Issue
07
2018 Working together to create tomorrow's advisers today
Building better mortgage businesses 2018 L SPECRIEA E C N E F CON ISSUE YOUNG ADVISERS
ON THE FUTURE
SIFA SIFAKULA
MAKES THE LEAP
PAUL WATKINS SAYS IT'S TIME TO TALK
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CONTENTS
IT’S A 20 WRAP
18
XX
XX
UP FRONT
In the final issue of TMM this year we wrap up what happened at the Better Business Conference last month.
FEATURES
04 EDITORIAL
Philip Macalister sums up the year that’s been.
11 REGULATION
MBIE have released a new timeline detailing key milestones for advisers to comply with FSLAB.
16 PROPERTY NEWS
Some good, and not so good news for property investors.
26 PAUL WATKINS CONFERENCE Stop thinking campaigns, start thinking conversations.
34 HOUSING COMMENTARY
Miriam Bell provides an update on the housing market.
09 NEWS Details of new adviser group revealed; Regulators watch advisers and TMM news briefs.
12 OPINION Robbi Zeng explains why be became a mortgage adviser.
COLUMNS
28
15 KIWISAVER
Retirement decisions based on science, not spin.
28 MY BUSINESS
Sifa Sifakula left the bank to become an adviser and loves the move.
30 LEGAL
Jonathan Flaws Everything you need to know about cross-leases.
32 INSURANCE
Steve Wright explains what the proposed new Code of Conduct means for advisers who are currently RFAs.
03 03
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UPFRONT From the Editor
WELCOME TO OUR SPECIAL CONFERENCE ISSUE OF TMM
Welcome to our special conference issue of TMM. TMM ran its second annual Better Business conference last month to help advisers understand changes happening in the market and to help them grow their businesses. On a personal note it was fantastic to see so many mortgage advisers making the effort to attend the conference. Also, it was a great time to catch up with peers across the industry and different groups. This is now an established event on the calendar for mortgage advisers. While the next event is still just under a year away, we are working on plans to make it a bigger and better event than before. Hopefully we can provide you with an update in the first quarter next year.
As 2018 comes to an end we are seeing plenty of action across our space - including banks offering some of their lowest rates ever. One of the takeouts from the conference was the increasing importance and relevance of the non-bank sector. The growth of this sector was also borne out by the success the two “speed dating” events held in Auckland and Wellington. The big issue for advisers is, undoubtedly, regulation. We have an update on what is happening in this space in this issue on page 24. Also, there is an updated timeline for the changes. A chart detailing key dates is on page 11. In closing for this year it’s been good to see how important mortgage advisers are in originating home loans. When you see that nearly 40% of ANZ’s home loans come via the adviser channel, that is clear evidence advisers are critical. My guess is that with all the changes happening in the market, that this market share figure can only grow from here.
Philip Macalister Publisher
PUBLISHER: Philip Macalister SUBEDITOR: Dawn Adams SENIOR WRITERS: Miriam Bell, Susan Edmunds, Daniel Dunkley CONTRIBUTORS: Paul Watkins, Steve Wright, Jonathan Flaws, Paul van Wetering GRAPHIC DESIGN: Debbie Morgan ADVERTISING SALES: Philip Macalister 0274-377527 philip@tmmonline.nz
MOVED OFFICES? Make sure you don't miss an issue by changing your address. Go to www.goodreturns.co.nz/coa SUBSCRIPTIONS: Alison King subs@tarawera.co.nz HEAD OFFICE: 1448A Hinemoa St, Rotorua PO Box 2011, Rotorua Phone: 07-349 1920 Fax: 07-349 1926 editor@tmmonline.nz
TMM is published by Tarawera Publishing Ltd (TPL). TPL also publishes online money management magazine Good Returns www. goodreturns.co.nz and ASSET magazine. All contents of TMM are copyright Tarawera Publishing Ltd. Any reproduction without prior written permission is strictly prohibited. TMM welcomes opinions from all readers on its editorial. If you would like to comment on articles, columns, or regularly appearing pieces in TMM, or on other issues, please send your comments to: editor@tmmonline.nz
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TMMONLINE.NZ/NEWS
Newpark promises mortgage advisers something new Newpark unveiled its new mortgage dealer group, promising advisers it will bring a new model with "choice and flexibility" to the market. Newpark Home Loans general manager Andrew Scott said there would be an inevitable focus on the price of its new model, but said the launch was about "delivering real choice and flexibility to advisers". Scott outlined plans for Newpark Home Loans at a function in Auckland in late October. Newpark only wants experienced advisers in the group, and there is a heavy focus on businesses which also write good volumes of life insurance. The pricing structure rewards advisers who write life insurance. There are three plans and four tiers under each plan, based on how much annual premium income (API) is written. A key difference between Newpark's pricing and other groups is that it is done
Our model provides choice and flexibility," he said. "You haven't had that in the past.
Andrew Scott on a per brokerage basis, not a fee per individual adviser. However, with this model commission is paid to the brokerage not the individual adviser. "Our model provides choice and flexibility," he said. "You haven't had that in the past." Scott said the market was very crowded and competitive, with 13 groups competing. Despite that, he said there was a place for a new group. Scott said technology would be a key selling point. Newpark has built its own CRM for its insurance advisers it is planning to offer an off-the-shelf CRM for mortgage advisers. The package it is looking at is widely used in Australia.
Regulators’ report puts spotlight on intermediaries The FMA and Reserve Bank report into banking conduct and culture raised concerns about the relationship between banks and intermediaries, in a warning sign for mortgage advisers. The November report highlighted a series of issues with intermediary relationships. It found a number of banks "highlighted conduct risks associated with their limited oversight of the customer interactions that occur through brokers and other intermediaries”. While the FMA and RBNZ review does not single out the mortgage advice sector, it also placed the spotlight on the remuneration structures used by banks and thirdparties. The report raised concerns about whether intermediary pay “impacts customer outcomes”. In a warning sign for the industry, regulators said “more work” was required to ensure intermediary incentives were “aligned with good outcomes”. The report said there was “little evidence” New Zealand banks monitored “higher-risk products and distribution channels”, and called on banks to ensure they were “comfortable with the quality of conversations and advice” from intermediaries. The report echoes concerns raised by Australia’s Royal Commission. The Commission’s interim report suggested broker sales incentives caused staff misconduct.
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FOR ALL YOUR NON BANK LENDING
JEN 021 447 926 AKL & NORTH ISLAND
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09
TMMONLINE.NZ/NEWS
TMM NEWS BRIEFS TMM delivers much of its news online through www.tmmonline.nz Some of the best stories from the past month are showcased below. To read the full stories go to tmmonline.nz
MORTGAGE EXPRESS CONFIRMS AUSSIE JOINT VENTURE
Mortgage Express New Zealand has confirmed a joint partnership agreement with Australian adviser group Astute Financial Management. The deal saw Sarah Johnston become chief executive of the Aussie group and David Gopperth become MX's General Manager. It comes months after TMM exclusively revealed talks over a joint-venture agreement between the two groups. The companies have declined repeated requests for comment on the JV. The partnership will see Mortgage Express adopt Astute's integrated model and technology. Astute's technology platform is said to be a key driver behind the JV deal. Key figures within the groups also believe a cross-Tasman partnership will help them cope with regulatory changes. Johnson said: “It will be a truly game-changing offering for our members. We look forward to getting to work now and helping our members to grow a full service financial services experience.”
NZCU BAYWIDE AIMS FOR FIRST-HOME BUYERS
NZCU Baywide relaxed its requirements for first-home buyers (FHBs) with a series of new features aimed at younger customers. The non-bank lender aims to take a slice of the FHB market, a growing segment within New Zealand. New features unveiled in October include a relaxed NSR requirement for low-deposit loans of more than 80% LVR (to 95%), and loan terms of up to 30 years. NZCU has also cut its requirement for customers to take out life insurance and disability insurance policies, according to market materials sent out to advisers. The lender also increased its lending cap to up to $850,000, as it targets first-home buyers in more expensive cities, including Wellington. The firm still excludes buyers in Hamilton and Auckland City. It comes as competition heats up in the lending space. NZCU described current lending conditions as “bananas” in market materials sent out to advisers. NZCU said: "As specialists in home loans for first-home buyers, we are always looking at how we can help everyday Kiwis realise their dream of owning a home and stepping on to the property ladder."
NON-BANKS’ SECOND “SPEED DATING” EVENT
Non-bank lenders joined together in Wellington for a second “speed dating” event with mortgage advisers, following a successful first session in August. Some of the market’s most prominent non-banks have set up the speed dating breakfast to raise awareness about alternative lenders, as banks continue to tighten available credit. The early morning event took place at Wellington’s Westpac Stadium on November 14. Avanti, Resimac, Bluestone, First Mortgage Trust, Heartland, Liberty, NZCU Baywide, Southern Cross Partners, and Spotcap were behind the Wellington event. The event allowed mortgage advisers to ask questions about products and features on offer, and explore potential financing scenarios for clients. More speed dating sessions could follow over the next few months, with Christchurch expected to hold a future event, non-bank sources said. The second event follows a speed dating night in Auckland in August attended by about 120 advisers, including Mortgage Link and the Mortgage Supply Company.
