REINZ Real Estate Magazine - Winter 2021

RealEstate WINTER 2021

A REAL ESTATE INSTITUTE OF NEW ZEALAND PUBLICATION

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The Emissions Trading Scheme impacts land transactions

• Is kitset housing a silver bullet?

• Ruakura suburb paves the way • Pressure from multi-offer situations

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RealEstate WINTER 2021

A Real Estate Institute of New Zealand Publication

IN THIS ISSUE OUT & ABOUT 08 FEATURES 12 OBITUARY 24 SECTOR GROUPS 26 TECHNOLOGY 36 EDUCATION 40 INTEREST STORIES 44 INDUSTRY 58 LEGAL 60

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RANGE OF MEASURES IMPACTING HOME OWNERSHIP

18 26 28 31 41

50 56

CHOOSING THE RIGHT BUILDER FOR A RENOVATION

60 63 66

PRESSURE FROM MULTI-OFFER SITUATIONS

DAVID WEAVER TALKS: IRD TARGETING REAL ESTATE AGENTS

TENGAH LEADS THE CHARGE TOWARDS THE FUTURE THE EMISSIONS TRADING SCHEME RUAKURA SUPERHUB IN HAMILTON HOLIDAY HOMES AND THE RTA eLEARNING REVOLUTION

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

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

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

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Communications

Editors

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

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

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ISSN 2324-3791

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Kirti Desai, Chief Digital & Innovation Officer kdesai@reinz.co.nz

Finance

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

PropertySmarts

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

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CEO UPDATE

Where will the market go now?

If only real estate professionals were able to see the future.

Just over 12 months ago, we were emerging from Alert Level 3 and the State of National Emergency was being lifted. We were all still unaware of what the future held and what the longer term impact would be on the property market.

Fast forward 12 months, and we’ve witnessed some of the sharpest annual house price increases the country has seen in recent times, with REINZ regularly reporting annual increases of around 20% to 25%. There have been a number of factors underpinning the market including the low interest rate environment, the removal of the LVRs (up until 1 March 2021) and the lack of supply. Additionally, rental prices around the country have continued to increase again as a result of a lack of supply and the fact that a number of investors are looking to exit the market.

The Government and the Reserve Bank have been staring down the barrel of these unsustainable house price and rental rises and are now looking to respond appropriately. Unfortunately, there are no silver bullets or magic wands and “solving the housing crisis” isn’t something that is going to happen overnight.

It is REINZ’s expectation that house prices will continue to rise for the next couple of months, albeit at a slower pace. Then hopefully, as we head into the coldest months of the year, we might start to see the market stabilising a little more and potentially some easing of prices, hopefully making it easier for first time buyers to get into the market.

In the meantime, there have been a number of announcements from the Government regarding policies it intends to introduce, and I would urge you all to keep abreast of these and ensure you are aware of the details of the various policies in order to provide the correct information to clients and customers. REINZ will of course keep members informed of any changes via the magazine, In the Know, our blog site and social media pages. So, I encourage you all to keep an eye on these channels in the coming weeks and months.

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Wendy Alexander Acting CEO, REINZ

On page 40 we update you on the changes to the real estate qualification and how this is progressing and on page 14 we’ve outlined all the recent government changes designed to accelerate the building of houses and reduce investor demand. We also outline some of the changes to the Emissions Trading Scheme and how that will impact land transactions – see page 26 for more details.

However, the biggest change, that no doubt most of you will be aware of, is that REINZ will have a new Chief Executive joining us next month. As announced in April, Jen Baird will be joining REINZ on 5 July as the new Chief Executive. This is an exciting move as Jen is a strong, strategic thinker with exceptional people management capabilities, and she is used to leading teams through challenging transformative environments. She has spent the last three years as the General Manager, City Growth, for the Hamilton City Council and prior to this was Chief Marketing Officer at Barfoot & Thompson for 10 years. You can read more about Jen on page 12.

After just four short months working with the REINZ team as Acting Chief Executive I will be sad to leave them as they taught me so much and were great company. I have also enjoyed the opportunity to connect directly with so many members around the country, sharing both the highs and the lows in a challenging and fast-moving market environment. I learned a lot.

No doubt, Jen will put a plan in place to get out and about and meet as many of our members over the coming weeks and months. I leave the Acting Chief Executive role knowing that you’re all in great hands.

Best wishes, Wendy Alexander

OUT & ABOUT

Barfoot & Thompson opens property management division in Tauranga After almost 100 years of focus in the Auckland and Northland regions, Barfoot & Thompson has taken the step to reach beyond these boundaries with the recent purchase of a property management rent roll in Tauranga.

“We’re always looking to diversify our income, not just in the type of real estate business we operate in but also geographically. Property management is something we know and do well, so this strategic move makes sense for us,” says Samantha Arnold, General Manager of Property Management.

Barfoot & Thompson wins again in the International Property Awards Once again Barfoot & Thompson has been recognised at a global level by the International Property Awards panel for their excellence in the real estate industry. In a first for the agency, they won all five categories entered, earning 5 star awards for both the New Zealand and Asia Pacific regions.

First brother-sister ownership for RE/MAX New Zealand RE/MAX New Zealand has its first brother-sister ownership with siblings Rozele and Ryan Singh owning Westgatebased real estate franchise, RE/MAX Vision.

Ryan, who last year completed a Bachelor of Commerce with an economics and marketing double major, had originally approached RE/MAX CEO Don Ha for a job.

“Don suggested the step up into ownership. Rozele already had a role with Don and RE/MAX in backend operations,” says Ryan. “We had grown up in a business environment with our parents heavily involved in real estate, which they used to create wealth and increase their business opportunities. We realised what an opportunity there was to use our experience, knowledge and understanding of best business practice in our own real estate franchise.”

As broker owners, Ryan’s focus is business development and marketing with Rozele focusing on management and administration as well as being active in sales.

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As the best in the Asia Pacific region, Barfoot & Thompson then competed with the best from Europe, the Americas, UK, Dubai, Africa and Arabia (South-West Asia) at the International Property Awards, scooping awards in three of the five categories at an international level.

These included the world’s Best International Lettings Agency, Best International Website and Best International Marketing.

Te Awamutu wins top office in C21 quarterly awards Century 21 New Zealand has announced its 2021 first quarter winners, which saw Century 21 Gadsby Realty in Te Awamutu ranked as the top office across the country as well as winning some leading sales awards.

“Rebecca Fraser and Paul Wheeler only bought Century 21 Gadsby Realty on Te Awamutu’s Alexandra Street in 2019 and then had a particularly strong 2020. It’s great the well-known Waikato franchise has now taken out the top office spot for the first three months of 2021,” says Derryn Mayne, Owner of Century 21 New Zealand.

Gadsby Realty won Top Office for the Quarter for both (Gross Closed Commission) and Units (the number of properties listed and sold). Rebecca Fraser and Eli Gadsby also won Gold sales awards, and Paul Wheeler took away a Silver award.

OUT & ABOUT

Harcourts Grenadier and Harcourts Monarch celebrate 30 years For three decades, Harcourts Grenadier in Christchurch and Harcourts Monarch in Hamilton have overcome challenges and enjoyed the success that comes from their unwavering commitment to putting people first and delivering the very best experience to their clients.

“30 years in business with one brand is a massive milestone,” says Harcourts New Zealand Managing Director Bryan Thomson. “In 2021 Harcourts Grenadier in Christchurch and Harcourts Monarch in Hamilton both achieved this milestone with our group. Through wonderful markets and challenging times, these foundation businesses have set an example for others to follow, and they continue to do so today. We offer our congratulations and thanks for the significant contribution to our group, team, clients and our communities. This is an achievement to be very proud of.”

Crockers experts lead discussions at Regenerate Conference Crockers CEO Helen O’Sullivan and Business Development Manager Shanon Aitken recently attended the Regenerate Property Management Conference in Queenstown, speaking about the future of the property management industry and the impact of COVID-19.

The Regenerate Property Management Conference is held every two years and provides an opportunity for industry leaders and influencers to come together to help improve and grow the professionalism of the New Zealand property management industry. In her presentation, Helen talked about key industry trends, including digital transformation and remote working opportunities post-COVID, as well as the impact of new regulations on New Zealand’s private rental market.

Shanon took part in an expert panel discussing the lessons learnt from COVID-19 and the changes that have occurred following the new RTA rules.

Harcourts Whakatane, through the Harcourts Foundation, helps local school devasted by fire Earlier this year, Apanui School in Whakatane suffered significant damage due to a fire.

The school, which has 410 students and 35 staff, is the latest recipient of a donation from Harcourts Whakatane (ETB Realty), made possible through the Harcourts Foundation.

