Author: quinovic

The Subtleties of Subletting

 

As a landlord, we strive to find the optimal tenants who we hope will reside in our properties for a long time to come. However, when you’re not around, who knows what goes on? Clearly, subletting is something that happens everyday and more often than not it goes unnoticed. In the case that you do catch out your tenants (god forbid), what do you do about it? Well, we look at the risk of this happening and the best possible approach to deal with the situation.

Now, this isn’t something that should be taken lightly, afterall, you’re sense of trust has been betrayed – the tenants you have come to know and trust have allowed complete strangers to dwell in your property. Some may not be too worried, but, for those that are, why is subletting so concerning?

Why is Subletting a Concern?

 

When we analyse the situation further we can take a look at our main concerns – insurance policies. Most policies have little wiggle room when it comes to subletting, with the biggest worry being that of your policy becoming void. What does that mean for you as a landlord? If damages do occur, when you do go to make an insurance claim – there may be complications.
But, you’ve trusted your tenants, how could any damages possibly occur. There is a huge risk that the subletting tenants may not take good care of your rental property, afterall, you didn’t choose them. As well as this, who checked references? Who conducted credit checks? so how can you be sure they’re reliable? This is something that Quinovic Lambton Quay are well on top of – by having our trust account, we are carefully examing the payments from every account that comes in. Our consistent communication with our tenants provides us with all the information we need to ensure your greatest asset is in safe hands.
Without a property manager, if the occupant who is subletting causes damage, you must pursue the original tenant for any re-compensation, which can prove difficult if they’re no longer contactable – rather time consuming for you.

 

How Can You Prevent Subletting?

 

It’s rather difficult to conduct inspections every 90 days as well as carrying out full documentation for it as well. But, this is the optimal way to prevent subletting. This is sometimes a requirement for your insurance policy and isn’t something that you want to get behind in. Carry out quarterly property inspections – showing tenants you’re keeping a good eye on the property should ensure they’re aware you take a close interest in the property and that they should communicate any changes to you.
Put a clause in your tenancy agreement forbidding subletting. We cannot stress this enough. 
When your tenants are signing the tenancy agreement ensure you tell them no subletting is allowed to prevent any misunderstandings.

 

What If I’m Okay With My Tenant Subletting?

 

There are instances where the landlord may be ok with subletting, it can certainly be beneficial to the landlord if the tenant needs help paying their rent on time or wants to get out of a fixed term tenancy without causing a huge issue. However, it’s important to remember that even if the tenant sublets and moves out of the property, the original tenant, not the person subletting, is responsible to the landlord. If you ensure the subletting tenant is properly letted a good outcome is much more likely.

 

You Should Request a New Tenancy Agreement

 

To protect everyone’s rights and responsibilities, if you find your property is being subletted ask the new occupant to sign a written tenancy agreement so they become the new tenant. This should be done only if you are prepared to end the agreement with the original tenant.

Being a landlord can be tough! That’s why when you sign up with Quinovic Lambton Quay, all of that stress disappears. You can rest assured that your property is in safe hands and all of your preferred boxes are ticked.

Healthy Homes Guarantee Bill

 

A catch up with Andrew Little’s Healthy Homes Guarantee Bill. Since it narrowly passed its Second Reading with a 61-60 vote in Parliament at the end of July, it has now passed the third reading and has now reached royal assent. The Bill amends the Residential Tenancies Act 1986 with the purpose of ensuring that every rental home in New Zealand meets minimum standards of heating and insulation – something that a lot of tenants can confirm is a necessity.

Under current legislation, landlords are legally obligated to:

 

Ensure smoke alarms are installed in all rentals from July 2016. Tenants are responsible for replacing batteries and notifying landlords of defects. There must be a minimum of one working smoke alarm in a hall or similar area, within 3m of each bedroom door.
Fit rental properties with ceiling and underfloor insulation by 1 July 2019. Certain exemptions will apply to properties where it is physically impractical to retrofit insulation.

Make certain that rental properties have a source of heating.
If you’re looking to meet these standards by the designated time, feel free to contact us to discuss options surrounding the upcoming change. We not only look after our property owners, but, care for our tenants just as much.

 

The Healthy Homes Guarantee Bill would require landlords to:

 

Maintain their property at a minimum indoor temperature.
Delay the requirement for insulation until five years after the Bill receives Royal Assent (moving compliance requirements to sometime in 2022)

 

The requirement to maintain a minimum indoor temperature is the only new requirement in the Bill not covered by existing laws. The requirement and Bill is criticized by the Government as unenforceable and redundant. Additionally, how landlords will comply with the temperature requirement is unclear as owners cannot control how heating, windows, and doors are used by tenants.