010 WWW.TMMONLINE.NZ
REGULATION
Updated regulation timeline
T
he Ministry of Business, Innovation and Employment has updated its expectations about the Financial Services Legislation Amendment Bill's progression towards becoming law, ushering in a new advice regime. It predicts FSLAB will be passed by the first quarter of 2019. The code of conduct for advisers would then be approved and regulations set by the second quarter. Then, transitional licensing applications would open by the fourth quarter of 2019, six months before the new regime starts in transition form. There would be nine months between the
code being approved and the regime coming into force. The transitional period would then run until the second quarter of 2022, when every provider would be required to have a full licence to continue to operate in the industry. MBIE said the time frames were indicative only and would not be confirmed until the bill was passed and the code of conduct approved. "But the new regime is not expected to begin before the second quarter of 2020." During the transitional period, new duties and the code of conduct for advisers would be in force, with a competency safe harbour
for previous industry participants. Financial advice providers would have to hold a transitional or full licence and financial advisers would have to be engaged by a financial advice provider. Both would need to be registered on the FSPR. MBIE said the FMA was still designing the licensing process, which would involve an online application form. MBIE is developing new regulations that will cover detailed FSPR registration requirements, and disclosure rules for financial advisers. MBIE is also developing regulations to set licencing fees and levies that will apply under the new regime. ✚
New duties and Code of Conduct Competency safe harbour for previous industry participants. Financial Advice Providers must hold a transitional or full licence. Financial Advisers must be engaged by a Financial Advice Provider.
BILL PASSED
By Quarter 1 (Q1) 2019
Act, Regulations and Code of Conduct for financial advice come into force.
Code approved Regulations made
Transitional licensing applications open
Financial Advice Providers and Financial Advisers must be registered on the Financial Service Providers Register.
NEW REGIME STARTS
Transitional Period
AT LEAST 9 MONTHS
BY Q4 2019
Competency safe harbour ends.
TRANSITIONAL PERIOD ENDS
Transitional licensing applications close Full licensing applications open
AT LEAST 6 MONTHS
BY Q2 2019
Financial Advice Providers must have a full licence.
2 YEARS
IN Q2 2020
IN Q2 2022
WE WILL, WHEN OTHERS WON’T. FOR ALL YOUR NON BANK LENDING
JEN 021 447 926 AKL & NORTH ISLAND
MICHAEL 0274 219 263 WGTN & SOUTH ISLAND
011
OPINION By Robbi Zeng
Why choose to become a
MORTGAGE ADVISER? Making the leap from bank pays off.
P
rior to joining Mortgage Link, I spent about five years working for two of the major banks. I started as a personal banker at BNZ. After almost two years, a friend referred me to Westpac as a mobile mortgage manager (MMM). I had a very good time with Westpac. During that period, the Auckland property market was booming. I had some major career success between 2014 and 2016. I still remember there were three days in a row when one other MMM and I needed to work at the Albany office until 3am (yes, you read it right) to catch up with all the applications. After a major restructure in 2016, some of my friends left, and I went to BNZ in the same role. I then spent about eight months with BNZ. When I was working for the banks, people kept telling me good stories about being a mortgage adviser. Most of the stories were about how much more I could make based on the volume of loans I had been writing. However, apart from money, the biggest motivation to become a mortgage adviser was to be my own boss. I could focus
In terms of the way I operate, it is fair to say there is a huge difference compared to when I was a banker. on organising funding solutions for my customers – no more worrying about crossselling life insurance, credit cards, KiwiSaver, etc. This is my own business, and I can make my own business decisions rather than someone else telling me what to do. I guess a lot of other Kiwi small business owners share the same thought.
DIFFERENCE BETWEEN MMM AND MORTGAGE ADVISER
It didn’t take long for me to switch my mindset from a banker to mortgage adviser, thanks to the team at Everbright Finance. Most of our team come from the same background. In fact, almost everyone from
the core leadership team know me from my BNZ days. In the first few months of my broker life, they gave me lots of help. In terms of the way I operate, it is fair to say there is a huge difference compared to when I was a banker. I often reflect on how I conduct my business – there are countless examples I can use to show the difference. But to summarise thousands of words into a
WE CAN WHEN OTHERS CAN’T WE WILL WHEN OTHERS WON’T FOR ALL YOUR NON BANK LENDING
JEN 021 447 926 AKL & NORTH ISLAND
012 WWW.TMMONLINE.NZ
MICHAEL 0274 219 263 WGTN & SOUTH ISLAND
couple of sentences: A banker’s job is to find customers who can tick the bank’s boxes. An adviser’s job is to find bank(s)/ lender(s) to tick the customers’ boxes. When I was at the bank, it was very common that there were deals that fell outside of the bank’s risk appetite. At that moment, you simply have to say “sorry, we can’t help right now” to customers. As an adviser, I am proud to say most of the time I will be able to find a solution for my customers. If I had to say one thing that I don’t like as much about being an adviser, it would be the turnaround time. The only customer that I had to say no to and refer them to the bank, was a couple who wanted an unconditional approval within 48 hours. My experience tells me that they should be okay, however I called my BDM and I was told that no matter how good the deal was, the broker unit wouldn’t be able to get an answer within 48 hours. In the end, I had to refer them to the bank directly to meet the timeframe. They managed to get an approval from a MMM within five hours. However, the customers still appreciated my work. There is definitely a change in lifestyle, even in my career direction. When I first got into the mortgage space, I was so excited by all kinds of construction and development. Being a banker, the chance for me to get my hands on these deals was minimal. After becoming a mortgage adviser, this opened a whole new world for me. I get to talk to different non-bank lenders who specialise in different types of development funding – from small to huge. Because of that, now I can expend my career to a different level. Under the inspiration of my customers, I’ve also started getting into the development space and started doing some small projects with my business partner. The satisfaction of seeing through a project from start to end is something that excites me, keeps me going, and wanting to do more. Let’s be honest, there were times that I doubted my decision of jumping out of the banks to become an adviser. Especially when you run out of applications on your desk. But reflecting on my last 15 months as an adviser and looking at myself today, I am sure I have made the right decision at this point of time. One thing I can be sure of is that I am in more control than ever before and I want to keep this going to see where it will lead. ✚ Robbi Zeng is a registered financial advisor with EverBright Finance.
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Unlisted commercial property stands the test of time $100,000 invested 25 years ago in direct commercial property would now be $775,000 (2018) Understanding what the future holds for the local and global economy is akin to looking into a crystal ball. Earlier in the year there was much speculation about Cameron Bagrie Bagrie Economics whether the world was heading into a GFC2 (Global Financial Crisis). It hasn’t. One person who got this right was renowned economist, Cameron Bagrie, of Bagrie Economics. The former ANZ chief economist predicted ongoing volatility and share market uncertainty, but no massive correction. So what does he think will happen to New Zealand’s economy over the next 12 to 18 months? Grumpflation. In Bagrie’s language that’s the combination of grumpy growth and rising costs. “Growth across the New Zealand economy has moderated and there is growing wariness that a downturn is around the corner,” says Bagrie. “But I don’t like the term downturn. There are risks, notably offshore and I’m getting increasingly worried about places like China, but the New Zealand economy is in reasonable shape when we eye the bigger picture. Where the world goes we will follow though, and there are a lot of risks. “The New Zealand economy does not have severe late-cycle excesses that can warn of a pending correction. The economy does have points of vulnerability, such as extended Auckland property prices, but not an array of warning signs,” he says.
“
It’s no secret NZ has a love affair with property, particularly residential. However, increasing compliance, the extension of the brightline test and surging capital values are making residential investment less attractive.
”
CEO of established unlisted funds and property manager, Property Managers Group (PMG), Scott McKenzie, says the Group is seeing much more enquiry and investment in its direct commercial property funds from traditional residential property investors. ”We recently received two AA recommended ratings from FundSource for two of our retail funds – Pacific Property and PMG Direct Office Fund, one of the first unlisted funds and property manager in NZ to receive two,” McKenzie says. “This recognition, coupled with the solidly
performing commercial property sector are two of the factors driving interest in our funds,” he says. The commercial property sector is enjoying a period of prosperity on the back of a strong New Zealand economy. What’s more, commercial property yields continued to outpace interest rates, offering attractive and easily accessible opportunities for investors¹. Considering the above and the graph below, now may be a good time to dip their toes into the commercial market. Compared to other asset classes including residential, bank bonds and listed property vehicles (LPVs), unlisted commercial property is currently delivering much better yields and providing exposure to diversified and passive property investment opportunities – models which are not easily replicable by individual investors.
“With a diverse choice of unlisted commercial investment funds, mortgage brokers and financial advisors can offer their clients alternative options and benefits.”
Scott McKenzie CEO & Director
Cash Yields vs other assets¹
Source: RBNZ, Bloomberg, Interest.co.nz, Craig’s Investment Partners estimates. Residential cash yields are calculated on the average annual gross return across Auckland, Hamilton and Tauranga, March 2018. Pacific Property yield reflects an implied gross dividend yield for an investor with a 30% marginal personal tax rate of the latest traded price on the secondary market for May 2018 of $1.02
Research2 shows if you had invested $100,000 25 years ago in directly-held commercial property, the value of your investment now would be 7.75 times that at $775,000 (2018). It also states that following the GFC it took direct commercial real estate only three years to fully recover its loss of value (approx. 40%) versus equities which lost the equivalent value, which took six years. “Investors gravitate back to tangible assets with easily identifiable revenue streams when markets are volatile and uncertain, just like we are seeing now,” says McKenzie. “PMG’s business model ensures our debt to equity ratio is managed as conservatively as possible. We offer investment funds diversified by sector and geography with multiple buildings and multiple tenants which ensures investor risk is managed, investor capital is preserved with regular and more reliable cash flow.”
