property management — a level 4 qualification, alongside a beginner’s course for those new to property management. We also hold online webinars and in-person training courses so that members can continue to advance their professional development. The good news for current REINZ property management members, and those seeking REINZ accreditation, is that the regulatory model proposed by HUD shares largely the same registration criteria as REINZ. This will make it easy for REINZ property management members to hit the ground running when the new licensing regime takes effect.

What’s next? From here, HUD’s Property Managers Review Team will analyse all submissions and report back to the Minister of Housing. The Minister will then seek Cabinet’s agreement to draft the Bill in September 2022. It is expected Cabinet will come to a decision on whether to introduce a new piece of legislation to regulate property managers in April 2023 — although we all hope that a decision will be made sooner. REINZ will communicate further updates, so please keep an eye out.

The good news for current REINZ members, and those seeking REINZ’s accreditation, is that the proposed regulatory model shares largely the same registration criteria as REINZ.

WINTER 2022

LEGAL

Impact of the Russia Sanctions Act 2022 on AML CDD

Joyce Chiu, In-house Counsel & Advisory Services, REINZ

On 11 March 2022, the Russia Sanctions Act was passed under urgency by Parliament and came into effect on 18 March. It is vital for real estate agents to be aware of the new regulations around assets and sanctioned individuals. Joyce Chiu, In-House Counsel and Advisory Services at REINZ, explains.

The Russia Sanctions Act (the Act) provided the legislative framework to implement sanctions in response to Russia’s invasion of Ukraine. The sanctions align with the Government and general public’s condemnation of the Putin regime’s invasion of Ukraine. So far, the sanctions restrict four key elements of civilian life:  Sanctioned individuals are not permitted to travel to, enter, or remain in New Zealand unless they are a New Zealand citizen or hold a residence class visa

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Under the regulations, real estate professionals are prohibited from dealing with sanctioned persons. If a transaction involves a sanctioned person’s or entity’s assets, or service to them, in addition to completing your reporting obligations under the AML/CFT Act, real estate professionals should seek legal advice before taking any further action. A breach of a sanction can come with heavy penalties. The list of ‘sanctioned persons’ continues to grow. This can be found at legislation.govt.nz.

 Certain ships and aircraft are prohibited from entering New Zealand ports

Impact on completing your AML Client Due Diligence

 New Zealanders must not deal with any restricted asset (assets owned by or controlled by a sanctioned individual)  New Zealanders must not receive services provided by a sanctioned individual or provide services to a sanctioned individual

Under the AML/CFT Act, designated ‘duty holders’ include all AML/CFT reporting entities and other persons prescribed by regulation. AML Compliance Officers are required to file a suspicious activity report (SAR) when they suspect assets are designated assets owned or controlled by a sanctioned individual.

The Russia Sanctions Regulations prohibit New Zealanders from dealing with any assets associated with sanctioned individuals. This includes assets located outside New Zealand if dealing with the asset would result in a sanctioned person owning or controlling the asset, or would otherwise benefit the sanctioned person.

Compliance officers must ensure the AML/CFT programme includes provisions to identify any grounds for reporting suspicious activity (s 31(2) of the AntiMoney Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). Under section 15 of the AML/CFT Act, reporting entities are required to make a

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SAR using goAML within three working days if they suspect on reasonable grounds that an individual or entity is sanctioned, or the transaction benefits a sanctioned person. Reporting entities should proactively identify clients and owners with connections to sanctioned individuals. You should also update your AML/CFT Programmes to include where there are reasonable grounds to suspect a transaction or activity is or may be relevant to the investigation or prosecution of an offence, including a sanctions related offence (s 39A AML/CFT Act).

