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Crockers Multi Living April - June 2017

ISSUE 42 | April - June 2017

Apartment Investors... Are You Ready?

Over the last few years the Auckland Central and surroundings suburbs have seen the skyline change, with cranes exploding onto the scene building new apartments for Auckland’s ever increasing population. 2016 saw some of these apartments reach completion and a further increase of new apartments will come into the market mid to late 2017.

There has been many comments written in the media about the Auckland housing shortage and this has shown through in the strong sales and rental growth over the last 6-7 years. However anecdotal evidence shows that a majority of new apartments are being purchased by both domestic and international investors and not just owner-occupiers. This will mean that upon completion there could be a strain on the rental market. Even those purchased by owner-occupiers’ as they are likely to be moving out of rental accommodation into their new homes, further increasing the number of rental properties on the market.

2016 saw the completion of 2,344 apartments in and around the central city. This caused a negative effect on the central city rental market especially over the winter months with the number of vacancies increasing and the vacancy periods between tenants becoming longer. During that period central city rents reduced slightly while the market absorbed the extra stock. Once the new apartments were absorbed by the market the rentals increased back to or above levels prior to the increased stock and vacancy times between tenancies decreased returning to normal.

2017 brings a further 3,860 apartments, that is just over the previous peak of 3,600 seen in 2005. We expect an additional 1,500 units (above 2016’s levels) to come on the market at around the same time. The effect of this will be a softening rental market and vacancies increasing above the levels experienced in 2016. As investors it is important to plan ahead when you become aware of changes to the market that may adversely affect your investment. The Crockers Rental Division have made a concerted effort to lock tenancies into 12 month fixed terms to ensure that during this period our clients aren’t affected by the slowdown in the market. At the end of their fixed term tenancies we would expect the market to have returned to normal as the new stock is absorbed.

Our recommendation to all Crockers Body Corporate investors is, if you have a unit in the Auckland Central or surrounding suburbs, to have your tenants fixed into tenancies over the winter months until at least January 2018. If you are using a property manager check to ensure they are looking after your investment and your interests. Should your tenants be on periodic tenancies, start the conversation now with them about changing to a fixed term so that you have peace of mind that you won’t be adversely affected while the market takes time to absorb the new apartments. If your current tenants are on a fixed term that ends soon, but they do not wish to extend for another longer period, do not be afraid to not renew the tenancy. Find new tenants in the stronger market now that will enter into a fixed term that gets them through the likely slow down period.

If you are an investor with a unit in a new development, contact the Crockers Rental Division as we have considerable experience at renting properties in large developments upon settlement and have exclusive tactics to ensure our client’s properties rent faster than others. Also, any Crockers Body Corporate client that brings on board a new property management for our Crockers Rental Division to manage is entitled to a $1,000 cash back - our way of showing our appreciation for your loyalty.

Please contact Shanon Aitken (, Crockers New Business Team Leader for more information and how you can get your $1,000 cash back!

Source: REINZ

Health & Safety In Residential Property Investment

Over the past year there have been a lot of changes to rules for owners of residential investment properties. The majority of these changes have been well publicised in the media, being topics of public interest. These include the acceptable level of methamphetamine contamination in a property, increased insulation requirements, the requirement for fire alarms in all properties and, more recently and possibly most controversially, the Osaki case - which has drastically reduced the landlord’s ability to claim for negligent damage of the investment property.

However some of the biggest changes to the industry over the last year have largely gone unnoticed. These are the changes to Health and Safety at Work Act 2015 (HSW Act).

On 1 April 2016 the new HSW Act came into force. The objective of the new law is to provide further protection to employees in the workplace. Although the HSW Act does not specifically define a business, it does define a ‘person conducting a business or undertaking’ (PCBU) in very broad terms; which it does include every residential landlord, as owning an investment property is certainly an undertaking, even if there is room to argue whether a single residential property investment can be considered a business.

The obligations imposed by the Act are also imposed on company directors, trustees, people holding positions comparable to company directors and anyone else who holds a position that allows them to exercise influence over the management of the PCBU. Simply put this means that not only the Landlord, but family members, solicitors, accountants or anybody else, whether or not they are listed as a director or trustee for the property owner, could be held responsible for breaches of the Act.