“While we can’t predict the economic future, PMG’s 26-year proven track record of providing sustainable returns through a variety of challenging economic fluctuations, and our business model, puts us in good stead to weather any pending turbulence,” he says. Latest Offer Open A new offer for PMG’s AA-rated diversified fund, Pacific Property Fund Limited (PPF) is now open and is for the acquisition of two quality industrial properties in Hamilton and in Palmerston North. PPF is issuing 36,000,000 new shares at $1.04 per share. From $20,800, investors can enjoy a diversified share of 12 industrial, office and retail properties, returning a projected, quarterly cash distribution of 7.25 cents per share. for the full financial year to 31 March 2020.³ For more information please visit our website – www.propertymgr.co.nz or phone (07) 578 3494.
https://www.realestate.co.nz/blog/news/commercial-property-good-investment-compared-residential-new-zealand https://www.propertymgr.co.nz/unlisted-commercial-property-stands-test-of-time Assuming successful completion of the Offer Content WWW.TMMONLINE.NZ of the article is the opinion of Scott McKenzie and not intended as personalised financial advice. You should seek independent financial advice from an authorised financial advisor before making any investment decisions. 1 2
014 3
KIWISAVER By Paul van Wetering
Retirement decisions
BASED ON SCIENCE NOT SPIN Here's what matters, and what doesn't, when it comes to KiwiSaver planning.
K
iwiSaver is rapidly proving as much of a bonanza for the marketing industry as it is for the wealth management industry. Some providers are spending seven figures annually to promote their various investment propositions. And as one would expect, if you let the ad executives loose, the key messages are, well …“loose”. In addition to surveying clients to determine what they want out of KiwiSaver (see Good Returns article “What New Zealanders want from KiwiSaver may surprise you”), NZ Funds has been researching what really determines how much money a KiwiSaver member retires with. The answers are logical and intuitive to long-term practitioners of financial advice, but will no doubt come as a shock to fans of Mad Men. To answer the question: “What matters most in maximising KiwiSaver by retirement?” the NZ Funds Wealth Technology Team started with an 18 year old on the average full-time youth earnings of $38,324 per annum. The 18 year old’s earnings increase by 3% each year until they retire at age 65. In this way, they approximate the national average wage of $68,588 per annum (with adjustments for expected inflation). The impacts of different variables were measured, holding all other factors constant. Asset allocation is the largest single determinant of retirement wealth (which will come as no surprise to financial advisers). Re-orientating a portfolio from 100% Income (default) to 100% Growth adds an additional $950,000 by retirement. Obviously, this comes with a higher level of volatility which may not match the investor’s risk appetite. Interestingly, even a transition from 100% Income (default) to a diversified portfolio of 40% Income and 60% Growth, increases the terminal value by $429,000, while a life cycle process can add as much as $931,000. The second most powerful determinant of retirement wealth is a member’s contribution rate. Assuming an employer contribution of 3% before ESCT tax throughout, and an increase in the employee’s contribution rate from 3% (the current statutory minimum) to 10% (the proposed statutory maximum from April 1, 2019, which together with the employer contribution approaches the
Australian 2025 compulsory savings level of 12%) results in an additional $778,000 by retirement. Manager performance can also meaningfully contribute to, or detract from, a client’s final retirement sum. Assuming performance bands of plus or minus 0.5% per annum for Income and plus or minus 1.5% per annum for Growth, for the entire 47-year period, manager performance either adds $347,000 or deducts $243,000. The research shows that fees rank fourth. We took the difference between the lowest and highest fees charged by a Balanced fund (0.4% and 1.4%). The difference by retirement is $164,000. This is without doubt a considerable sum, but is meaningfully less than the value that can be added in the other ways that the team identified. Some things are in neither the investor’s nor the manager’s hands, such as bull or bear markets. Fortunately, for most members, their time in KiwiSaver is long enough that they are likely to experience both over time and end up with the average. However, the order in which they come makes a meaningful difference. Those fortunate enough to enjoy a strong market (defined as neutral interest rates, credit spreads and real equity returns all 50% higher than average) from age 42 to retirement, after experiencing a weak market (defined as neutral interest rates, credit spreads and real equity returns all 50% lower than average) from age 18 to 41, accumulate $547,000 more than investors who experience a strong market between age 18 to 41 and a weak market thereafter. Finally, there are a growing number of studies which seek to quantify the value
an adviser can add. NZ Funds measured the benefit of a personal financial plan and regular portfolio reviews by comparing two outcomes. The first, for an investor who at age 53 switches from Income (default) to Growth near the end of an expansion, and then panics at age 57 and switches from Growth to Income (default) after a period of investment market volatility. The second, for an advised client who stays the course with a diversified portfolio of 40% Income and 60% Growth. All other things being equal, the advised client retires $403,000 wealthier. A surprising outcome of the research is that it shows investors are more in control of their retirement wealth, through asset allocation and their choice of savings rate, than the investment manager who determines fees and manager performance. And as with most things in life, fate also has a role to play in determining whether investors enjoy strong returns earlier or later in life. The research also suggests that the resources deployed to build and maintain government funded sites, such as fundfinder.sorted.org.nz which predominately focuses on fees, would be better deployed illustrating the merits of growth-orientated investments over the long term, and encouraging New Zealanders to select a higher contribution rate. The requirement from next year for all KiwiSaver Annual Member Statements to illustrate the merits of different savings rates to investors is a meaningful step in the right direction. Paul van Wetering, CFA, Head of Investment Process, New Zealand Funds Management is the issuer of the NZ Funds KiwiSaver Scheme.
WHAT MAXIMISES YOUR KIWISAVER BALANCE? Indicative 18 year old member on average wage to age 65. Asset allocation
Contribution rate
Manager performance
Market cycle
Fees
Worst
$570k
$660k
$760k
$770k
$920k
Average
$1.0m
$1.0m
$1.0m
$1.0m
$1.0m
Best
$1.5m
$1.4m
$1.3m
$1.3m
$1.1m
The table contains rounding. Income returns are based on a neutral interest rate of 3.5% and credit spreads of 1%. Growth returns are based upon real equity returns (long term) of 6.5% and inflation of 2%. Tax is deducted at PIRs in accordance with Inland Revenue rules. Alpha is based on tracking errors of 3% for Growth and 1% for income, with infomation ratios of 50%.
015
PROPERTY NEWS
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By Miriam Bell
Reform heat rises Solid moves towards various tenancy reforms mean landlords have been feeling the heat of late – but the Tenancy Tribunal has provided some relief... We find out all the details. Growing numbers of property managers are announcing they will be replacing letting fees with new charges for landlords. Letting fees were banned by Parliament in November, with the ban due to come into effect from 12 December this year. Many of the larger property management companies have now confirmed they will be passing letting costs on to landlords. All say they need to cover the time and costs associated with finding and placing new tenants, but approaches to the new charges vary. While Quinovic plans to charge landlords a "tenancy fee", which would be a flat rate of $550 plus GST, Crockers are opting for an "admin fee" of $20 a month for landlords - regardless of whether a tenancy changed or not. Barfoot & Thompson are still finalising their plans while others are likely to simply increase the percentage commission they
take from the rent each week. But there is a high likelihood that the new charges will ultimately be passed on to tenants in the form of higher rents. The NZ Property Investors Federation (NZPIF) and the Real Estate Institute of NZ have warned this could happen, while MBIE officials also advised Government that it was a risk. NZPIF executive officer Andrew King says not only will tenants still probably end up paying the letting fee, they are likely to end up paying more over time albeit indirectly. “MBIE officials advised Government that if landlords responded by raising rents, the likely increase would be $9.99 per week. The average tenancy is around two years, so tenants will end up paying more than the original cost of the letting fee.” This situation shows that simply banning a practice doesn’t always result in the intended outcome, he says.
RTA reforms fiercely opposed Opposition to the Government’s proposed tenancy law reforms is running high among landlords and this is reflected in the 92-strong take-up rate of a simplified online submission form on the proposals. Stop the War on Tenancies spokesman Mike Butler says the proposal to do with requiring purchasers to take on sitting tenants during the sale of rental property generated the biggest response from submitters. “A whopping 98% thought that if a property is being sold, the new owner should be able to request vacant possession of it.” The proposed removal of 90-day notice no-cause terminations also generated strong opposition, with 94% against it, with many submitters saying landlords never remove a tenant without cause, he says. “This misguided proposal is intended to give tenants additional security but would have the effect to sheltering badly-behaving tenants from any consequences.”
Some of the other proposals also prompted staunch disagreement from submitters, with 92% saying landlords should have the right to refuse pets without giving a reason and 78% opposing a ban on fixed-term tenancies. The submission responses also reveal many landlords believe tenants should have to take more responsibility for properties they rent, with 89% agreeing with this suggestion. Auckland property investor Lily Leung felt compelled to create and circulate the online submission form after she spent eight hours completing the official submission document and realised this would put other landlords off submitting. She says the Government’s proposed reforms are unfair and biased against landlords. “It is important for landlords to speak up as much as possible to try and get the Government to listen to their take on tenancy law as it stands and as it should be.”
Tribunal adopts 15mcg standard
One piece of good news for landlords emerged from the Tenancy Tribunal. The Tribunal confirmed it will, generally, accept 15 micrograms per 100 sq cm as the minimum standard for meth contamination in rental properties. Tenancy Tribunal chief adjudicator Melissa Poole told delegates at the NZ Property Investors Federation conference that it would use the 15mg level as proposed in the Gluckman report. But that is only as long as the meth test was done after the report was released on May 28 this year. Poole says the Tribunal’s hand was forced by Housing New Zealand’s decision to use 15 as its standard shortly after the Gluckman report was released. “If you have the biggest player in town going with 15 as the standard it becomes very difficult for us to say to you guys you’re not Housing New Zealand so we are going to apply NZS (1.5) to you. It would effectively penalise private landlords.” But Poole says there are some important differences between the NZS standard of 1.5 micrograms per 100cm2and the 15 proposed by Gluckman. “It’s gone from watertight to risk evaluations.” She also says that the Tribunal could use the 1.5 level if an applicant presented evidence that there were “other factors” such as meth manufacturing in a rental. “If you think there’s a risk of more than smoking you have to bring evidence. Then we can look at 1.5. It’s all about the evidence landlords bring to us.” It’s worth noting the Tribunal does not set the law, Poole adds. “It doesn’t set the standards. It applies the standards. But once the Gluckman report came out we couldn’t ignore it.”