 

Despite the ongoing debate over the new Bill, insulation will be required at some point. Quinovic Lambton Quay recommends getting your property insulated sooner rather than later to avoid running out of time. Our close affiliation with Wellington’s finest tradesmen makes us a fantastic port of call to orchestrate the requirements that are needed for the Bill.

 

If you’re concerned at the possible changes, grants of up to $2000 will be available for eligible landlords to upgrade their stock. Under the previous law rentals were only required to be insulated – by the same date in 2019 – if it was practicable, with 100,000 homes excluded from the requirement. For more info, feel free to call us!

A Few Pointers for Private Landlords

 

Alright, we all know how difficult it is to stay on top of everything, especially when life is coming at you from all angles. But, let us take a step back and analyse the most common mistakes we make when managing rental properties. These mistakes more often than not can transcend into an ungodly cost for landlords; what started out as an easy fix spirals into another problem and another.

This week, we take a closer look at what mistakes you can prevent, helping you avoid unnecessary expenses and improve the cash-flow in your greatest investment – property.

Not Attending Repairs

 

This is a big one amongst rentals that weren’t state of the art to begin with, as a landlord, you hope tenants will look after your property and keep it in good condition. Sometimes, you buy a rental property with high intentions of improvements and over time you tend to forget or ignore the simple things. We must acknowledge that wear and tear does happen over time, especially if you’ve invested in an older property (or you’ve got a few rough tenants). If we ignore the initial issue we tend to find that further damage is usually inevitable. So, what happens? This causes a knock on effect with our tenants, who are now frustrated, what’s worse; An even larger bill than we thought – that leak in the roof? Yeah, that’s now come through and has damaged the ceiling. Obviously, we all know that its significantly cheaper to replace a roof, than it is to replace the roof AND pay for the extensive water damage throughout the property from the ongoing leaking.

Let us not forget that landlords can even be fined up to $4000 for failing to meet their obligations in respect to maintenance, smoke alarms or insulation under Section 45 (1A) – take it from us, you’ll want to avoid this one.

 

Overtrusting

 

Let’s look at FACTS; when it comes down to it, you’re letting strangers live in your investment property. Before they move in, what would you assume would be the most crucial stage? Reference checking! Then, why does it seem to be the process most skipped by private landlords. Finding great tenants is essential to your property being well looked after (reducing maintenance costs), ensuring rent is paid on time with no rent arrears occurring, and finding people who will be easy to work with when it comes to maintenance and property inspections.

With the Quinovic Wellington Team, we interview each of our tenants at property viewings, our showings team make recommendations of people who have shown interest in the property. We then immediately conduct triple reference checks and work credit checks on the applicants to ensure they have good character, a positive financial history, and have had no issues with previous landlords.

 

Easing off the GAS

 

Bookkeeping is essential! Any novice business man could tell you that. So, you’d never run a business without at least one spreadsheet, the same should be with your property portfolio. Being relaxed about admin can lead to big expenses and losses that could have been foreseen if you had a spreadsheet. Maintaining an updated spreadsheet allows you to identify rent arrears, keep track of expenses, follow the property’s success as a rental, and know when you can next adjust the property’s rent. Our systems take care of admin from checking rents received to recording maintenance costs and documenting inspections.

 

Not Knowing How To Draw The Line

 

When do you draw the line, well, let’s see. Repairs are expected and necessary in investment properties., it’s a way of life. However sometimes people expect more, and demand what most would consider as luxuries. When the line has been overstepped, a good approach is simply contacting the tenant and politely explaining the situation. Most tenants will be considerate of your perspective, some might even know they’re asking for more than is reasonable.

 

Rent Adjustments

 

In a market where rents are rising, and where rents can only be increased every 6 months, naturally a large percentage of tenants will be paying less than the current market rent. As we’ve discussed previously, rent can be increased every 180 days, enabling landlords to once again be able to achieve the best rent from their property in the current market. At Quinovic Wellington Property Management Specialists, we conduct a rent review on all properties every 6 months to ensure our owners are receiving the best rent in the current market – something that a private landlord may tend to forget as time goes on.

 

Closing Words

 

Expenses happen, but there will always be a way to minimise them. None of our tips are huge or difficult to follow, yet together they can significantly reduce your expenses, creating better cash-flow and a more successful investment. A constant and disciplined attention to detail ensures the best outcomes.

Buying a TENANTED PROPERTY

 

So, you’re purchasing a property, you’ve examined every possible avenue of the home – you’ve checked and rechecked the history of the property. You were happy with the result. You had a plumber look through the pipes, an electrician through the wires and a builder inspect the piles. Well, based on that, nothing could possibly go wrong, right?