“We are proud to be able to help out this local school in their time of need,” says Director of ETB Realty Wayne Pamment.

“Apanui School is the heart of the local community. Along with funding to purchase new mathematics books which will enable lifelong learning, we also donated some 30 sports balls to the school as part of our donation to help them get back to normal. We hope the funding provided through the Harcourts Foundation will be of great use”.

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OUT & ABOUT

Property Brokers welcomes Southern Wide Southland into the fold The announcement of the merger with Southern Wide Southland further broadens Property Brokers’ commanding footprint and scale, adding more resources and resulting in improved service for customers.

Property Brokers Managing Director, Guy Mordaunt, says: “Welcoming Southern Wide Southland into the Property Brokers family feels like a great fit. They are well respected, and we are excited to have them on board. The future is bright, and we are delighted to be able to service Southland.”

Southern Wide Real Estate Southland’s five shareholders, Mark Wilson, John Hay, Dallas Lucas, Brett Lucas, and Wayne Clarke have all remained with Property Brokers.

Director Mark Wilson says: “We are thrilled to be joining Property Brokers. They are a trusted and respected real estate brand. Good honest provincial people - just like us.”

Making a REAL difference!

The whole team at REAL is thrilled to make Hospice our official charity. As a locally owned business we feel it is important to continue our support of our community.

We have pledged to give $1,000 from every house sale during 2021 to Hospice Mid-North and our goal is to raise over $130,000.

This year alone, Hospice faces a shortfall of around $900,000. Typically, this is raised through a combination of channels including their retail stores, donations and a variety of fundraising events, many of which simply couldn’t proceed last year due to COVID-19.

At the time of writing this article we have already raised $20,000 and hope that by the end of March we will have raised enough for the purchase of a Mitsubishi ASX for them at a generously discounted price thanks to Pacific Motor Group in Waipapa. Next, we are aiming to purchase a second car for the exclusive use of the Nursing team which needs another vehicle

for home visits. After that comes a heat pump system to keep volunteers and customers in the Cobham Road shop safe and comfortable as closure has occasionally been necessary after exceeding the maximum allowable temperature of 30 degrees.

Professionals and Oxygen Property Management raise $35k for Child Cancer Foundation After a year where the majority of us spent a lot of time at home, Property Professionals and Oxygen Property Management have created a wonderful golfing event where the aim was to reconnect with our team, clients and friends all while raising money and awareness for a cause close to their hearts.

They created an experience that people would queue up for next year which included Hawaiian cocktails, Mr Whippy, photobooths and a hole-inone car giveaway, just to name a few! The event was organised in under a month and sold out within 48 hours of launching! They managed to raise a massive $36,000 for our little Kiwis.

Thank you to every player, sponsor, all those who made donations and everyone who paid well over market value for an auction item! The team is extremely passionate about this cause and couldn’t have pulled it together without the kindness and generosity of so many clients, friends and family.

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OUT & ABOUT

SPOTLIGHT

11th Annual Property Brokers Race to the Brewery event marks major milestone The Property Brokers Race to the Brewery event achieved a major milestone for the wider Manawatu community by raising over a quarter of a million dollars for Relay for Life over the 11 years that the event has been held.

Race organiser and Property Brokers Regional Director Paul Roache says: “It’s an achievement that we’re incredibly proud of. The event has actually raised closer to $350,000 over the years, with the rest of the profits going to other organisations like Rescue Helicopter, local community fire brigades, and a scholarship programme that was set up in 2016 for local athletes that are competing on the national or international stage.”

The race has gone on to become an iconic annual event in the region where teams of workmates, families, sports clubs and individuals get together and compete in a well-spirited race from Property Brokers over six stages to the final destination at the Mangatainoka Tui Brewery where everyone relaxes with a nice cold beer and enjoys a festival atmosphere.

Property Brokers was one of the original sponsors of Relay for Life when it was bought to the region around 30 years ago and is also a sponsor of Hospice. Alongside Property Brokers, other companies that proudly sponsor this event are MediaWorks, Tui Brewery, Norwood, MacDougall’s, Manawatu TRC Toyota, McDonald’s as well as Dean McKerras School of Dance, Mad Butcher, Isles Construction and Kevin Bills Media.

The North Shore – what a great place to swim!

Harcourts Cooper & Co created a splash recently by supporting the local community with the second ever Harcourts Cooper & Co Swim the Bridge event giving the public the opportunity to swim under the iconic Auckland Harbour Bridge. The swim is the largest event of the series run by New Zealand Ocean Swim Series and saw more than 1,000 swimmers take part in the 2km event.

Similar numbers at the Sunday event encouraged families with their children to take part in the shorter 1km course. Swimmers were met on the finish line and personally awarded their finishers medals by Martin Cooper and his crew.

Harcourts Cooper & Co is thrilled that the official charity partner of the series is Live Ocean – founded by sailors Peter Burling and Blair Tuke, a charity that aims to inspire everyone who loves and enjoys the sea, to get behind the big ambition for a healthy ocean.

As well as supporting the event the Community Team were present both days with their Coffee & Cone van with all proceeds going to the Live Ocean charity.

REINZ is pleased to announce that it has been named as a finalist in the 2021 PRINZ - Public Relations Institute of New Zealand Awards for the work completed last year in response to COVID-19 and keeping the real estate profession moving through lockdown.

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FEATURE

REINZ announces Jen Baird as new Chief Executive The Real Estate Institute of New Zealand has announced that Jen Baird will be the industry body’s new Chief Executive and will start in the role in early July.

For the past three years Jen has been the General Manager, City Growth, for the Hamilton City Council. Her role includes responsibility for planning for the longterm future of a metropolitan scale city including growth funding and delivery of new growth cells, leading Council’s regulatory responsibilities for land use, resource and building consents, economic development, customer experience and city safety. This broad role has also included considerable stakeholder engagement and risk management. She led the Council’s civil defence and crisis management during last year’s Alert Level 4 lockdown period.

Previous to her GM role at the Council, she was their Manager for Communications and Marketing for a short period. Prior to this, Jen was Chief Marketing Officer at Barfoot & Thompson for nearly 10 years, and she also spent two years as Manager Communications and Brand at Radius Health Group.

Commenting on her appointment, Jen says: “I’ve spent nearly ten years working in the real estate profession, and like many

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Kiwis have a love of property; so, getting the role at REINZ is like coming home.

I’m really excited to join REINZ at a time when the industry is rapidly changing and where the importance of data and digital transformation will be so important in the profession’s future. Additionally, there are significant changes from a regulatory perspective which will require real leadership from the industry body, so I’m very much looking forward to the opportunity of being involved in everything that lies ahead.”

Bridget Coates, Chair of the REINZ Board says: “Jen is a strong, strategic thinker with exceptional people management capabilities, and she is used to leading teams through challenging transformative environments. Her experience across diverse teams and dealing with a multitude of stakeholders will be an asset to REINZ and we look forward to welcoming her to the team later in the year.

“Our Acting Chief Executive, Wendy Alexander, will continue on in her ‘caretaker’ capacity until Jen joins the team on 5 July,” concludes Coates.

Celebrating excellence in Real Estate for the Awards period 1 April 2020 - 31 March 2021.

Submit your entries now for the 2020-2021 Awards period at awards.reinz.co.nz. Entries close 30 July.

The winners will be announced at our Awards Gala Dinner on Friday 3 September at Cordis Auckland.

Tickets now on sale.

Visit awards.reinz.co.nz

Sponsored by

FEATURE

Range of measures impacting home ownership receives mixed reception

Melisa Beight, General Counsel, REINZ

On 23 March 2021, the Government announced it would be implementing a range of integrated measures to accelerate the building of new houses, including freeing up buildready land and investing in infrastructure. Four key measures were announced, which are explained below.

Whilst there is widespread agreement that the housing market in New Zealand needs to stabilise, thereby making it easier for first home buyers to get on the property ladder, these specific measures have received a mixed reception. Certainly, there is no silver bullet. Supply has not kept up with demand. But some measures are already having unintended consequences, which are discussed further below.

Housing Acceleration Fund The Housing Acceleration Fund aims to increase the supply of houses and improve affordability for home buyers and renters.

The key components of the fund are: • An infrastructure fund ($3.8 billion) to unlock a mix of private sector led and government led developments in locations facing the biggest housing supply and affordability challenges • Additional funding for the Land for Housing Programme to accelerate development of vacant or underutilised Crown-owned land, in order to deliver a broader range of affordable housing options for rental and home ownership.

First Home Loan and Grant On 1 April 2021, the income caps increased, and the house price caps increased in targeted areas.