Unconsented work in scope
More cause for landlord relief came when the Tenancy Tribunal announced that it, once again, has scope to consider cases involving rental properties with non-consented work – thanks to a new High Court ruling. After a 2013 High Court judgment was cited as authority in the now-notorious Vic Inglis case last year, landlords have had to face the prospect of full rent refunds to tenants. The Anderson v FM Custodians case determined that unconsented premises don’t meet the definition of “residential premises” under the Residential Tenancies Act. That meant they were regarded as “unlawful tenancies” and not within the jurisdiction of the Tribunal. This highlighted the uncertainty created by the FM Custodians ruling which has, reportedly, led to a number of full rent refunds to tenants in “unlawful tenancy” situations. But NZ Property Investors Federation executive officer Andrew King told NZPIF conference delegates that a new High Court ruling, which disagrees with the FM Custodians decision, means the situation is changing. “The judge in the new decision found it to be ridiculous that unconsented premises should not fall within the domain of the Tribunal – and said they should. This leaves the Tribunal with two different High Court rulings on unconsented properties to choose from.” Tenancy Tribunal chief adjudicator Melissa Poole then confirmed the new decision, which adjudicators prefer, gives the Tribunal the room to say the High Court disagrees on this issue. Unfortunately, the new decision is now being appealed but, in the meantime, the Tribunal has a decision which says they can continue to exercise their jurisdiction under the Act, she says. “We will have to see what the Court of Appeal does. But it looks as though the situation could return to normal and we will have the full scope of the RTA back to deal with these sorts of situations.”
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BETTER BUSINESS CONFERENCE
Advice for the
future
2018 In this eight-page spread we wrap up the TMM Better Business conference held in Auckland last month.
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he Better Business Conference is a one-day event designed especially for mortgage advisers. Indeed one of the many pieces of positive feedback from delegates is that they love how it is 100% focussed on mortgage advice. A key theme to come from the event was positivity. Last year keynote speaker, BNZ chief economist Tony Alexander, suggested that in a year’s time many advisers would have left the industry. However, this year he was far more positive and even suggested that he may not have been right 12 months earlier. The other positive theme to come from his presentation was that there are not many worrying signs for interest rates. Since the conference the Reserve Bank has reinforced this in its latest Monetary Policy Statement. It says the Official Cash Rate is unlikely to increase until 2020.
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Added to that nearly all the banks have taken one or two year fixed rate home loans below the 4% mark. It’s new territory as most of them have never-ever been there before. One warning Alexander made was not to extrapolate the big increases in provincial house prices into the future. It’s more like the recent increases have been a catch up. Regulation is the big issue facing all advisers. Ministry of Business, Innovation and Employment principal policy adviser Sharon Corbett, provided an updated timeline for the changes. This is detailed on page 34 in this issue. Possibly the most important point to come from her presentation is a personal promise that the transition to a new regime will be orderly. “We want to reassure people that there will be an orderly transition. There will be time to consider how you want to go about applying for a licence before the new regime comes
into effect. “Our key message is that details won’t be sprung on you without time to prepare,” she told delegates. Last year the TMM Better Business Conference had a panel of old-hands. Bruce Patten, Paul Fuller and Judy Steiner talked about how they ran their businesses. This year it was the turn of the young advisers to take the stage. Details of their thoughts are on pages XX. These people are the future of the mortgage advice industry and they bring a new approach to the role. As one delegate said: “These guys represented the industry well with a millennial twist”. The goal of the conference is to help advisers grow their businesses. TMM’s resident sales and marketing expert, Paul Watkins, was a hit with delegates. He has summed up his presentation in his column in this issue of TMM.
Non-banks toast successful year Dan Dunkley gets the low-down from non-bank lenders at the TMM Better Business Conference.
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ew Zealand’s top non-bank lenders used the TMM Better Business Conference to reveal new features and share some key developments as they continue to build market share across the country. Resimac’s Adrienne Church said the nonbank is set to launch a revamped specialist product as it tries to grab more business from traditional sources, such as the big four lenders. Church said Australia’s Royal Commission into financial services misconduct has helped to “level the playing field” between the major banks and their non-bank rivals. “They have been focused on borrowing and servicing, people are prepared to look at other solutions,” Church added. As part of the group’s campaign to build its New Zealand business, Resimac is aiming to lure more specialist customers, including the self-employed. The firm is speeding up applications by allowing selfemployed borrowers to validate income with an accountant’s letter, Church said. Church said the firm was also looking to make it easier for “life event” borrowers to take out a loan. Resimac will treat adverse credit items as one life-linked “credit event” rather than a series of separate events. The approach is likely to improve customers’ credit history and shift more people to its “clear” product, Church said. Meanwhile, Luke Jackson, the CEO of peer-to-peer lender Southern Cross Partners, said “more deals are falling into our bucket” due to the conservative behaviour of the big four lenders. He added: “If you talk to other providers they will tell you their books are growing and growing with stronger deals.” Jackson said the firm’s peer-to-peer status marked it as a differentiator among non-banks: “We are not governed by LVR restrictions, trustees, or securitisation limitations. If we like a deal, we do it.” Southern Cross said the group continues to help customers looking for a shortterm loan of a “transitional nature”. He added: “They need funding now, it could be maternity leave or any of the reasons why a bank might not want to do a loan. They get the funding, can refinance back to another
It is a product that targets gold plated customers’ deals, we have rolled it out in Auckland and plan to extend it. Bruce McGhie provider in another time frame. We’re simple to deal with, and all we require is the purpose of the loan, the entities wanting to borrow, the term and exit strategy.” Bruce McGhie of Cressida Capital said the company’s recently-launched Cressida Gold product would help it take more prime customers from the big banks. “It is a product that targets gold plated customers’ deals, committing to providing an aggressive competitive interest rate for a quality loan, in terms of the LVR and quality of the asset. We have rolled it out in Auckland and plan to extend it,” McGhie added. Stephen Massey from Avanti Finance was also in attendance at the conference. He agreed it was a “good time for non-banks” in the face of credit tightening. The group is among several leading non-bank finance companies to represent the industry at a speed dating event in November. The event, hosted in Wellington, aims to bring together advisers and non-bank partners. Rival non-bank First Mortgage Trust, New Zealand’s largest first mortgage non-bank lender, added to the chorus of good news. The firm revealed it had surpassed $600
million in loan volumes, fuelled by the recent growth in the alternative finance market. In the year to March 2018, FMT had a loss of just $56,000 against a loan portfolio of $525 million. Investors fund FMT through two traded vehicles, a group investment fund and PIE fund. Recent performance shows the funds have delivered for investors. The group fund achieved annualised returns of 5.30% in the year to September, while its PIE fund returned 5.7% over the same period. The FMT Group Fund now has more than $710 million in firepower, with investors totalling more than 3,600 people. ✚
Non-banks back with a bang Non-bank lenders and finance companies have moved to take a bigger slice of the New Zealand mortgage market in recent years, buoyed by credit tightening from the big four and growing awareness among customers and advisers. Non-banks have overcome problems from the GFC to make a big mark on the NZ market. According to advisory firm KPMG, post-tax profits for non-bank lenders rose by 10.2% last year to $216.6 million, with gross lending up 13.92% to $1.08 billion. The figures are expected to be higher in 2018 as a host of names returned to the market and others expanded capacity. A number of non-banks have signalled their intent to grow business in the past year. Bluestone took its first steps back in the market and received major new backing from American private equity firm Cerberus. While Blackwell Global secured a new funding line for NZ lending, following its reverse takeover of NZF Group. Leading non-banks including RESIMAC, Avanti, First Mortgage Trust, and Liberty held two speed-dating events in Auckland and Wellington this year to raise their profile in the adviser community.
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BETTER BUSINESS CONFERENCE
AUTOMATION to benefit young advisers
Dan Dunkley speaks to the panellists at the TMM Better Business Conference about the future of technology for the industry and its impact on the advice process and adviser/client relationship.
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he increased use of automation and robo-advice by the big banks could play into the hands of the mortgage adviser industry, some of the industry’s top young brokers have predicted. Major banks have cut staff over the past decade with many relying on online chatbots and automated programmes for frontline operations. Comparison sites have also become more prominent in recent years, as more people opt to shop online. Despite the march of technology, the developments are likely to enhance the adviser proposition and give the industry a human edge over the big banks, young advisers told the TMM Better Business Conference.
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Panellists at the session included Elyce Maxwell of The Mortgage Girls, Brandon Lipman of iRefi, and Josh Graham of Roost Mortgage Brokers. Roost’s Graham said: “AI is taking a big part of the world, but at the end of the day quality one-on-one human advice is something a client will always want. There will be a major focus on quality advice, and that is reflected by a lot of the regulation we are hearing about today.” Lipman said: “A lot of my friends are software engineers and they keep telling me financial services will be the first industry to go. If I wasn’t in the industry, I might believe them. Being in the industry, I can’t really.” Lipman added: “I travelled to a client and ended up there until 10pm. A client
told me their son had a drug addiction. You need that personal relationship, and you can’t foster that through a chatbot.” Lipman said tech did have its advantages as an adviser: “It’s nice for it to answer your Facebook messages.” Maxwell described automation as a “threat and an opportunity”, and pointed to shrinking personnel numbers within bank branches: “The banks are shrinking their footprint, and less and less people are going into branches. The more they shrink, the more we can grow.” The trio said social media marketing could be effective for mortgage advisers of any age. Maxwell said: “Consistency is key. If you’re going to do it, do it every week. We do Facebook Live and I answer questions.