The fines and penalties for breaches of the Act have been greatly increased. Should a landlord/business fail to meet their obligations under the Act and face prosecution, the maximum fines or penalties are up to $3 million for a PCBU; and $600,000 and/or a five year imprisonment term for an individual or officer of a PCBU. Ignorance of what is happening will be no defence. The Act also prevents PCBUs from insuring against fines, so while indemnity insurance may cover any court costs, the actual fines must be paid by the PCBU or the individual.

In practice, a landlord is required to ensure that a property is provided as a safe and healthy environment for tenants and as far as reasonably practicable the health and safety of workers engaged in work on the property. This means that every time a contractor is sent to the property they must be informed of any Health and Safety issues that are present at the property, such as a dangerous dog, or difficult access. It also means that landlords have a duty to ensure that the contractor undertaking any maintenance is competent and appropriately qualified to do that work. They can meet this duty by assuring themselves that they are contracting a bona fide reputable company. The changes and the penalties able to be imposed under the Act, should be a sufficient incentive to end the days of the old number eight wire do-it-yourself Kiwi attitude to carrying out maintenance on a residential rental property. To do so may well be a breach under the Act, unless the landlord or person carrying out the work can demonstrate that they were fully qualified to carry out that job and that their qualifications were current.

Another aspect of the law is that once a landlord has become aware of issues at a property they must take all reasonably practicable steps to deal with issues in a competent manner. For example, if they notice during a routine inspection, or if a tenant notifies them that some boards on the deck are rotten, they will not be able to simply deal with the issue by putting plywood over the offending boards so that no one stands on the rotten wood. Rather, they will be obliged to determine whether the problem is more widespread and in any event apply a permanent fix rather than merely undertaking a stop-gap measure.

Australia has had a similar Health & Safety Act for many years and provides an indication of how the HSW Act might be enforced in New Zealand. Certain aspects of the changes can be illustrated by reference to two cases, the first in New Zealand prior to the HSW Act coming into force; and another in Australia after their equivalent legislation had already come into force.

In New Zealand a case in Timaru involved a property management company being fined $50,000 for engaging an unqualified contractor to remove a gas heater. The gas supply was not capped off and when the new tenant moved in and ordered a new gas cylinder, up to 35kg of gas leaked into the house overnight. Fortunately for all concerned, the incident didn’t result in serious injury.

In Australia a landlord and property manager were both taken to court and ordered to pay $840,000. The tenant in the property had seriously hurt themselves when they accidentally broke a window pane on the front door of the house. The issue was that a contractor had, over a period of seven years, twice been to the house to repair other windows that had been broken. The contractor was a handyman, rather than a qualified glazier. Had they used a qualified glazier it is likely the glazier would have noticed that the pane in the door was not of the required safety glass and therefore taken steps to replace it, by doing so preventing the injury from occurring.

How WorkSafe New Zealand intends to enforce the HSW Act in relation to residential rental properties remains to be seen. It is likely to take a few test cases to gain a full understanding of the implications. Where a property is professionally managed, we would imagine that WorkSafe will look primarily to the property manager should an incident occur, as the property manager will have responsibility for the day to day management and oversight of the property. However, to be able to rely on this protection, the landlord may need to show that they have contracted the management to a qualified agent or reputable property management company. Therefore the use of experienced professionals is strongly recommended.

Please contact Shanon Aitken (, Crockers New Business Team Leader if you own a residential rental property and wish to discuss any aspect of property management or if you have any concerns about these new rules.

Meet The Team

As part of an ongoing series, we would like to introduce you to our Body Corporate team. This is an insight into team members and what they do as an integral part of Crockers. Meet Peter Grierson, Specialist Business Team Account Manager

Peter has been part of the Crockers team for over four and a half years and enjoys his role in the Specialist Business Team. The Specialist Business team was set up to offer a high level of customer service to our smaller complexes, ensuring their needs are met.

The team has expanded to six team members who take pride in the quick turnaround for maintenance requests and client queries which come their way. Peter has a varied background in small Business Management, Business Services and Sales Management.

Being a property investor himself, he understands the needs of overseas and domestic customers who want reassurance on their investment and how their complex is operated. What Peter brings to his role at Crockers, is his easy-going manner and can-do attitude, while maintaining great long term relationships with our customers.

He is interested in fitness, travel and loves nothing better than starting his weekend with bacon and eggs!