The income cap (maximum yearly income before tax) for a single person increased

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from $85,000 to $95,000. For two people, it increased from a combined maximum yearly income before tax of $130,000 to $150,000.

Doubling the bright-line test to 10 years The bright-line test means if you sell a residential property within a set period after acquiring it, you will be required to pay income tax on any profit made through the property increasing in value.

The bright-line period was previously 5 years. The Government doubled this on 27 March 2021, extending the bright-line period to 10 years for residential property, except newly built houses acquired before 21 March 2021, which remain at 5 years (for tax purposes, a property is generally ‘acquired’ on the date a binding Sale & Purchase Agreement is entered into, even where the agreement is still conditional).

Inherited properties, and properties which have been the owner’s main home for the entire time they owned it, continue to be exempt from all bright-line tests.

Removal of interest deductibility on loans for residential property The Government is changing the rules that allow property owners to claim interest on loans used for residential properties as an expense against their income from those properties. The legislation will apply from 1 October 2021.

FEATURE

Income Year

Percent of interest you can claim

1 April 2020-31 March 2021

100%

1 April 2021-31 March 2022 (Transitional year)

1 April 2021–30 September 2021 – 100% 1 October 2021–31 March 2022 – 75%

1 April 2022-31 March 2023

75%

1 April 2023-31 March 2024

50%

1 April 2024-31 March 2025

25%

From 1 April 2025 onwards

0%

Interest deductions on residential investment property acquired on or after 27 March 2021 will not be allowed from 1 October 2021. The percentage of interest that can be claimed will reduce by 25% each income year until 2025. Please see table above. Interest on loans for properties acquired before 27 March 2021 can still be claimed as an expense.

Property developers (who pay tax on the sale of property) will not be affected by this change. They will still be able to claim interest as an expense.

For further detail on these changes, see the Advisory Resources section of the REINZ members’ website, including useful IRD information sheets on interest deductibility and the extension of the bright-line test.

IRD also has an advice line. HUD has released very useful fact sheets, and there is helpful information on the Kāinga Ora website.

Unintended but not unexpected consequences for landlords and tenants Despite no doubt the best of intentions, some measures, such as the removal of interest deductibility on loans, are already having unintended adverse consequences.

This change will affect landlords financially and is likely to adversely affect vulnerable tenants.

Some landlords will pass on those increased costs to low-income tenants through rent increases. Making rentals even more unaffordable will make it even harder for tenants to save a deposit for their own property.

Other landlords have been forced to sell rental properties (and remember this announcement came hot on the heels of the Residential Tenancies Act change removing no fault termination, which led to a flurry of terminations before the law change took effect).

Disincentivising ordinary New Zealanders from owning a rental property means there will be even less rental accommodation available. This contributes to overcrowding, with more vulnerable tenants living in unhealthy, uninsulated sleep-outs and garages over winter.

Independently of these measures, the LVR restrictions targeting residential property investors are having the effect of cooling investment in residential property in any event.

These risks associated with removing mortgage interest deductibility were highlighted by HUD before the Government’s housing announcements.

Alongside REINZ, the New Zealand Property Investors Federation, Real iQ, First Home Buyers Club, Tenants Protection Canterbury and a number of economists have also been vocal in their criticism of the removal of mortgage interest deductibility and their intention to lobby Government in this regard.

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FEATURE

Is kitset housing a silver bullet?

It’s a great idea, which has potential to help solve at least some of our property woes, but like most things in life, there is more than one component to the story.

By now, every one of us is surely well-aware that New Zealand has a serious shortage of housing and a related housing-affordability crisis to deal with at the moment as well. In this situation, set against a background of the current global COVID-19 pandemic and the resulting economic uncertainty, lateral thinking has never been more necessary.

Luckily, this is something that New Zealand designers and tradespeople are good at.

Call it what you will; kitset, prefabricated, or flat-pack housing is one option that has potential to help solve these interrelated problems - at least to some extent. Not surprisingly, it’s increasingly finding favour across the country, especially amongst prospective homeowners who’ve found it difficult and frustrating, trying to get onto the bottom rung of the great Kiwi housing ladder.

Various companies, including hardware giant, Bunnings Warehouse, have recently been developing a variety of kitset offerings at various price-points. While many of these packages cater to the growing trend for small and environmentally conscious homes, families in need of more space can generally still find options which will suit them.

Unfortunately, land prices in Auckland remain prohibitive, but kitset homes are increasingly popular in the provinces.

Wannabe homeowners who expected to be forced to settle for a dingy do-up are finding themselves in pretty, fresh, bright houses where everything is new and built to last.

Many designs, found in mainstream kitset ranges come under the MBIE: Ministry of Business, Innovation and Employment’s MultiProof scheme, designed to speed up the construction of new homes. Under this system, standardised designs with certain, modest variations can be pre-approved

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as complying with the building code. This means consent can be fast-tracked, saving up to three weeks waiting time, and in some cases this means lower consenting costs, as less work is required from the Building Consent Authority.

Unfortunately, there is another side to this seemingly hopeful story as the prospect of solving the housing crisis with kitset homes, although promising, is not as straightforward as it seems.

Along with a housing shortage, we also have a skills shortage and qualified tradespeople are in very high demand. It’s important to remember that builders alone can’t assemble these packages. Plumbers,

FEATURE

electricians, glaziers, painters and any number of other experts are also involved.

It seems many Kiwis took last year’s extensive COVID-19 lockdowns as a time to contemplate their lives both then, now, and in the future. Home builds and renovations appear to have been high on the list for those who were saving money - in many cases unexpectedly, thanks to the indefinite suspension of most overseas travel.

As a result, tradespeople nationwide report being run off their feet and to compound the issue, massive pandemic-related backlogs in terms of imported materials mean that structural timber – especially – is in short supply, as are some types of paint.

While it’s naturally tempting to put kitset housing forward as an exclusive solution to the housing problems currently besetting us, builders who work in this field have expressed alarm at the simplistic nature of much reporting around the issue.

When an award-winning home was recently lauded by media as having been assembled in four days, tradespeople by the dozen appeared in the comments section pointing out that ‘assembled’ isn’t the same as ‘built’.

“Please remember to put this in context,” said user Abugogo2000, “This building was assembled in 4 days-not built.

“Factor in the design, time pre-fabricating this building, transport and site

preparations,” the commenter continued, adding: “This building still required builders and material, of which there is a serious shortage at the moment. I absolutely think there is a place for prefabrication, however it is not necessarily a quick and easy solution to the current housing crisis.

Particularly when you factor in the scale (and isolation) of New Zealand.”

This commentary suggests that when supply chain issues are resolved - and when viewed in perspective, the kitset home proposition is definitely a promising tool in the New Zealand property supply toolbox – it’s just not the ultimate answer, at least not yet.

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FEATURE

Tengah leads the charge towards the future SINGAPORE’S FIRST SMART AND SUSTAINABLE TOWN

A ‘smart city’ used to be a very daring concept that was labelled simply as just a fantasy, but that’s not the case in this digital age. The surge of technological innovations and ‘smart applications’ within the last decade is changing every aspect of how we live; from how we read books to the way we drive.

In layman’s terms, a smart city incorporates the latest technology into its infrastructures to find new creative ways to deal with issues around safety, sustainability, transportation, urban planning, economy, etc. The goal is to create technological opportunities that improve society’s way of living, which leads to better quality of life.

While the rest of the world is still getting used to the idea of a smart city, Singapore’s Housing & Development Board (HDB) is making great strides towards the future by building its first smart city.

Currently developing Tengah – located in the western region of Singapore – from a town known for its strong agricultural and industrial history, to a smart and sustainable town fully equipped with future-proof housing, latest technology and green features.

The 700 hectare town is promised to accommodate 42,000 homes throughout five residential districts – each with its own unique character – that collectively reflects the identity of the town.

• Plantation District pays tribute to its farming origins by including a Community Farmway operating throughout the district. It will be the home of community farming where produce harvesting, farmer’s markets, and ‘farm-to-table’ dining will take place • Brickland District integrates the Forest Corridor with brick-like architectural

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design to reflect on Tengah’s industrial history • Garden District will be an urban sanctuary which will include great open spaces supplemented by Central Park, Tengah Pond, and thematic gardens to provide more opportunities for residents to connect and interact with nature • Park District will be the hub and heart of Tengah. A place where residents can explore the first ‘car-free’ town centre in Singapore, surrounded by an everflowing river and amazing greenery of the Forest Corridor • Forrest Hill District embodies the phrase ‘living amidst nature,’ bringing nature and greenery right outside residential homes. Residents can relish the serene quality that nature adds to their homes.