The only possible thing you haven’t looked over is the tenants. The house is staying, the furniture isn’t going nowhere and what about the tenants? Those tenants are there to stay, you purchased the property with that knowledge. How well do you know them? Is it an emotional decision to retain them? Or alternatively, do we source new tenants?

Will this decision generate more stress for us as a property owner or will it relieve any problems arising in the future? When we buy a tenanted property, there are a few things we must take into consideration – let us jump into the possibility and decide whether it was the optimal decision with such a weighted investment.

 

The Advantages

 

Yes! The tenants are here to stay, there isn’t any worries as to finding new tenants, doing background checks or losing rent during that period – what a win! The investment is already generating money and that means we can start paying off the mortgage immediately. What’s more, you wouldn’t have to find a property management firm to find your tenants, of course this is a great start – your tenants are happy, you’re happy and the bank’s happy.

Well, with the pros, come the cons.

 

The Disadvantages

 

We have to admit, nine times out of ten, tenants are lovely and considerate to our properties, they even bring us presents during the Christmas season! These reliable ones are the individuals which fuel the rental market and give us hope for what’s to come – the entire experience is pleasant.
But, remember, those are the tenants that you’ve interviewed yourself; you know them, you know how they would respond to certain circumstances and what would happen if any damage or issues occurred on the property. Now, when buying a property and we retain the existing tenants; we don’t know them. We have no idea of their backgrounds, we haven’t affirmed that with a reference check nor a credit check. These are imperative steps in finding appropriate tenants for your rental. It is unknown to you if the last tenants were punctual in their rent payments or if they did no damage. These are the most crucial things when buying a rental property – when you undertake a management with Quinovic Wellington Regional Property Management Specialists, we ensure your tenants are the ones you desire. We don’t mess around.

As in all cases when we take over the property, we must inform our tenants of the alteration. If a tenant isn’t informed of the replacement landlord, how are they to know where to pay their rent – things such as contact details and all information pertaining to rent payments.

 

What about the BOND?

 

Ok, the property has changed ownership, therefore, the original landlord’s interest in the bond will pass to the new landlord. This means that the original landlord actually cannot make a claim of any bond after the settlement date. If the bond is held by the Ministry of Business, Innovation & Employment, both the original and new landlords must fill in a change of landlord/agent form.

 

What About a NEW LEASE?

 

Down to facts – If the new owner has agreed to purchase a tenanted property and the tenant is under a fixed term lease, by law the landlord can’t give notice to end the tenancy early. What happens is that the lease will continue. However, if the tenancy is under a periodic agreement, then the new landlord must provide at least 90 days’ written notice to end the tenancy.

 

Changing Property Managers

 

New owners have the right to change property managers if they wish, but they must inform the tenant and update these details on the lease. If you’ve recently purchased a house and have considered changing property managers – we make it simple! Just click HERE!

 

Increasing Rent

 

As we know, if the increase is not within 180 days of the last increase, and they give the tenant 60 days written notice the new owner is entitled to raise the rent.

 

Increasing Bond

 

Let’s say we want to increase the rent, the landlord may ask the tenant to pay extra bond money based on the number of weeks’ bond charged in the tenancy agreement. Let’s take for example, we want to increase rent by $10 per week, the tenant pays 3 weeks’ rent as bond money, the landlord can ask for an extra $30 to be added to the bond. Extra bond money needs to be lodged with the rest of the bond, by completing a bond lodgement form – something we take care of here at Quinovic Wellington Regional Property Management Specialists.

 

So, now, we obviously know that tenanted properties can be a great first investment. If you’re just starting out in property investing and don’t want to be overwhelmed with tenant applications and selection, this is the perfect option for you. Getting an instant income and guaranteed rent until the end of the fixed term tenancy gets the investment off to a good start, and helps it on its way to becoming a successful investment property. If you are someone who is looking to purchase a rental property and have considered all of the possible options, this may be the one for you. Give us a call today to find out more about our property management possibilities.

The Tenancy Law is in the WORKS

 

The saying goes; “there’s always a light at the end of the tunnel”. Many may be sceptical with the latest changes being implemented to tenancy law. Why? Well, we could seeing a boost in tenants’ rights. Some may be in awe, what will happen? The specifics are yet to be released and we’ll be sure to be the first to inform all of you. But, what we do know is that the landlord advocates will be relieved to hear rent controls won’t be among the rights.

 

So, what is INFLUENCING the Decision?