It’s about building up. We have a structured marketing plan and try to get our name out there. It’s about showing the client you know what you’re doing.” The young advisers said they shared familiar frustrations with their older counterparts. Maxwell said: “My biggest frustration would have to be waiting for documents. You always seem to be waiting for something, waiting on clients, waiting on the bank, being the middleman. Being the middleman, you have to be patient.” Graham said: “My biggest pet hate at the moment is interest-only extensions. I don’t know if anyone has battles with the bank about why a client should have a couple of extra years, even though it doesn’t meet the banks’ servicing requirements.” Lipman said: “Mine would be the commitment of some clients to go direct. I see independent advice benefitting Kiwis, rather than just doing what they are told and going direct.” On the subject of pay, the young advisers said they were working out which commission models would be most appropriate for their business in the long term. Lipman said: “It depends on who comes through.”
AI is taking a big part of the world, but at the end of the day quality one-onone human advice is something a client will always want. Josh Graham
Maxwell said: “Everyone is different. Trail is fabulous if you want long-term benefits for your business. I don’t look at what I get paid by the banks. My business partner looks after that. My big thing is putting clients where they need to go, not based on how I get paid.” Graham said: “I’m an employee, so am remunerated in different ways, salary, commission and other things. I think upfront and trail play a massive part in what we do. Trail is a vital part of our business and anyone looking long-term needs to be well aware of that.” On regulation, the panel described regulatory changes as a “good thing” for the industry but said they were waiting for more information from the Code Working Group. Lipman said: “If there’s a level of specificity that needs to come out ...The underlying message is good outcomes, and someone has to define good outcomes. We still need a bit more information.” Graham: “Interpretation is going to be the most frustrating part. It will be interesting to see how it comes along. There are so many more forms that are being passed along and it just makes it more difficult to pass timely advice on to clients.” ✚
The banks A lot of my friends are shrinking their keep telling me financial footprint, and less services will be the first and less people are industry to go. If I wasn’t going into branches. in the industry, I might The more they shrink, believe them. Being the more we can in the industry, I can’t grow. really. Elyce Maxwell
Brandon Lipman 021
BETTER BUSINESS CONFERENCE
It was a full house at TMM's Better Business Conference this year.
Marketing expert Paul Watkins and TMM Publisher Philip Macalister.
I'm from MBIE: Glen Hildreth gives advisers an update on regulatory changes.
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CoreLogic Head of Research Nick Goodall provided delegates with a solid update on the housing market.
Always one with a smile: RESIMAC NZ general manager Adrienne Church.
MBIE's Sharon Corbett is the key person running regulatory changes for advisers.
Southern Cross Partners CEO Luke Jackson.
Matt Harley from File Invite.
BNZ chief economist Tony Alexander: I've got a question.
The Code is this much smaller: Code Working Group chairman Angus Dale-Jones.
Farea Khan (The Fund Master Ltd) and Manoj Singhal (Finance Matters).
Financial Advice NZ Andrew Gunn, Michelle Harrison from Liquid Communications and Head Squirrel John Bolton.
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REGULATION By Miriam Bell
Flexibilty
key to new code
Advisers may have had some time to digest the new draft code of conduct, but they still have plenty of burning questions about it.
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lexibility is meant to be the name and the aim of the game when it comes to the draft code of conduct. That was one of the key messages to come out of a presentation by Code Working Group chair Angus Dale-Jones at TMM’s Better Business conference. Speaking in the regulation update session, Dale-Jones gave a quick run-down of the latest version of the code, which is set to apply to all advisers operating in the new financial advice regime. But he spent most of his time addressing questions from the audience about the qualification requirements contained in the draft code. He said an important part of the new regime to understand was that it is not all just
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spelled out in the draft code. “The new regime is a framework and the draft code is one part of that. In fact, the regime is like the road system, there is a framework of elements which work together to create safe roads. It will be the same for financial advice.” Ultimately, it was all about doing the right thing, he said. “So the draft code is about raising the bar for the whole ‘road’ system. If you don’t know how to safely ‘drive’ your business, or if others in the industry detoriate the industry, it will impact on your business. That’s what we are trying to bring to the surface.” To that end, the draft code sets out what advisers must have in terms of competencies and skills before they can give advice, as well as what advisers must do.
But where the current code for AFAs talks a lot about process and the steps advisers have to go through when giving advice, the draft code has taken a step back from that approach. Dale-Jones said that’s because the working group wanted to give different businesses the flexibility to work out how they could best approach these principles in their own business environment. The principle of flexibility is also one the Code Working Group envisions when it comes to the draft code’s qualification requirements, as well as CPD work. Under the draft code, all financial advisers will need to have the New Zealand Certificate in Financial Services (Level Five) or to have been an AFA just before the code takes effect – which requires that
MBIE update on finance advice reforms At the TMM Better Business conference, MBIE representatives Sharon Corbett and Glen Hildreth also provided a report on progress towards the new financial advice regulatory regime. They said the reforms were like a jigsaw puzzle composed of the following pieces: the Financial Services Legislation Amendment Bill (FSLAB), the new Code of Conduct, FMA licensing, registration, new disclosure requirements, and licensing fees and levies. After explaining where all the pieces are at in terms of development, Corbett said the new regime created a level playing field. “So that no matter where consumers go for advice they can rest assured that the same standards apply and that their interests will be at heart. I think it will be good for the industry and for consumers.” FSLAB could be passed by the end of the year, they said but it would probably be early next year. By the second quarter of next year all elements of the new regime would be known. All new duties take effect in 2020 and advisers will need to be operating under a transitional license by then. But advisers will then have until 2022 to work through what is necessary to comply with, and to get up to standard under, the new regime, Corbett said. “We want to reassure people that there will be an orderly transition. There will be time to consider how you want to go about applying for a licence before the new regime comes into effect. Our key message is that details won’t be sprung on you without time to prepare.”
If you don’t know how to safely ‘drive’ your business, or if others in the industry detoriate the industry, it will impact on your business. Angus Dale-Jones
qualification standard. While level five is the cross-industry minimum standard when it comes to the qualification required, Dale-Jones said the group was deliberately not specifying that advisers needed that particular qualification. “But you have to meet the outcomes specified in the qualification and be able to prove it. “The easiest way to do that is to get level five. Some people might have alternate ways of proving that standard, but for most people it will be easiest to go down that path. Still, we want to let everyone who has done the hard years in terms of competencies into the regime.”
Despite this, questions from conference attendees highlighted widespread concerns around the recognition of prior learning in the new regime. Dale-Jones said it was difficult to distinguish between the people who had been practising for 20 years and were good and those who were not. For that reason, they needed to find a measurable way of noting the differences between the two. Recognition of prior learning that measures up to the required qualification was one way but previous examples indicated that not many people used the prior learning route. “It could be because it is often more difficult to put the portfolio and everything that is necessary together than it is to go and sit the qualification.” He added that another possible option could be a one-day course, with half a day as a refresher course and the option to do the qualification in the other half of the day. “Then if you are confident you could sit the qualification or you could choose to do some more learning before doing the qualification.” Exactly what the draft code might require in terms of CPD was another area of audience concern. And, again, Dale-Jones emphasised the principle of flexibility in how advisers should go about keeping their competencies and learning up to date. “It is about ensuring you take the space necessary to maintain your knowledge and environment. We want to set a signal of what we are trying to achieve but not dictate how you do it. So we don’t want people to torture themselves for a certain number of hours to meet the requirement.” This does create a burden for advisers because they need to think about what they are doing to keep up to speed and then do it, he said. “But we are happy that the trade-off for flexibility will be beneficial. We want people to think critically over their careers about how they can keep up to speed and how they are doing their job. It might be that a lot of the development is in the soft stuff – like people skills.” If advisers want to move into providing different areas of advice, they must build on the core level five qualification. It will be necessary for an adviser to have some level of competency in an area before they can offer advice on it. Dale-Jones added the Code Working Group wanted feedback on the draft code from advisers. “Rather than dictating to advisers how they do their business, we are focused on outcomes. Think about the code and how it fits your business. We want to know the things that are causing you uncertainty.” The draft code is due to go to Commerce Minister Kris Faafoi for sign-off either before Christmas or early in the new year. ✚
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SALES & MARKETING By Paul Watkins
Stop thinking campaigns and start thinking conversations
Online marketing offers the chance to engage directly with potential clients.