Tengah has three key features that will differentiate it from the rest. They are: at home with nature; smart and sustainable; and moving around with ease.

At home with nature Tengah will be the first town to be developed in a biophilic framework.

Integrating built environment and its nature landscape so residents can enjoy the endless benefits that come with living ‘at home with nature’ – utilising Singapore’s natural resources to minimise the environmental impact of urban infrastructures.

FEATURE

Plantation District

New fitness playground

Brickland District Continued over leaf

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FEATURE

Garden District

Town Amphitheatre Residents will be able to experience nature in every corner as soon as they step outside their homes. HDB will incorporate a five kilometre long and hundred meter wide ‘Forest Corridor’ that runs through the town and an additional Forest Fringe of luxuriant natural landscape wrapping around the town.

will be installed in selected districts to regulate temperature.

Smart and Sustainable

Every home will come with smart socket outlets and smart distribution boards, which help residents monitor their household water and energy consumption through a mobile app. These tools will provide residents with sufficient information and resources to make cost saving decisions. Also, giving the residents access to monitor their consumption could initiate and empower a positive behavioural change. Furthermore, reducing energy consumption by finding alternative ways to use water and energy will not only help residents’ pockets but will also assist with the town’s overall sustainability.

Tengah has come a long way from using minimal technology to using computer simulation and data analytics tools to ensure sustainability and preservation for its natural and urban landscape.

Tengah’s smart-enabled homes explore the capabilities of artificial intelligence and data analytics in assisting with the town’s energy management. Smart lighting is built-in to assist in managing the lighting levels based on the amount of human traffic within districts. Therefore, reducing energy consumption while ensuring there is sufficient lighting throughout the town.

With the tropical climate being a consistent comfort issue, residents will be able to save more money because they don’t have to buy their own airconditioning units. A much more energyefficient Centralised Cooling System

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Also, HDB developed a Pneumatic Waste Conveyance System (PWCS) to help establish a cleaner way of transporting waste. It is an automated waste collection system that uses high-speed air to transport waste instead of a truck.

Moving around with ease Tengah offers a wide network of transport that eases how residents get to their destinations. There will be a train station within walking distance; dedicated bus lanes, and walking and cycling paths giving a variety of transport options

around town. HDB promotes the use of eco-friendly vehicles by installing electric vehicle charging stations at car parks outside the town centre to benefit drivers.

Traffic will be segregated from areas with high foot traffic. The roads will run underground making most of the town traffic-free, resulting in a safer environment and more available spaces at ground level. Tengah takes it to another level by preparing its roads for the future by getting it ready for self-driving vehicles.

Tengah leads the charge towards the future of urban planning and way of living. Highlighting the residential benefits of innovative and resourceful planning. Tengah’s smart features act as a flexible base that can be used to build or accommodate future digital infrastructures and advances in technology – providing residents with opportunities for a more efficient and better living so they can just sit back relax and enjoy every aspect of their lives.

Information and Visuals courtesy of the Housing & Development Board of Singapore.

For more information, visit www.hdb.gov.sg

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FEATURE

Digital infrastructure investments boost regional living While work previously was thought of as a place you go, it is increasingly a thing that you do – a part of life that is no longer bound to a specific location, thanks to incredible developments in digital infrastructure.

After adjusting to the rapid changes brought on by COVID-19 last year, being able to get things done anywhere is becoming the new normal.

These digital developments create potential for much more flexibility and free-range working, and the possibility to create better work/life balance – whether that means spending time with the kids, exercising on your lunch break, being out in nature, or even just ticking off more mundane tasks like laundry in between work and meetings. Some people are also rethinking where they live, and if relocating to the beach or a new town is a possibility for some or all of their time.

At Vodafone, we’re seeing more team members apply to work outside the traditional city hubs - be it Nelson, Mangawhai or Mt Maunganui - and commute to the office periodically, instead of daily. For teams based in big centres, we’re agreeing to ‘balanced working’ options, such as spending three days in the office to facilitate collaboration and connections, to complement the flexibility of getting work done from home.

This trend is also showing up in many other organisations, as the upsides of remote and flexible working, enabled by digital infrastructure, come into focus to complement time spent in the office.

With mobile phones and 24/7 connectivity, work doesn’t always start and finish at a set time or place. While we also need to ensure we prioritise work/life balance and switching off, there are lots of positives as more people can make choices about where and when they get their work done amidst their other priorities. Spending more time in regional New Zealand isn’t just about holidays anymore. It can be about lifestyle.

For Vodafone NZ, a high priority for 2021 is to help close the geographical gaps between the digital haves and have nots, so that more of Aotearoa has access to next generation technology necessary to carry all this data – which given the regional housing boom, is increasingly important. The challenge is that someone

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Sharina Nisha, Head of Network Services, Vodafone NZ

visiting or relocating to somewhere like the Coromandel now expects to have the same digital connectivity as they have in the city – with growing expectations of having additional digital conveniences like Uber at their fingertips.

To deliver on these rapidly changing consumer preferences, New Zealand is going to need significant additional digital infrastructure investment now, and into the future.

At Vodafone, we’re investing heavily into urban and regional Aotearoa in 2021 and beyond. We are putting significant resources into improving regional networks, growing 5G availability both in cities and regional centres, expanding and strengthening 4G coverage, adding capacity in our core

FEATURE

Another way we can make the financials work better is through the use of newer, more efficient technologies, and the retirement of older, end-of-life technologies as we go. On top of better connectivity, replacing the old with the new also has a positive environmental effect, as modern digital infrastructure often consumes less power. The future of the internet means better benefits to people, with reduced emissions which are kinder on the environment.

Due to the energy efficiency of 5G and other new technologies, over the next three years, Vodafone expects to see a reduction of at least 10% in electricity consumption.

We also need the support of local communities to build cell sites in their area.

Under the Telecommunications Act, digital communications providers like Vodafone can locate a cell site, including our cabinets and pole, subject to the conditions as set out in the National Environment Standards 2016. Letters are also sent to neighbours to inform them of the process.

network to support the data growth, and building or upgrading cell sites across the country. Pumping millions of dollars into regional economies in particular will allow more communities to participate in the digital economy.

We’re starting with Palmerston North and the Bay of Plenty, and will be progressively rolling out new technology into more parts of the country. We already have 5G live in parts of Auckland, Tauranga, Wellington, Christchurch and Queenstown - with more locations to come.

However, enabling digital infrastructure isn’t a cheap or fast exercise. A new cell site can take anywhere from 6 to 18 months to build - and costs hundreds of thousands of

This means that in order to be worthwhile, new towers have to serve a significant number of people - or be part of a shared infrastructure programme.

Most of the time people are very pleased that we are building a cell site and increasing the local digital infrastructure, but sometimes people are concerned about safety elements, so we try to reassure them that mobile cell sites and towers are safe and we often refer locals to the Ministry of Health or World Health Organisation if they want more detail.

As well as building new Vodafone infrastructure, we’re proud to play a role with the Rural Connectivity Group (RCG), contributing expertise and knowledge to a joint industry and government programme.

The 400-plus additional 4G cell sites we’re collectively building nationwide as part of the Rural Broadband Initiative (RBI2) will make a massive difference to many Kiwis living in some of the more remote and rural parts of the country.

Ultimately, what this investment means for people in the area is the freedom for work and everything else to come with you. Better social connections, and the ability to work, live and play wherever you are. With the latest digital infrastructure offering more possibilities than ever in the way of connectivity and things set to improve even further this year, Kiwis are now more than ever able to call the shots about the kind of lives they want to live.

Wherever they want to live.

dollars - making the economics challenging in areas with small populations.

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OBITUARY

Phil Dawson | 1959 - 2020 Richardsons Real Estate lost a colourful character in Phil Dawson with his passing last November.

Phil was best known for his casual style of dress shorts and jandals, the outstanding service he gave his customers, the work he did in the community, love of his family and most of all his love of Cooks Beach.

Before Phil became a real estate agent, he had been a grave digger, cleaned public toilets for the Council, tried his hand at engineering and worked in the local hardware store – all within the Cooks Beach area.

In 1994, Phil met Colin Richardson. He and his wife Claire were in Thames shopping when he heard a sales role was becoming vacant in Cooks Beach, so called into the Thames office by chance to enquire about the position.

Phil wore Stubby shorts, a ripped singlet and jandals. Emma Ashworth (Managing Director of Richardsons) says the records also say that he was unshaven!

In his first year of selling real estate, REINZ, our regulatory body at the time, awarded Phil the ‘Rookie of the Year’ title for the whole country and he was up on stage receiving his award standing next to the legendary Michael Boulgaris. Being a black tie event, Michael went all out to look smart; and yes, Phil did wear black tie (the first of only a handful of times he wore such attire!).