 

Let’s start with the facts that are influencing these changes; our very own Housing and Urban Development Minister, Phil Twyford has come forward and informed us that he is thinking about the practicality of introducing a legislation that will eventually transform the RTA at the conclusion of 2018.

Taking into consideration what Twyford has said; “New Zealand tenants have less rights than any in the Western world”, it is understandable that his mission is to reform the existing law to improve the tenants’ rights. Ultimately, in time, what we will see is tenancies that span longer durations, happier tenants that have a feeling of security and consequently, landlords that aren’t looking for tenants every year. This may be a concern for some, however, long term, a property manager would eliminate any concerns. Eradicating any issues that you may face as a landlord – at Quinovic Wellington Regional Specialists, we work for the property owner, we pride ourselves on informing you with every piece of information we can. The reforms are likely to include restricting rent increases to once a year, banning letting fees and abolishing no-cause terminations.

 

Is there a REBUTTAL?

 

However, Twyford has also confirmed that rent controls will not be part of the reform package. Why you might ask, his belief is that “rent controls are bad policy which drive landlords out of the market, discourage landlords from upgrading and maintaining their rental stock, and only protect tenants in properties under rent control”. Rightly so, it stagnates a market because the improvements that would arise through rent increases cease to stop. Maintenance may become costly without the landlord receiving revenue as well as a variety of other possibilities.

Considering this situation, Twyford went further to address that the optimal long term solution to the current rental market squeeze is to increase the supply of housing on the market. With an altered RTA that decreases the interest from property investors, how is this supposedly increasing the supply?

 

The Take Home

 

Tenant groups have been advocating for the introduction of rent controls following claims that a rise in student allowances has led some Wellington landlords to significantly increase their rent. Taking a word from Andrew King (NZ Property Investors Federation executive officer) says that imposing rent controls would only make the situation worse. Twyford rebutted in reconsidering rent controls.

“There are high levels of regulation and new compliance costs already. That’s contributing to rising rents at a time when there is already a shortage of rental supply… Enforcing further regulation, like rent controls, is only going to accelerate the problem as private landlords stop replenishing the rental stock.”

The government is planning to conduct extensive public consultation with landlords, tenants and the general public before the RTA reform legislation is introduced to Parliament. Twyford says they have to get the legislation right so that it works for both landlords and tenants.

The Legal Changes that CONCERN YOU

 

As we’ve all heard; the latest legislative changes are bound to hit hard. The RTA is essentially being rewritten before our very eyes and the results will speak for themselves. Take for example, the changes to the Health and Safety at Work in regard to Asbestos; as we can already forecast, this is set to cause quite a challenge for private landlords.

 

Asbestos Alterations

 

From April 2018; where we are at the moment, the properties held in tenancy will require an asbestos register if there is potential that the property is at risk of asbestos – something that is well overdue. As always, we’re looking out for our tenants; this is a huge concern for us and something that we’ll be monitoring very carefully. We’ve been teaming up with our local Wellington Asbestos removal specialists to ensure we’re ahead of the ball on this one.

 

Prior to an asbestos remover coming in, an analysis is required from an independent qualified assessor to ascertain the risk of asbestos to the residents. Real IQ went further to say, “this applies to buildings built in the pre-mid 1990’s, it could mean approximately 75% or more of all rental stock would need an asbestos assessment plan”.

 

Asbestos is a proven risk, as we care for our property owners as much as our tenants, we highly recommend that prior to having asbestos tests conducted that you contact us. We work for our property owners on the basis that all of our properties are compliant with the RTA and this means eliminating exposure to anything considered harmful – Asbestos or even Methamphetamine residue.

 

If, however, you as a landlord have decided to take matters into your own hands, we would like to remind you that Section 1.6.1 of the Code of Practice states that the Act, Regulations and Code do not apply to home occupants who conduct ‘do it yourself’ work on their own home.

 

Same Old Smoke Alarms?

 

Following on from asbestos removal, we’ve let you know of the smoke alarm alterations which are in effect as of the 1st of July which will require every house to have smoke alarms that are installed and functional. These alarms will require long life batteries as well as a photoelectric sensor. In defence of home owners, tenants will be required to replace worn-out batteries in the smoke alarms and will need to inform the property owner of any issues.

 

The Possibility of Tenancy Abandonment

 

As of the new law, the introduction of expediting the entire process – entitling the landlord to regain possession of their property far more efficiently than it has been in the past. A tenancy adjudicator will have contribution to the goings on after the owner has put forward an abandonment application.

 

The Take Home

 

As we can see, the RTA alterations will affect the way you do business with your rental property, but, it doesn’t have to be a stressful time. Just come and have a chat to us about the possibilities of property management – avoiding all of the run around associated with managing your property!