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e live our lives online, or more specifically through our phones. We do our banking on our phones, we find our way with its GPS, we check the weather, we read the news, we buy and sell through TradeMe and offshore sites, and we even find love that way. We also message each other on our phones (messages through phone apps are now believed to exceed all the world’s emails) and strange as it may sound, we call each other. More than 30% of New Zealand homes no longer have a landline and many cell phone plans now come with unlimited calling. At the TMM conference I recently spoke at, I asked who in the audience still had their phones turned on during my session. Everyone did. I was not trying to embarrass
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anyone, I just wanted to point out that cell phones have become part of us. We have them with us at all times, every day and stress if we think we may have misplaced them. Big surprise. Your clients and prospects live on their phones, too. Around 55% of all Google searches are now made on phones and more than 75% of all social media is accessed with a phone. So, doesn’t it make sense to use them as an advertising medium? Here is how. Before I get into the specifics, you may be disappointed with the performance of your website. This is because a website is just an informational platform. The correct way to use it is to add “landing pages” and drive traffic to it through social media, notably Facebook, Youtube, LinkedIn, and Google Ads (used to be called AdWords). I will deal with Facebook and LinkedIn in this article,
the other two being the subject of the next edition. Brands equal trust. So, anything you do in the way of branding must exude trust. How do you do this? Through video. People deal with people they like, so they need to see you, hear you, listen to your message, feel that you empathise with them, that you understand their pain and most importantly, believe you. This is how trust forms and why video is almost the only thing that works now. And the video should be chatty and casual, just like you are talking one-on-one with someone. Let’s compare social media to traditional media (radio, press, TV). Any radio ad would cost $3,000 to be effective at all. Social media is pay-per-click, so you only pay when someone clicks your ad. Budgets of just $10 per day are suitable for Facebook, and a bit
more for LinkedIn. Traditional media is almost totally unmeasurable. Social media is 100% measurable. Traditional media promotes the service and can only speak in general terms, while social media promotes the personality of the brand and speaks directly to the individual. Here is how to use it. First, choose your target market and message. On Facebook, target by geography and age. You can micro-target it further but stick to those two factors for now. Let’s say it’s people within a 20km radius of you and aged between 28 and 38. Create a video of yourself speaking about how they can achieve home ownership, as this is the demographic for first-home buyers. Make it personal. Hold your cell phone out in front of you and speak in an empathetic way. Put yourself in their shoes, with comments like “I know how frustrating it must be to think that home ownership is not an option for you. Well, you might be surprised…” Then make an offer at the end of it, like, “Click here to download a six-page report on how home ownership is entirely possible…”. The click through goes to a landing page, being a single page on your site that offers the downloadable document. To get it, they must put in their name and email of course. This becomes the start of the conversation. To see this in action, click on any such videos that appear in your Facebook newsfeed. It doesn’t matter if they are for weight-loss, how to make money on the internet, or inviting you to enrol in a class. Click on it and see where it takes you. Sign up for the offered download and then see what happens. You can always unsubscribe at any time.
A big plus about Facebook is that you can run multiple messages, aimed at multiple target groups as each group can’t see what you are saying to the others. A really cool little add-on is that you can exclude competitors seeing your ads. Moving on to LinkedIn, it’s very similar. LinkedIn is populated by career-seeking individuals with higher-than-average incomes. Here you can modify your profile to suit. Use the area above your name for a photograph, just as you do for your Facebook cover shot.
At the TMM conference I recently spoke at, I asked who in the audience still had their phones turned on during my session. Everyone did. Put a headline in the profile below your name, but above where you say, “mortgage broker”. For example, it could read, “John Smith, specialist on investment property finance” Post lots of video. Each time you do, your connections are notified, so they remember you. Re-post or share other people’s videos,
such as market commentaries, update on the economy, banks, housing, interest rates and anything else relevant. Interview clients as testimonials, interview lenders, interview anyone relevant to pushing your credibility. Once again, your contacts see these. You can advertise on LinkedIn by targeting any of the parameters that LinkedIn people use i.e. job title, company, skills, education and so on. The cost of advertising in this medium is quite a bit higher than in Facebook, but it’s a highly qualified target group. And finally, while this will sound like a worn-out record, keep the conversation going. You now have their email address, so put them on your monthly newsletter list. They can always unsubscribe, and you will have built in a small note to that effect when they downloaded your e-book or report. Monthly is now the best frequency, as they forget you too easily otherwise. Use MailChimp or a similar mail service, which are free up to 2,000 subscribers. Go to fiverr.com and seek help setting up a good-looking template. This can be done for around $50. Setting up a good landing page is only a couple of hundred dollars, writing a report of e-book is free (just your time), flashing up your LinkedIn page is free, and running Facebook advertising pay-per-click, so you only pay when it works. Not only are these highly effective lead generating mediums, but the costs and risks are extremely low. Try them, you have little to lose. ✚ Paul Watkins writes blog content and newsletters for financial advisers.
Is your Marketing not Getting the Results it Used to? The online world is dominating all marketing activity right now and that it unlikely to change. Is your message clear and resonating with prospects? Is your website generating leads? Are you using social media? Are you sending newsletters to keep in touch with increasingly dis-loyal clients? I can offer a marketing review to you or your team, to examine what works, what doesn't work and what can be changed or improved. I can also offer high-value, low-cost newsletters filled with lending, insurance and lifestyle articles. Call or email me to discuss what best suits you.
Paul Watkins Speaker / Marketer / Writer 0274 747 285 paul@paulwatkins.co.nz
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MY BUSINESS By Miriam Bell
WEALTH BUILDER Be it a commercial business deal or a first-home purchase, South Aucklandbased Sifa Sifakula from Loan Market is driven by the goal of helping his clients build their wealth long-term.
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WHAT PROMPTED YOU TO GO INTO MORTGAGE ADVISING?
It was the prospect of working for myself. Advising offered me the ability to work around my two boys as well as other family commitments. Back in 2015 when I was considering the move, I had a couple of friends advising. So I had the good fortune to spend some time in their offices getting a feel for the business. And then I decided to make the leap.
HOW DID YOU LEARN THE BUSINESS?
I had spent over 12 years working in the banking sector in a number of different roles. That included working at ANZ for nine years: my last role there was as a corporate and commercial manager. So that meant I was familiar with the lending industry: I just had to build on that knowledge.
WHY ARE YOU PASSIONATE ABOUT THE INDUSTRY?
After spending a fair bit of time on the other side of the table, it’s satisfying to be able to assist people through the mortgage process and provide them with options. But it always feels good when you can help someone when they've had so many "no's". One good example is actually from my days at the bank when we were able to help a young transport business into their first truck. It always brings a smile to my face when I’m driving around town and see they now have quite a few trucks on the road. They've grown the business substantially in less than 10 years.
HOW DO YOU APPROACH BUSINESS DIFFERENTLY TO OTHER ADVISERS?
My aim is to work long-term with my clients. The ultimate goal is to help them build wealth through the provision of good solid advice. Also, I specialise in providing a tailored service. As one size does not fit all, neither should financial solutions. During my time in the banking industry, I worked across many divisions. That means I’m well-positioned to assist with a range of lending needs from buying a first home to expanding an investment portfolio. I believe that by simplifying the process of lending it means my clients have more time to focus on things that add value to them and their family.
I HEAR YOU DO SOME COMMERCIAL WORK: WHAT PROMPTED YOU TO WORK IN THAT SPACE?
I have a commercial banking background which involved looking after a portfolio of clients in a segment range with turnover of $2 million to $200 million. It meant that I learnt to navigate and balance between bank policy and client needs. That has left me well-equipped to assist businesses and those who are self-employed with cash flow lending.
DO YOU MAKE USE OF SOCIAL MEDIA AND NEW TECHNOLOGY OR PLATFORMS IN YOUR WORK?
Yes, I do. Loan Market has a good platform to launch off. We also use Facebook, LinkedIn and a monthly newsletter to keep in touch with our clients. However, the majority of our business comes through referrals or word of mouth.
WHAT HAS BEEN THE HIGH POINT OF YOUR TIME IN THE BUSINESS?
It is always a high point to deliver good news to my clients. When you see how much it means to them to get into their first property, or their next investment, it feels great.
AND WHAT ABOUT THE LOW POINT?
Early on in my career as an adviser, it was pretty tough having to earn my stripes not only with lenders but also with clients. When you get a string of not very positive answers it really puts a dampener on things.
DO YOU HAVE A MENTOR? IF NOT, WHO HAS MOST INSPIRED YOU IN BUSINESS?
I don’t have an official mentor but I do have a few good friends that I could also classify as mentors. In terms of inspiration, Hamish Patel (Mortgages Online) and Bruce Patten (Loan Market) are people in the mortgage advice industry whom I admire. I like the way they bring their own style to the way they do business.
WHAT’S THE BEST ADVICE YOU’VE RECEIVED? HOW ABOUT THE WORST?
In my view, the best advice I’ve received was to make the leap to become self-employed and have a crack at advising. The worst advice I’ve been given would be to "wait until you're ready". This might come back to haunt me but I’ve had a really good time getting to where I want to get. And hesitation in the past has delayed the start of this journey.
IS THERE A TYPICAL WORKING DAY FOR YOU? WHAT DOES IT LOOK LIKE? I find that no day is ever the same for me. That’s because both my family and work commitments ensure that I’m always on my toes, running around doing different things. But every morning starts off with phone calls to our team to see how the day is looking and how we would like it to go.
WHAT CHALLENGES – FOR YOURSELF OR FOR THE INDUSTRY – DO YOU SEE AHEAD?
The challenges that I see ahead for myself is that we’ve just added a new staff member to our business. Also, it will be a challenge
to ensure that our processes and systems are in check while still trying to grow the business. On top of that, industry-wise compliance is always a concern given the ever-changing landscape at the moment in the finance and insurance industry.
WHAT IS YOUR BIGGEST LONGTERM BUSINESS GOAL? I’d like to find, or work out, a business model that can assist with making the non-profit profitable. Also, work life balance is always an area that I’m lacking in and struggle with. I will be looking to try and correct that this summer.
WHAT ARE YOUR TOP TIPS FOR OTHER ADVISERS?