Colin obviously saw something in Phil, offering to pay his exam fees. Phil’s strength of character and likeable personality was recognised and so the journey began.

He started on 1 April 1994 (April Fools’ Day) taking over the role armed with an old photograph album and two small boxes of files, making his first sale that very day!

Phil’s lasting legacy after selling the final stage of the Longreach Subdivision in Cooks was to proudly have a street named after him – ‘Dawson Place’.

Phil had touched so many lives in one way or another; whether in the business of buying and selling property through him, or by his generosity and what he did for the community. In many cases it was both.

Phil would be the first to open up the property for a tradie to work on your beach house whilst you were back where you lived. His office acted like the information or utility centre if you needed printing or use of computers, and doing so was aptly named the Mayor of Cooks Beach!

The community was his love, fundraising for the local community hall, fire brigade and ambulance.

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Emma recalls that over the years, Phil won many office and individual awards but instead of accolades, his personal success was always measured by putting people and community first.

The friendships made through real estate transactions over the years were countless, and Phil loved seeing the generations of families coming to the beach year after year.

Phil was so delighted to see his daughter Miriam complete her real estate papers and join him in the business. Equally he relied on Paulette, Penne and Gavin (working from the Hahei office) and was proud of what they achieved over the years.

At Phil’s farewell service, Peter Thompson, REINZ Life Member and close friend asked all those attending to look outside the marquee in the field overlooking Cooks Beach and to gaze from one end of the bay to the other to reflect on Phil’s life.

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Phil was the ultimate real estate agent – people first, people last and in between, ensuring people got what they wanted!

The Real Estate Institute of New Zealand

REINZ NATIONAL REAL ESTATE

AUCTIONEERING CHAMPIONSHIPS

20 - 22 JUNE 2021

Events on Khyber, Auckland

Free to attend & live-streamed on REINZ Facebook page

Major Sponsor

Supporters

Commercial & Industrial Breakfast

Challenges in a post-COVID world Tuesday 15 June 2021 | 7:00am - 9:30am The Northern Club, Auckland Join MC Angela Bull, REINZ Director, for our annual Commercial & Industrial Breakfast.

David Seymour Leader of ACT Party

Helen Johnson Partner, PwC Legal

David Seymour will brief us on regional development, infrastructure and commercial real estate in Auckland, Helen Johnson will discuss the tax changes to purchase price allocation, Melisa Beight will provide an advisory update and Shane Martin will provide an economic update and his predictions. $80+GST for members or $100+GST for non-members. Cost includes entry, tea, coffee and plated breakfast. Be there from 7am (breakfast) for a 7:30am start and out by 9:30am.

Melisa Beight General Counsel, REINZ

Shane Martin Senior Economist, Auckland Council

Email events@reinz.co.nz to book today!

Proudly sponsored by:

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SECTOR RURAL

The Emissions Trading Scheme impacts land transactions

The Emissions Trading Scheme (ETS) is New Zealand’s main tool for meeting our domestic and international climate change targets. The ETS operates as a domestic carbon market with emitters being required to surrender New Zealand Units (NZUs) for their emissions.

An NZU, also known as a ‘carbon credit’, is equivalent to 1 tonne of CO2.

Some forests can receive NZUs for the carbon they remove from the atmosphere.

These NZUs can be sold to emitters, creating a price, and lead to cashflow for the owners.

The ETS defines two types of forest land, which are treated differently: • Pre-1990 forest land was forest land on 31 December 1989 and remained forest land that contained mostly exotic forest species on 31 December 2007 • Post-1989 forest land is forest land established after 31 December 1989.

Pre-1990 forests Pre-1990 forest land can be harvested and replanted without liability. Deforesting – for example by failing to re-establish or converting out of forest – is highly likely to incur an ETS liability. Deforestation liability should be considered when valuing forest land.

As mature forest has a high carbon storage per hectare, even small areas of deforestation can result in significant liability. For example, a 28-year-old Pinus radiata forest can have up to 814 tonnes of carbon stored per hectare. Deforesting 10 hectares would result in a liability of up to 8,140 NZUs, which at $37 per NZU amounts to more than $300,000. Moreover, as pre-1990 forest provided the baseline for carbon storage, any deforestation results in emissions, making it harder for New Zealand to meet its climate change obligations.

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Oliver Hendrickson, Director Forestry & Land Management, Te Uru Rākau – New Zealand Forest Service

When deforestation occurs, the landowner is usually liable. When buying or selling land, particular care needs to be taken with recently harvested or cut over land. The ETS treats this as temporarily unstocked forest land, rather than deforested, and therefore the new landowner could be liable if the land gets deforested in the future.

Post-1989 forests Post-1989 forests can be registered in the ETS to earn NZUs for increases in carbon stock as they grow. This can have significant value. Depending on where it is planted, 20 hectares of fast growing radiata pine forest receives up to around 16,000 NZU per hectare by age 28, worth almost $600,000. The same area of slower growing indigenous forest would receive 4,844 NZU, worth $179,000, over the same period.

When registered post-1989 forest land is cleared (for example, harvested), NZUs must be surrendered to cover the emissions.

This can be around 70% to 80% of the carbon stock at the time of harvest. For the 28-year-old radiata pine forest above, this surrender liability could be as much as 12,700 NZU, which is $470,000 at current prices. When the forest is replanted and the net carbon storage begins to increase again, it will begin to earn NZUs. When registered post-1989 forest land is deforested or deregistered, the total unit balance must be paid back. Participants will never have to surrender more NZUs than the forest has earnt.

RURAL SECTOR Obligations when the land is bought or sold When registered post-1989 forest land is bought, sold, or transferred, the buyer automatically becomes the ETS participant and inherits all associated ETS obligations.

This includes all reporting obligations as well as the unit balance for the land. The unit balance is the net number of NZUs the land has earnt in the ETS, which is the liability the land carries that must be met at harvest or deregistration. There is no requirement for the NZUs earnt to be transferred to the new owner.

When buying, selling or transferring registered post-1989 forest land, both parties in the transaction have obligations: • both parties must tell Te Uru Rākau within 20 working days of the date of transfer, and • the seller must submit an emissions return within 20 working days of the date of transfer, which calculates the carbon stock change up until that date.

Where the ETS participant is a forestry right holder or lessee, a change in land ownership does not affect participation and all associated ETS obligations remain with the forestry right holder or lessee.

However, buyers need to be aware of what happens when a forestry right or lease ends. If the land remains in the ETS, participation and all associated ETS obligations automatically transfer back to the landowner.

Check land titles for ETS notices Forest land that is affected by the ETS is likely to have a land status notice registered on the land title, as required under section 195 of the Climate Change Response Act 2002. Before buying forest land, it’s important to check the title for these notices.

A notice indicates that the land is somehow affected by the ETS – the instrument number can be ordered from Land Information New Zealand to check this.

Even if there is no notice, the land – or part of it – may still be affected by the ETS. Anyone looking to buy forest land should conduct due diligence before purchasing.

For more information or enquiries: visit mpi.govt.nz/ets email climatechange@mpi.govt.nz.

Ph 0800 CLIMATE (0800 25 46 28) and select option 2.

DISCLAIMER: The information above only highlights some of the key considerations relating to forestry in the ETS but is not comprehensive.

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SECTOR COMMERCIAL & INDUSTRIAL

Ruakura Superhub paves the way in Hamilton renaissance

Chris Joblin, CEO, Tainui Group Holdings

One of the most satisfying aspects of working with the commercial arm of the Waikato-Tainui iwi since 2009 has been to see and contribute to the growing economic confidence in the Waikato.

The 92 hectare stage 1 of the Ruakura Superhub showing the inland port and adjacent logistics, industrial and commercial zones.

Even better, to see awareness of our emerging economic strength dawning on our neighbours in the golden triangle – Auckland and Tauranga and now extending to the Government in Wellington.

The upshot? A surge of committed major commercial, civic and infrastructure development projects that promise to rejuvenate an admittedly tired and dated CBD, connect us strongly into the Auckland Hamilton growth corridor and significantly increase our city’s role as a key node in the North Island supply chain; taking pressure off the key seaports in Tauranga and Auckland.

It’s no stretch to say that strategic property development has played a key role in

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this emerging confidence, sustaining the economy through COVID and helping us power out the other side.

For our iwi, these developments kicked off with The Base regional shopping centre, which is New Zealand’s largest single site retail outlet. Today it comprises 85,680 square metres of large format retail, chain and boutique retail, food & beverage and entertainment - owned and operated in conjunction with Kiwi Property Group, who acquired a 50% share in 2016 for $192.5 million.