Red flags to look out for:  The purchase price of the property is far above or below fair market value  A transaction involving all-cash transfers  A transaction involving complex trust and company structures  A transaction involving weakly regulated remittance agents connected to offshore companies

individual who is found to be in breach or likely to breach a sanction without lawful justification or reasonable excuse can be severe. The penalties and offences are stated under section 24 of the Russia Sanctions Act. For instance, the Attorney-General may issue a formal warning, order you to enter enforceable undertakings, or issue injunctions to prevent sanction breaches. The breach of sanctions may also be classed as a criminal offence. Penalties could include fines of up to $1 million for a company, or up to seven years imprisonment or a $100,000 fine for an individual. Failing to provide a SAR report under the AML/CFT Act, including false or misleading information or omitting key information from a report will result in imprisonment for up to one year and/or a fine of up to $20,000 for individuals. For an entity, the liability for a breach of section 15 is a fine of up to $200,000.

 A transaction originally funded by a third party with a known connection to a sanctioned persons or associate.

Remember, it is an offence if the breach committed by a real estate agent as a reporting entity was actioned knowingly or recklessly without lawful justification or reasonable excuse.

It is important to remember that parties to a transaction cannot contract out of any sanctions. The penalties for an

Real estate agents should take immediate steps to ensure compliance under these unprecedented sanctions and regulations. WINTER 2022

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The rules of disclosure Claire Tyler, Partner, Rainey Collins

Smaller Body Corporates still hold all the same disclosure rules as larger Body Corporates, and agents must be aware of these requirements under the Unit Titles Act 2010. Claire Tyler, Partner at Rainey Collins, gives us the low down on crucial factors to be aware of when selling a unit titled property. An investor owned an apartment in a complex of four unit titled apartments, which they contacted a real estate agent about selling. The agent asked them for contact details and information about the Body Corporate, including levies and insurance. The investor was adamant that because their complex was small and had a ‘nonfunctioning Body Corporate’, any disclosure rules did not apply to them when selling their unit. The agent wasn’t sure what exactly was required in terms of disclosure when there is no ‘functioning’ Body Corporate, so they sought legal advice. The legal position here is clear. There is no such thing legally as a ‘non-functioning Body Corporate’, and all the same disclosure rules apply to smaller Bodies Corporate as larger ones. As agents you will still need to ensure you hold disclosure documents in the same way as you would with any larger Body Corporate.

What Bodies Corporate must do No matter how small or large the development, all unit titled properties are governed by the Unit Titles Act 2010. All unit owners in a unit titled development make up the Body Corporate. As an absolute minimum, the Body Corporate must: 1. maintain a register of all unit owners; 2. have an operating account into which levies are paid (which at the very least, should cover insurance costs); 3. ensure the development is insured under one insurance policy (noting there is an

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exception if units are not attached to each other, where the Body Corporate can insure separately if it passes a special resolution confirming this); 4. manage and maintain common property; 5. have a long-term maintenance plan in place; and 6. p rovide disclosure statements when a unit owner is selling their property. The only thing that a smaller Body Corporate is exempt from under the Act is the requirement to have a Body Corporate committee. A committee is a smaller group of owners to which the Body Corporate has delegated certain responsibilities. Any Body Corporate with nine or fewer units does not need to have a Body Corporate committee. If there is no committee or nominated chairperson of the Body Corporate, all owners need to sign all documents on behalf of a Body Corporate.

Disclosure regime When selling a unit titled property, there are requirements under the Act for the vendor to provide the purchaser with:  a Pre-contract Disclosure Statement  a Pre-settlement Disclosure Statement  insurance details, and  a n additional disclosure statement, if requested by the purchaser. It is important to be aware that this disclosure regime is separate from any usual disclosures that your agency requires from vendors at the time of listing.

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Vendors still need to disclose to you (and therefore to purchasers) any known defects, and you will still need to use your knowledge and experience as an agent to make sure you point out any defects or likely defects. For example, if you know the building is monolithic clad, you will need to disclose this to purchasers.

Pre-contract Disclosure Statement When selling the property, the vendor needs to provide (and sign) a Pre-contract Disclosure Statement to purchasers. Often agents will be asked to assist with this. A template statement is available on the Tenancy Services website, which may assist if the Body Corporate does not know how to prepare the statement. As agents will likely be aware, there is a specific list of items that need to be included in the statement, as detailed in the Unit Titles Regulations.