Give it a go and be sure to surround yourself with the right people. ✚
FROM: I’m Samoan/Niuean. I was born in Samoa but raised in Auckland. I have also spent some time in Christchurch. FAMILY: I’m the oldest of six. I now have two sons of my own. OUT OF WORK INTERESTS: Sports. Also,
relaxing with good friends with good food and even better wine.
FAVOURITE FILM &/OR TV SHOW: The Godfather. FAVOURITE BOOK: The Alchemist.
FAVOURITE MUSIC:
It depends on my mood!
MOTTO: Shakespeare – “To thine own self be true”.
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LEGAL By Jonathan Flaws
Cross-leases need not be a minefield
Here’s what you need to know if your clients are considering buying one.
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n September, the NZ Herald headlined an article on cross-leases: “Cross-Lease properties can be ‘ticking time bombs’, warns top lawyer.” In October, a follow-up article extended the theme by warning that cross-lease properties can generate some unwelcome surprises. It claimed that since the previous article, some home owners had become so cross about cross-lease that they wanted such titles abolished. “The big issue is the lack of freedom to make changes to valuable homes that they want to improve. When reminded that, at the time
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of purchase, they agreed to get neighbours' consent to substantial additions or alterations,
All cross-leases were not created equal, so I doubt that there is any one solution that fits all.
cross-lease owners either say they forgot, or that their neighbour is being unreasonable.” At a recent property law dinner, the same top lawyer who warned of ticking time bombs proposed a toast to the North Shore lawyer, now aged in his 90s, who developed the first cross-lease in the 1960s to overcome a problem that prevented people with large properties subdividing the land and building and selling a second house on the same lot. There are apparently more than 200,000 cross leases, most in the Auckland region. The vast majority relate to two or three self-
standing dwelling houses built on what was originally one lot. Most are accompanied by exclusive-use areas that allow the owner living in a house the use of the area of land surrounding the house to the exclusion of other house owners. There is usually a common area, such as a driveway that all share. The rates are assessed separately, the insurance is generally the responsibility of the owner so apart from any work required on the common property, each owner is the lord of their own manor and can live happily ever after without reference to their neighbours. If the same development were registered as unit title, there would need to be a body corporate and unless the rules provided otherwise, there would need to be communal insurance, meetings, annual levies and a person responsible for collecting the levies and providing statements of account to purchasers. There are probably just as many issues with unit titles as there are with cross leases. Ask an owner living in the Metropolis apartments in Auckland City what they think of their title structure and I suspect many would say that they are a ticking time bomb and they survive by ignoring those neighbours they don’t like or who have opposing views as to how the property should be managed. A unit title makes sense for larger multistory developments and apartments. A cross-lease makes sense for self-standing infill housing on a large section. So, what’s the problem with cross-leases? Should they be abolished? How can owners survive living inside a ticking time bomb?
ISSUES
A cross lease title is a title under which: (a) all owners hold the fee simple as tenants in common in shares. If there are two houses, each has a half-share. Three and each has a third-share. (b) the occupier of a house has a lease of the house as shown on a flats plan, which is lodged with the land registry and is shown on the record of title for the land. The lease only refers to the area shown on the flats plan so if the footprint of the house is ever extended beyond the area shown on the plan, the owner has no legal right to lease the area not shown on the flats plan. (c) all owners of the fee simple are the lessors so if any consent is required to amend the lease – or the flats plan or to do something permitted by the lease but only with the lessors’ consent, all of the lessors have to agree. (d) there is no such thing as a standard cross-lease document and each one can contain whatever provisions the lawyer who originally drafted the lease felt like including. The Herald refers to one lease
that prohibited leasing the property to persons of brown skin. This racist clause is unenforceable. (e) the flats plan may not include exclusiveuse areas or may be incorrect (particularly if changes have taken place since it was first put in place). (f) there is no formal provision for any consent to be recorded so even if an extra bedroom was built with the consent of all owners 30 years ago there may be no record of that consent today.
SHOULD CROSS-LEASES BE ABOLISHED OR REFORMED?
No, or at least not in a wholesale way. All cross-leases were not created equal, so I doubt that there is any one solution that fits all. Ask the (I suspect) vast majority of owners of cross-lease who have never had an issue and who get on with their neighbours and live happy and stress-less lives in their cross-lease home and they will say there is no need. The quote from the NZ Herald above suggests that the answer lies in the due diligence you undertake when you buy a cross-lease property. It also suggests that cross-leases are not for all.
If you have no intention of making any changes, then there is no problem. If you are leasing any property, you need to know the terms of the lease and abide by it. If you are buying a property with the intention of adding to it and it is a crosslease, don’t do so unless you either obtain the consent of the neighbours before you buy, or you are prepared to run the risk of having to pay to obtain their consent: Either by paying them something or by going to court and seeking a court order. If you have no intention of making any changes, then there is no problem. Check out the footprint of the existing house and the area of exclusive use (assuming there is one) and make sure these are correct. If the footprint has changed, find out when it changed. Ask if there is any evidence of consent having been obtained. If the neighbours have changed, it may be that consent was given but there is no evidence of it. It may be that it is a defence to the breach that the limitation period for taking action has expired. It may also be that the
consent was one that it would have been unreasonable to withhold, particularly if it was in an exclusive use area and did not affect the neighbour.
DON’T LIGHT THE FUSE
If a cross-lease is a ticking time bomb, then don’t light the fuse or turn on the clock. Or applying another metaphor, don’t make any changes and don’t raise the issue of past changes with your neighbours and let the sleeping dog lie. Last year, a purchaser of a cross-lease felt the need to get the neighbours’ consent to change the flats plan because on due diligence they discovered additions to the house not shown on the flats plan. They got consent and proceeded with the purchase. They didn’t look closely at the exclusive use area and when the surveyor pointed out they were using a path within the neighbour’s exclusive use area to access their front steps that were right up along the boundary, they asked the neighbour to agree to shift the boundary. The neighbour refused. It took several years and a court order plus $85,000 to pay the neighbour for the 11m2 of land they needed for the path – plus legal costs. Apparently during the previous years there had been no objections to the use of the path and the neighbour was unaware of the real boundary.
INSURE AGAINST THE RISK
If you don’t want to make changes but you are aware of a potential problem, then it is possible to insure against issues that are present at the date of purchase, provided there have been no objections or discussions on the issue and the issue has been in place for some time. If you have a client purchasing or refinancing a cross-lease and you discover issues like this, you may like to suggest they talk to their lawyer or insurance broker about legal indemnity insurance. JLT Insurances have a section that specialises in this type of insurance. Because it doesn’t make the issue go away and doesn’t require a lawyer to be paid to solve the perceived problem, most lawyers will tell you it is a waste of money. But like all insurance, it manages the financial risk should the issue become real and, being a one-off premium, it can save your client a lot of money and stress. If your client wants to make future changes without the consent of the neighbours – they are best looking for another property that is not a cross-ease. A cross-lease is what it says it is – a lease. If you can’t meet the lease conditions, don’t buy it. ✚ Jonathan Flaws is a partner at legal firm Sanderson Weir.
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INSURANCE By Steve Wright
Integrity, the code of conduct and what now for insurance advisers?
New code brings changes for risk conversations.
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he new code of conduct will relatively soon apply to all people who give financial advice, including insurance advisers. While many of the obligations under the code probably applied before, courtesy of a variety of laws and legal principles, some of these will now be front and centre in all advisers’ lives. Probably the two most important code standards are standards one and two. I suspect these obligations will be included in the final version of the code in some form or another. • Code standard one requires advisers to treat clients fairly and act in their interests. • Code standard two requires advisers to act with integrity.
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Advisers who do this will find the other conduct requirements in the code will probably follow quite easily. Even without the code, all advisers are legally required to give advice only after exercising the necessary due care, diligence
Knowledge and skill is no guarantee an adviser will use it to the client’s best interest.
and skill. I think this can be summarised as … “conscientious application of knowledge and skill to achieve a recommendation that on balance, is the best one for the client.” To do this, advisers must "know their stuff" and, continuously improve their knowledge. However, knowledge and skill is no guarantee an adviser will use it to the client’s best interest. To act in the client’s best interests, advisers need a big heart, they need to genuinely care about their clients and do what is right for them, even if this is inconvenient for the adviser. Code standards one and two essentially force advisers to do this even if their own hearts are not big enough. For instance, it is not acceptable for advisers to:
the policy which does not cover non-funded drugs at all or significantly restricts cover for non-funded drugs or which can simply have benefits removed because its policy wording is not guaranteed. • It’s not acceptable for advisers to ignore providers and their products for the adviser’s own reasons, reasons irrelevant to the interests of the client. For example: “They have not been around long.” All insurers must have sufficient resources, including capital (financial and human) and thus ability to pay claims, before the Reserve Bank will allow them to operate, so this is no good reason. Another example is: “They don’t pay claims.” Insurance companies can really only decline claims for two reasons: material non-disclosure; and in the absence of a benefit due under the policy wording. Please don’t forget, clients can always lay a complaint with the Ombudsman, at no cost to themselves, if a claim is unfairly declined, so again, this really is no justifiable reason. • It’s not acceptable for advisers to recommend their preferred provider and ignore how another might be better for
It’s not acceptable for advisers to ignore providers and their products for the adviser’s own reasons, reasons irrelevant to the interests of the client. • Recommend a policy or provider because the commission paid is bigger. • Recommend a policy/product that does not protect adequately against the risks the client requires the product for (this is the “fitfor-purpose” test required by the Consumer Guarantees Act). For example, if the client wants medical insurance to fund a possible future need for drugs not paid for by Pharmac then you should probably not sell
their clients because: they like the BDM; or because they are loyal to that provider (advisers are legally required to be loyal to their clients); or because the provider gives them special underwriting deals on unhealthy clients (which might be useful for the unhealthy client, but conveys no benefit on healthier clients). Why does all this matter? It matters because the difference in claim outcome
can be very significant depending on the provider selected and the benefits clients ultimately receive for the premium they pay. For advisers who purport to offer advice and solutions from multiple providers, I think code standards one and two require them to objectively, fairly and without prejudice, consider all the providers at their disposal so that a suitable recommendation can be made, one which gives priority to their client’s interests. For advisers who limit their provider selection, the disclosure rules require them to very clearly explain that their advice is limited to one or two providers (whatever it is in practice) and explain the consequences. Provider selection is a critical part of the advice proposition because it can make a big difference come claim time. I recently compared claims scenarios under income protection and mortgage protection between two significant insurers, which compete for advisers’ business, to see how much of a difference provider selection could make to the actual dollars received at claim time, having regard for their respective product benefits and features. Like for like, and choosing the most generous options of each product, the premiums were almost identical for the example I chose, and, in some claims scenarios (the less severe ones) the dollar differences were negligible. In others they were not negligible, typically depending on what the cause of disability was. For longer-term and more severe disability, though (the most financially significant risk for the family and thus the most important for advisers to best protect their clients from) the dollar difference in claim payments over time was staggering, reaching into the hundreds of thousands of dollars. For the client of the less generous provider to achieve a similar level of benefit, significant amounts of at least two other products would be required and at considerable extra premium expense: Premium expense which could be put to much better use. Product provider does matter, and quite dramatically. ✚ Steve Wright is the manager of professional development at Partners Life.