Like many other developments we do, The Base is developed on whenua that was returned to the Waikato-Tainui iwi as part of the 1995 Settlement with the Crown,

COMMERCIAL & INDUSTRIAL SECTOR as partial redress for the Raupatu illegal confiscations of more than 1.2 million acres of land in the 1860’s. As the largest nonpublic land-owner in the Hamilton CBD we are proud of our recent role in leading its rejuvenation.

Currently, we are constructing an 8,500 square metre new regional centre for ACC – the three pavilions distinctively adorned with our unique iwi designs. Also entrain is the new JV we announced last month with Kiwi Property to re-imagine the future of Centre Place North with an expansive mix of retail, office and inner-city living. A unique feature of the development is the opportunity to reactivate New Zealand’s only underground train station outside of Auckland, potentially tapping into the rail connectivity that has just kicked off with the fledgling Te Huia passenger rail service.

Drawing on all our development experience over the years, we are now in boots and all with our largest, most visionary and most transformative development to date.

At 495 hectares, our Ruakura Superhub development is arguably the largest development in New Zealand. It will add around 8% to the urban mass of Hamilton, an additional area that’s larger than the Auckland CBD. It has not been an overnight process to bring the Ruakura Superhub to the market – in fact it has been 14 years of master planning, RMA applications and hearings, eventually gaining recognition as a Project of National Significance, and then a search for strategic partners.

These partners include the Port of Tauranga, who came on board last year in a specific joint venture to develop the 30-hectare inland port.

They say timing is everything – and it couldn’t be more true with Ruakura. We will be open for business in mid-2022, shortly after the Hamilton stretch of the Waikato Expressway opens, connecting into Ruakura with a full diamond interchange.

The Government and Hamilton City Council have played a catalytic role by investing in some of the public infrastructure and local roading network with $16.8 million invested through the PGF programme and $40 million under the CIP’s ‘Shovel Ready’ programme. This public investment has accelerated development by several years and kept under-pressure contracting teams together at a tough time immediately postCOVID.

just-in-time delivery to export ships and to more efficiently match import and export containers.

The disruption of global supply chains has been a side effect of COVID-19 and with it, many companies realising they need to have more resilience and redundancy in the supply chain. E-commerce business models have grown exponentially, as has the wish to retain more inventory on shore.

These are all trends playing into the current strong demand we are experiencing for New Zealand’s largest consented logistics and industrial sites at Ruakura Superhub.

First to sign on in November last year was national express freight operator Peter Baker Transport (PBT) and we are now in talks with a lengthy pipeline of strategic tenants attracted by the sustainability story which includes inter-generational iwi ownership, direct freight rail connections to Auckland and Tauranga, extensive on-site solar generation, water catchment and reuse, and planting 1 million native plants in stage one.

With its inland port and adjacent logistics, industrial, commercial retail and residential elements, Ruakura will be a centrepiece of commercial confidence for Hamilton and Waikato for decades to come. It will deliver a more prosperous future for the 76,000 members of our iwi and be a pillar in the rise of the Waikato as an economic force to be reckoned with.

THEY SAY TIMING IS EVERYTHING – AND IT COULDN’T BE MORE TRUE WITH RUAKURA. WE WILL BE OPEN FOR BUSINESS IN MID2022, SHORTLY AFTER THE HAMILTON STRETCH OF THE WAIKATO EXPRESSWAY OPENS, CONNECTING INTO RUAKURA WITH A FULL DIAMOND INTERCHANGE.

Recently there has been a lot of debate about the future role and mix of Upper North Island ports. There is clear demand for a major inland port to allow greater aggregation of freight off the dockside for WINTER 2021

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SECTOR RESIDENTIAL PROPERTY MANAGEMENT

Your home is the next technology frontier The digital age is upon us – and it has no plan to leave. Entire industries are at war, clashing between the “how it’s always done”, and the “how it’s going to be done”. There have been the triumphant successors, like AirBnB, and clear losers like Blockbuster; but for smarthomes and property technology - who will win this war and what will their future then look like?

As the founder and CEO of Tether, whose core purpose is to solve building performance problems, I tend to see things a little differently. The home is untapped and has resisted modernisation and digital transformation quite effectively. In fact, I would go as far as saying that the home is the last digital frontier in the property sector.

The phrase “Smart-Home” should conjure a range of thoughts and emotions. Everything from Amazon Alexa to Google Home, automatic lights and connected cameras are a common response. The problem with this response is that all these solutions are dependent on the occupant. The home is not inherently smart, the home is made smart by the occupant who resides in the home. It is up to the occupant to install and support their preferred flavour of smart home solution and you, as the property owner, developer or manager, see little-tono benefit from this solution as the data is not shared.

To summarise this train of thought, I would like to use an analogy. Imagine for a moment that when you purchased your car that the basic reporting and monitoring functions were not included. The car was still fully functional, but it did not tell you when the petrol was about to run out,

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Brandon van Blerk, CEO & Founder, Tether

when your oil was running low or what temperature your air conditioner was set to. This functionality is not necessary for the car to operate and is seen as a luxury that you could purchase and install if you wanted at a later date. This analogy may seem absurd, who would want a car that could not warn you before it stopped functioning? However, cars once existed without any of these features.

What I am seeing (and am partly responsible for) is the technological disruption of the home itself. Systems that are capable of reporting on the health, efficiency and sustainability of the home whether occupied or not. Imagine a home that can tell you when something is about to break or is broken. A home that can communicate how to run it more efficiently and save money. A home that can suggest which upgrades it needs, to improve energy consumption and environmental quality.

This underlying data will form a technology foundation upon which the property development and management industries will revolutionise the way they interact with their portfolios and customers.

Are you ready to embrace the next technology frontier or do you believe that it will never happen?

RESIDENTIAL PROPERTY MANAGEMENT SECTOR

Holiday Homes HOW THE RESIDENTIAL TENANCIES ACT 1986 COULD AFFECT THE GOOD OLD KIWI BACH/CRIB OWNER

While most of the changes to the Residential Tenancies Act 1986 that came into effect on 11 February 2021 are being navigated by property professionals, and case law will no doubt add further insight; one of the changes to the RTA has the industry and owners of holiday homes just a little perplexed.

The fact that fixed term tenancies of greater than 90 days automatically roll onto periodic tenancies and landlords can only end them for reasons listed in the RTA (while tenants can end them for any reason), means that owners of holiday homes who have typically rented out their homes during seasonal peaks of tourism (either winter, summer or both) or to seasonal horticultural workers, will need to be fully briefed by their property managers about this risk.

The risk highlights that an owner of a holiday home might not be able to use their bach/crib as it was before the changes to the RTA took effect earlier this year. That is, owners wish to rent out their property for a fixed period of time and know that it will definitely end on the date agreed by both parties at the outset. Under the new RTA changes, the tenant may now choose to stay on longer and the owner give notice to the tenant to end the tenancy, unless one of the legislated reasons applied.

Reasons include: the owner or a member of their family returning to the property to reside as their principal place of residence for at least 90 days; the property being placed on the market or has been sold; or the owner has extensive renovations planned

Vesna Wells, Director and Solicitor, Resolve

to take place. Outside of the risk of a fixed term tenancy rolling onto a periodic tenancy, there is also the risk of a tenant staying on longer and then wanting to exercise their right of assigning the property.

While the new RTA changes do pose a risk, the good news is that most people who enter into fixed term agreement in these situations do so for a reason, being that their work is also for a fixed period of time and they do not wish to stay longer and rent the property. Tenant selection by property managers has always been critical in any tenancy and now, perhaps a little more so with holiday homes given this quirk of the legislation.

It is important for property managers to brief the owners about the ‘small’ risk of a tenancy continuing on and how that could have an impact on their plans. It is best to have the discussion and record that it has been had in case something in the tenant’s circumstances change and the tenancy continues past the date originally agreed.

Vesna Wells is director and a solicitor for over 20 years who specialises in property management law at Resolve – resolve.org.nz.

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Managing owners’ expectations who are returning to their rental property

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RESIDENTIAL PROPERTY MANAGEMENT SECTOR

Jo Rae, Head of Property Management, REINZ

There is a journey that plays out from the start of signing up and taking on the management of a rental property, through to when the owner may eventually decide to sell or in many cases recently, due to the COVID-19 situation, move back in.

We need to clarify that investors who rent out properties with no intention to ever live in them, often have little or no emotional attachment to the “business”. However, for a homeowner who has a lifetime of memories or has painstakingly renovated or improved their family home, deciding to rent it for what can be a number of reasons (change in employment, personal circumstances etc.), it can be a very emotional time.