Pre-settlement Disclosure Statement The vendor is required to provide the purchaser with a certificate of insurance and a Pre-settlement Disclosure Statement no later than five working days before settlement. A Pre-settlement Disclosure Statement is also signed by the vendor and must be

accompanied by a certificate from the Body Corporate confirming the contents are correct. If there is no chairperson or committee, this statement will need to be signed by all owners. It could be difficult to get all owners to sign, so enquiries may need to be made very early in the piece to avoid delayed settlement, as mentioned below. This Pre-settlement Disclosure Statement includes information regarding the levies that will be apportioned on settlement and other details relevant to the purchase. It is worth noting that, under the Agreement for Sale and Purchase, only ordinary levies are apportioned on settlement, not longterm maintenance, contingency or capital Improvement fund levies. Vendors will not get back a share of what they have contributed to any such funds over time. It is also important to be aware that the Agreement can be delayed or cancelled if this statement is not provided within five working days of settlement.

(if requested) are provided. This is critical as the purchaser has the right to cancel prior to those statements being provided.

Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill This Bill, currently passing through Parliament, seeks to update the Unit Titles Act and rectify some known problem areas. The Bill has passed its Third Reading and is expected to be considered again in May. Key changes to the Bill are:  a dding additional items to be provided under a Pre-contract Disclosure Statement and some other changes to the disclosure regime;  g reater accountability for Body Corporate managers, who will be defined in the Act and will be subject to a code of conduct;  a reduction in the fees for applying to the Tenancy Tribunal in the event of a dispute;

Deposit requirements

 p ermanent ability to hold meetings via audio-visual link and vote electronically.

It is important to remember that when selling a unit titled property, you as the agent are required to hold the deposit until the Pre-settlement Disclosure Statement and Additional Disclosure Statement

Sales of unit titled properties are more complex for all involved than fee simple sales. So it pays to know what to look out for and what is required to avoid settlements being delayed or cancelled. WINTER 2022

OBITUARY

Patricia Ann (Patsy) Holley With deep sadness, we announce the passing of Patsy Holley who worked tirelessly in the industry from 1995 until her retirement in late 2018. Patsy was a friend, colleague and a special person who understood what is important in life — family and friends. She was a loving wife to John, a devoted mother to Michael and an adoring grandmother to her grandchildren. Patsy worked with Elizabeth Nidd (FREINZ) over a period of more than 20 years. Working at Cooper & Co together, Patsy demonstrated her own humble but very successful way of selling real estate — and enjoyed socialising with the people at the branch. A short time after Elizabeth opened Nidd Realty, Patsy joined the team. In a world where everything was becoming digital, Patsy adopted just enough to run her business her way. Elizabeth cannot remember her ever having a diary — digital or otherwise — and will never understand how she always turned up for appointments, let alone being on time! When everyone began talking about a Customer Relationship Management database (CRM), Patsy’s approach was a personal call, cup of tea or lunch out. Because of this, Elizabeth believes that 95% of Patsy’s business was repeat and referral business. The key to Patsy’s success was the fact that she generated a love for her clients — and they certainly loved her back. The best kind of business is one where people become your clients because you are trusted from the outset — most of those clients became her friends and a new part of the network. If you asked Patsy what she did for a hobby, she would tell you that her work was her hobby, and her passion. Apart from being a successful real estate agent, Patsy also gave her time to grief counselling and participating in school road safety programmes. Patsy left a legacy in the real estate profession and will be deeply missed and fondly remembered by all who were fortunate enough to have crossed her path.

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Recognise the accomplishments of the profession. Submit your entries for the REINZ Awards for Excellence at awards.reinz.co.nz. Entries close Friday 29 July.

Celebrate excellence in real estate. Winners announced at our Awards Gala Dinner Tuesday 6 September 2022 | Cordis Auckland

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REINZ Real Estate Magazine - Winter 2022

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