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HOUSING COMMENTARY By Miriam Bell
Market jigsaw Sales activity, values growth, supply issues and buyer data make up the pieces of the housing maket puzzle presented by CoreLogic’s head at a recent conference, reports Miriam Bell
G
etting to grips with the housing market is a matter of looking at a range of different information and then putting it all together, much like a jigsaw. Sales activity, price growth, buyer types: they are all critical pieces in the puzzle. That’s something most people are aware of, but sometimes an objective expert can throw new light on a mix of well-worn data. At the recent TMM Better Business conference, CoreLogic head of research Nick Goodall did just that in a wideranging address. In this month’s commentary, we report on Goodall’s presentation and examine the pieces of the puzzle he used to present his picture of the housing market at this point in time.
SALES BOTTOMING OUT
The turbulent trajectory of sales activity was the first piece up. It’s well known that over the last few years, sales have dropped off significantly. In fact, Goodall says that sales have fallen by about 20% since 2016. “But we are starting to see signs that sales activity may have reached a low. Our sales data shows it is levelling out. The same goes for Auckland’s sales. The Super City’s drop in sales activity has been plain to see. But our data indicates that it also appears to have bottomed out.” His take on this is backed up by latest REINZ data which shows that sales bounced back to life in October. It has the number of sales nationwide up by 15.5% year-on-year to reach the highest level in five months in October. In the REINZ data, sales were up in
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13 out of 16 regions with 10 of those 13 regions seeing double-digit increases. Even Auckland recorded a surge in sales with a year-on-year increase of 15.2%, after months of flattening activity. Further backing came from Barfoot & Thompson’s October data. It shows Auckland’s sales jumped by 22.4% from September and by 39.4% on the same time last year. The number of sales were the highest in an October for three years. Going forward, Goodall says there are also signs that a loosening in credit could further help with sales in the short term. “If not, expect activity to remain constrained.”
MIXED VALUE RESULTS
While Goodall sees sales activity as likely to have hit a floor, he has a less optimistic take on value growth. Overall, it remains weak, he says, but there is a mixed picture when
Auckland is also seeing a gradual increase of listings and they are now up 45% on two years ago. That is contributing to the weak value growth in the city.
it comes to value change, particularly in the main centres. CoreLogic’s latest data has year-on-year value growth persisting in Wellington City and Dunedin. Wellington values continue to strengthen, with growth up 8.5% to an average value of $795,098. Dunedin’s performance is even better: it is up by 10.4% to $420,127. The fact that both Wellington and Dunedin have demand but a relative lack of listings is a major factor in the strength of their value growth. In contrast, the data has Auckland’s values up by 0.8% to $1,047,415, while Christchurch’s values remain flat, inching up by just 0.5% to $493,922. Hamilton and Tauranga continue to see moderate growth, up by 4.7% to $572,169 and by 3.3% to $709,339 respectively. Goodall says there is not much growth in other markets around the country but local complexities are contributing to divergent regional performances. “For example, Invercargill values are up 13.4% annually, which is the city’s strongest growth rate in 10 years. Elsewhere, Napier is still pretty strong but slowing. Most of the country is slowing, but it’s gradual and happening as a lag.” As is often the case, Auckland serves as a microcosm of the nation’s mixed results. CoreLogic’s data highlights inconsistent growth patterns across the wider Auckland region. While the region as a whole is flat, some areas are still going up while others are not. “It is all over the show and it’s hard to pick discernible patterns across the city. There is no consistency. Basically, property values
WHAT’S DRIVING HOUSE PRICES?
REINZ HOUSE SALES: UP
Despite the looming policy and tax changes, low yields and reduced capital gains, property investment is still attractive. now depend on how well the property is marketed and who turns up on the day.” It’s likely the reason Auckland prices are holding up is because vendors are holding out for the prices seen in the recent past, he adds. “But Auckland is also seeing a gradual increase of listings and they are now up 45% on two years ago. That is contributing to the weak value growth in the city.”
SUPPLY STRUGGLES
Much attention has been paid to the housing supply shortages plaguing markets around the country, particularly Auckland. Goodall’s message on this is mixed. Despite encouraging numbers in the form of strong building consents, not enough is actually being built yet. Auckland has a massive undersupply and it’s difficult to change that in a short time, he says. “While consents are up, we are making up for a massive deficit. There are also land restrictions and infrastructure issues. The situation is starting to change but we have a long way to go.” The situation is complicated further by a gap which is opening up between the number of building consents issued and the number of new builds being built. That’s partly because of the need to regenerate and replace old buildings with new and partly because of construction industry capacity constraints. However, more terraced and higher density housing is being built and that is good, Goodall says. “As is the fact the situation means that what is currently happening in Australia’s housing market is unlike to happen here. They have a big risk of an oversupply but in Auckland that is not a risk.” The undersupply situation is not as bad in Wellington, although there is a problem. In Christchurch, there is a potential oversupply. Goodall says that although consents have flattened off they are still at a higher level than pre-earthquake. “They are still building down there. So it’s important to understand what is happening in different pockets of
that market.” Meanwhile, Kiwibuild is now a reality but, again, there are teething problems. For example, there seem to be some demand limits and construction industry capacity constraints are an issue here too. Goodall says Kiwibuild is really about making an impact on the affordability of properties rather than the amount of stock on the market. “The Government will be aware of these issue and will be trying to target them, but there is a long way to go.”
MARKET PARTICIPANTS
The final piece of the puzzle explored by Goodall involves the market’s participants. And CoreLogic’s latest buyer classification data reveals some interesting trends. It shows that first home buyers remain active across the country, with a 24% share of the national market and a 25% share of the Auckland market. Rather than staying on the sidelines, they have been coming back into the market over a sustained period – despite the rise in prices. “They are finding ways in and one of them is Kiwisaver,” Goodall says. “But they have also adjusted their expectations in terms of locations and property types (although they still haven’t fully embraced apartments), and they are accepting longer commute times to get into the market.” Another trend is that mortgaged multiple property owners – ie: investors – are also returning to the market. CoreLogic’s data shows there has been a slight tick up in investors over the last couple of quarters. They now have a 24% share of the national market and a 27% share of the Auckland market. Goodall says that means that investor demand is still there and that it has been lending constraints which have held them back from buying. “Despite the looming policy and tax changes, low yields and reduced capital gains, property investment is still attractive. I don’t think investors are planning to sell up en masse and get out of the market.” Established investors will be looking at the longer horizon, he says. “They have done this for 20 years and have been successful, so are they going to change? No, they are just wanting to find out how to continue acting in the market and being successful. They are not going to get out of it.” Additionally, he doesn’t believe rents will skyrocket to eye-watering levels as a result of the policy and tax changes. “Rents can only go up so far because they are tied to income. If they rise too much a landlord could lose a good tenant because the tenant won’t be able to afford it. And landlords do put value on good tenants because a bad tenant can cost you more in the long run.” ✚
Sales volumes nationwide were up in October. After a slump in September, October saw sales reach their highest level in five months. They were also up year-on-year.
INTEREST RATES: DOWN
Interest rates have taken a downwards turn again and banks appear to be engaged in a competition to put record low rates on the market.
OCR: DOWN
The Reserve Bank left the OCR on hold at the record low of 1.75% in November and Reserve Bank Governor Adrian Orr says they expect it to stay on hold until into 2020.
IMMIGRATION: DOWN
Monthly net migration was down in September as compared to August. Annual net migration was down in September for the eighth month in a row and commentators say the rate is easing.
BUILDING CONSENTS: UP
Building consents dipped slightly in September as compared to August. But yearon-year consents are on the rise, particularly in Auckland where consents are approaching record levels.
MORTGAGE APPROVALS: DOWN
Reserve Bank data shows mortgage lending overall was down in September, as compared to August. New lending to investors was also down slightly from the previous month.
RENTS: UP
The average national rent in September stayed unchanged at a record high and it was up year-on-year. Average rents in both Auckland and Wellington remained 035 unchanged at elevated levels.
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