We are going to focus on homeowners returning to their properties. It’s very difficult to prepare an owner for the real possibility that there will be wear and tear and damage from the usual daily living activities of tenants.

It is important to set realistic expectations with owners about fair wear and tear, along with the Tenancy Tribunal’s interpretation of reasonably clean. Reasonably clean means clean to a standard that an average, reasonable bystander would consider clean.

A reasonable state of cleanliness does not mean, for example, spotless, commercially clean, a full spring clean or a hotel/motel standard clean. Right at the outset of your business relationship with the owner of the home, you need to be clear about this. It is common for issues to arise, particularly if the owners are having a full professional clean done of the premises prior to the tenancy (including carpets) and are

expecting the same from the tenants when they vacate.

Anecdotally, we are hearing of less than around 20% of handovers of property back to owners, where there are no issues.

Inevitably, there is something that the owner feels lands in that space of more than fair wear and tear. That could range from marks on polished floors, the oven not being clean enough, the carpets not being clean enough, or the garden not being in the same condition as it was originally.

In many states in Australia, they have a bond clean requirement for tenants that is built-in to the vacate process and details included in the Tenancy Agreement at the time of signing. At the exit inspection, the tenant has to prove with receipts they have had the carpets cleaned to a certain standard and a professional cleaner through the property.

This would most definitely remove most disagreements about cleaning; however, it is important to note that this is not enforceable in New Zealand.

unenforceable, for example, tenants having to commercially clean the carpets at the end of the tenancy, or additional bond being charged for a pet that exceeds 4 weeks rent in total. The landlord or the property manager could be fined exemplary damages for including an unenforceable clause in their Tenancy Agreement.

Until such times as we have a rule change or clearer guidance on the term ‘reasonably clean’, landlords should be well informed about the current position with exit cleaning. In some cases, property managers ask landlords to allocate funds for further cleaning once the tenant has finished with their obligations.

As long as the property continues to be a rental property (i.e. is tenanted again afterwards), then the expense is deductible to the property owner. This is one way to ensure that the general condition of the property does not go backwards.

MBIE – Tenancy Services released statistics relating to the period October – December 2020, showing there were more than 490 applications to the Tenancy Tribunal by tenants in relation to the bond.

It is not uncommon to still see clauses in Tenancy Agreements that are WINTER 2021

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SECTOR RESIDENTIAL PROPERTY MANAGEMENT

REINZ Residential Property Management Training Offerings:

THE BEGINNER’S GUIDE TO PROPERTY MANAGEMENT

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

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

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

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

The New Zealand Certificate in Property Management (Level 4)

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

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

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

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

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

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

RPM Conference 2021

People Purpose & Passion

Join keynotes Hon Dr Megan Woods and Paula Bennett, MC Kerre McIvor and hear lots of relevant Property Management speakers at the 2021 REINZ RPM Conference.

Proudly sponsored by:

Thanks to our supporters:

THURSDAY 23 SEPTEMBER 9:30am - 5:00pm LIFE Central Auckland Tickets: reinzconference.com

TECHNOLOGY

5 ways using Local Suburb Guides can help you become an attraction agent

Kylie Davis, HomePrezzo

The most successful agents in real estate are those who have clients coming to them rather than constantly hustling on cold calls.

These are agents who have developed a reputation for being trustworthy and knowledgeable about their market and who are genuinely interested in helping their clients make better decisions about their next step with property.

With behaviour changing in the recent explosion of social media and mobile technology, consumer hunger for information has grown.

Sharing data about the market can be a big step in building trust with potential clients.

By connecting potential clients regularly with information that is helpful and useful in the form of Local Suburb Guides, you can build their trust and be top of mind when they need you.

Here are five major benefits of using the REINZ Local Suburb Guides.

1. Local Suburb Guides position you as a trusted expert Why should people hire you as a real estate agent? Not because you’ll sell their property – all agents are supposed to do that. They’ll hire you because they believe you have the expertise to get the highest price and are the kind of person they can relate to and trust through the stressful period of selling their home.

To demonstrate your expertise, provide information on how the market is performing, what prices are doing, and the time it takes to sell and your client base will recognise you as someone helpful and reliable.

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2. Local Suburb Guides let you differentiate yourself Flyers appear in letterboxes every week talking about a property that’s on the market or been sold. All homeowners are constantly barraged with messaging that states “I’m a real estate agent and I sell properties.”

Local Suburb Guides help you differentiate yourself by providing valuable information that helps start a conversation with a potential vendor that they’re interested in; how the local property market is performing.

This type of communication will tell your prospects you’re an agent who’s here to help, not just pitch to them.

3. Local Suburb Guides create leads that are warm and better qualified Sharing a Local Suburb Guide changes your phone call regime. What would you prefer – pitching to someone who knows nothing about you or your agency, or someone who has read your guide and is engaged about the local property market and curious to know more. By sharing a Local Suburb Guide, you are warming up your leads by providing a great conversation starter.

4. Local Suburb Guides encourage customers to come to you Use printed versions of your Local Suburb Guide as alternative to flyers or hand

TECHNOLOGY

them out at open homes. A prospect with a question is an opportunity waiting to happen and when a contact reaches out to you looking for more information about something in the report, you know you are becoming an attraction agent.

5. Local Suburb Guides and videos can expand your digital marketing activities Your Local Suburb Guide can be both printed off and used as a physical report, or you can use a digital version for your online marketing. Share the URL link to your Local Suburb Guide in your social media posts or include it in your email

marketing. This will also give you valuable insights into the demographics of who has accessed your report improving your social media targeting and knowledge about your audience even further.

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

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POWERED BY:

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

FREE 7 Day Trial

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

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Personalised with your brand colours, logo and photo

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

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

TECHNOLOGY

A snapshot into the world of REINZ data & insights services

Ian Smith, Senior Data & Platform Manager, REINZ

REINZ is constantly evolving the data products and services that we offer. The following is a quick insight into the recent developments and enhancements we’ve made for our members.

Migration to DataMart REINZ has recently migrated to a new data platform called DataMart. This is a significant step forward for REINZ, as it continues on its transformation journey.

DataMart is the engine which manages all the property data that is critical to our industry. This migration has been months in planning and delivery and is a significant achievement for REINZ and the industry.

As with any large system migration, there have been a few teething issues, so thank you for your patience whilst we iron these out. The new platform is a foundation for the future and uses robotics to match data.

The data matching rates compared to our old system have significantly improved, ensuring that property data has a single source of truth. There is an ongoing programme of data quality improvements over the coming months which will help members find more up-to-date and accurate data.

RentalSmarts Over the last few months, the REINZ Digital & Innovation team has worked to re-build the technology and calculation of rental data to better reflect revised boundary changes following the last census. This is great news for property management members as this will now allow more accurate comparisons of data within our RentalSmarts platform.

We are confident that the new methodology and underlying technology is a great step forward for our rental data & insights services.

The Automated Valuation Model (AVM) The new REINZ Automated Valuation Model (AVM) launched in April and is REINZ’s most technologically advanced product yet. The AVM uses advanced modelling and deep machine learning techniques to produce accurate estimates and up-to-date sales price predictions for residential properties across New Zealand at the click of a button.

The REINZ AVM is a computer-generated valuation of a property’s estimated current market value. REINZ calculates an AVM for more than 92% of all New Zealand properties. Broken down by category coverage this increases to approximately 99% for houses, units and apartments, with residential sections and lifestyle blocks receiving approximately 98% coverage.

The new REINZ AVM will cover more properties in the market and provide more accurate estimates that are closer to actual sales prices, within a narrower range and with less time lag to detect changing trends. It will achieve this by using more data point inputs, more sophisticated models and algorithms and more up-to-date data. It will also use machine learning to continuously improve.

Predicting property values is an extremely complex process, as such the REINZ AVM uses REINZ proprietary deep machine learning to incorporate over 200 individual datapoints to derive a sophisticated prediction. Some of these datapoints include land area; site coverage; number of bedrooms; number of bathrooms; building condition; floor area; latest CV and many more variables.

Find it now under the PropertySmarts ‘Property Details page’ and the Statistics Platform property ‘view’.

DataHub The REINZ DataHub brings together information around REINZ’s data & insights capabilities, resulting in a central hub for property data analytics. The new DataHub makes property data more accessible and understandable for those who want to get a good handle on the New Zealand property market and makes it easier for customers to find out information about what data is available in order to help them understand the market.

This is just the first iteration of what we eventually anticipate will be a one-stop shop for property data in New Zealand. Over the past few years, we’ve invested heavily in our statistics platform [which powers the DataHub], and this investment will enable us to ‘slice and dice’ the data and view it all in one place over time.

The services are already used and trusted by industry-leading economists and business professionals, both domestically and internationally.

REINZ’s team of data consultants are available to assist users for any specific requirements they may have and will work with individuals to find customised solutions to fit their business needs. Visit www.reinz.co.nz/datahub Watch out for ongoing updates on data products & services in the coming months.

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EDUCATION

Real Estate Qualification Update REINZ is delighted to share two major milestones from the early months of 2021 for the Education team, including the submission and approval by NZQA of the newly proposed qualifications developed

by Skills, supported by REINZ and the REA; as well as the development and release of the REINZ 2021 online verifiable training packages.

Now the new qualification submission has been approved by NZQA, this project will move into its next phase of works being new programme development by training providers. In order to continue our support of members and the industry, REINZ along

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with the REA, are continuing to assist Skills through this transition phase.

Our continuing priority is the liaison with training providers across New Zealand regarding programme development and availability. We will continue to collaborate and produce FAQs for the industry via the normal REINZ channels. Keep an eye out for REINZ, REA and Skills updates with more information as the project progresses.

You can view the latest qualification FAQs at www.skills.org.nz along with links on the REINZ and REA blogs.

EDUCATION

eLearning Revolution – The lessons we’ve learned “Will there be an online version available?” is often the first question we now hear when releasing new training courses. At this stage, almost everyone has undoubtedly joined a Zoom meeting, live webinar or attended a virtual conference. This is a trend we were able to see even before the impacts of COVID-19 and lockdownrelated restrictions on gatherings. 2020 has forced us to adapt to new ways of learning and at REINZ we have experienced this change first-hand.

Within the first week of the Level 4 lockdown in March 2020, we transferred hundreds of learners from face-to-face courses to the online versions. By the end of the year, online enrolments had more than doubled compared to the previous year; a behavioural shift and acceptance that has carried over to 2021.

However, completing courses online is often easier said than done. We have adopted terms like ‘zoom fatigue’ or ‘zoomed-out’ into our everyday vocabulary. How do we stay alert and motivated during an online training session? Here are some tips that can help: - If possible, keep training sessions short (between 30 minutes and an hour is ideal).

Research has shown that the average adult has an attention span of around 20 minutes. Essentially, it is normal if you lose focus and cannot be blamed on a lazy attitude. So, make sure you take enough breaks - Try not to multi-task: Schedule dedicated time for your online training. It seems almost impossible not to check your emails or quickly respond to that one urgent text while attending an online class. However, it is best to limit distractions by closing all other applications on your computer, minimise your notifications and focus on the training at hand - Get up from your seat: Taking regular breaks, stretching, or going for a quick walk around the office or house is good for your physical and mental health. Physical

Lisa Stern, Digital and eLearning Manager, REINZ activity throughout the day boosts your dopamine and endorphin levels, which are linked to an increased attention span and improved mood.

Above all, it is the Learning Designer’s responsibility to create content that keeps the learner engaged by using gamification, a variety of media and creating mini competitions.

The shift to increased eLearning has enabled many organisations to deliver more content at a faster pace. Education has never been more accessible, for example, by removing time and physical limitations such as the commute to the classroom.

One question remains: Will online learning ever fully replace the classroom experience? The answer is ‘probably not’.

Classroom learning still has many benefits.

Humans thrive on social interaction and forming personal connections. For this reason, blended learning experiences have become more popular, using a combination of online, face-to-face and on-the-job learning activities. For example, many REINZ face-to-face workshop attendees love the networking and in-person discussions of up-to-date case studies.

Where do we go from here?

Rodney Beach from Liberate Learning recently stated: “2021 can be a time to embrace the changes and advantages thrust upon us in 2020.” At REINZ, we have taken the learnings from 2020 and plan to fully embrace the changes in 2021 and beyond.

If you want to learn more about what online courses REINZ offers or have a topic you would like more training on, please reach out to education@reinz.co.nz REINZ is always looking to serve its members better through education – please send all general enquiries and training needs/requests to education@reinz.co.nz

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EDUCATION

Just launched – ‘REINZ Wellbeing Series: Strategies for me’ REINZ has been working hard to ensure that the education material developed assists with all aspects of every day real estate life; technical and non-technical. We have responded to requests for a more personal-focused wellbeing module to be used throughout all sectors.

We are excited to share we have several updates for the series, released and not yet released.

‘REINZ Wellbeing in Real Estate’ Series updates: • ‘Strategies for Me’ complete and available online (6hrs) • Personal financial fitness, corporate social responsibility and recruitment & retention are all examples of topics coming soon.

Upcoming 2021 Verifiable Trainings: There are six months left to complete your CPD for 2021. Check out our online options on reinzeducation.co.nz or go to one of our face-to-face sessions (list below). We are also facilitating private sessions for groups of 40 or larger. Please contact us at education@reinz.co.nz for more information.

DATE June 23-24 June 30-July 1 July 7-8 July 28-29 August 4-5 August 11-12 August 18-19 September 1-2 September 8-9 September 15-16 October 20-21 December 1-2

LOCATION Timaru Whangarei Taupo Nelson Rotorua Paihia Palmerston North Dunedin Auckland 2 Tauranga Christchurch 2 Auckland 3

Upcoming launch ‘REINZ Introduction to Real Estate’ online training REINZ is consistently working with the industry to understand the priorities of our members in regard to what type of training content is needed and what ongoing learning opportunities are desired.

REINZ’s recent needs analysis work has resulted in the impending delivery of the new module: ‘REINZ Introduction to Real Estate’, and we can’t wait for you to see it!

• Do you have someone new coming into the office?

• Are you thinking about starting someone in the office to help you in RPM, Sales or Broking in any sector?

• Do you need something to help train your new starters after induction?

The REINZ Introduction to Real Estate has been built to help with all these scenarios. The new course is aimed at managers who have a support person starting in their business; new starters from school or university; individuals rejoining the industry after a long break; or individuals making career u-turns from

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another industry.

The course is all online and can be completed at the office or home for someone starting out.

Keep an eye on our weekly ‘In The Know’ newsletter or visit www.reinzeducation.co.nz for more, as it happens!

“The ‘REINZ Introduction to Real Estate’ gives a great basic introduction and understanding of the real estate industry, I would wholeheartedly recommend this course to anyone new to the real estate industry and potentially considering a career in real estate.”

Liz Nidd, Director Nidd Realty Liz Nidd

021 3-2 201

Re al E i es state Ag enc

INTEREST

Moving in the right direction: Bio-fuels at Z Energy The Climate Change Commission has recently released its draft advice, signalling a long-expected shift in focus when it comes to the future of energy in New Zealand. The recommended carbon budgets and route to decarbonise the transport sector is practical, and looks to leverage a range of existing technologies. It does not rely on potentially great but not yet commercially available options, or ‘silver bullets’.

The transport sector contributes 36% of New Zealand’s greenhouse gas emissions, and the recommendations from the Commission to reduce total transport emissions include the use of low carbon fuels like biofuels and hydrogen for trains, ships and heavy trucks - a recommendation preceded by three others: shifting journeys from private cars to active mobility (walking and cycling) and public transport; and accelerating the uptake of electric vehicles.

Biofuels are a realistic option to start lowering the emissions of our existing fleet now, as we simultaneously accelerate the uptake of electric vehicles. Between the Commission’s draft advice and the Government’s recently announced package of measures to tackle decarbonisation, biofuels will become a meaningful part of the decarbonisation puzzle for New Zealand.

Leading the way on this journey, as part of Z’s commitment to give our customers lower carbon solutions, we have launched our first biodiesel-only truck stop at Highbrook in Auckland. Branded “Z Bio D”, the product is a blend of 5% biodiesel made from a byproduct of the agricultural industry (tallow), mixed with 95% regular diesel.

At launch, back in December 2020, Z’s General Manager of Supply, David Binnie said that converting the pumps to biodiesel is part of the company’s intention to continue delivering on low carbon fuels.

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“While our biodiesel production plant, Te Kora Hou, remains in hibernation pending increased customer demand or a more favourable policy environment to support low carbon fuels, we remain committed to continuing to meet demand for biodiesel from our more forward-thinking customers.”

“To do so, we have imported a biodiesel from Australia that is similar to our own to supplement our remaining stocks. While we believe local production capability would be the best outcome for New Zealand’s low carbon future, we are pleased to support those customers such as infrastructure firm Dempsey Wood and NZ Post who are using biofuels as an immediate option for reducing their carbon footprint.”

David said that one of the key benefits of biodiesel is its compatibility with existing diesel engines.

“Many of our customers have been seeking lower-carbon options for parts of their fleet that rely on diesel. Z Bio D meets this need, as it complies with New Zealand’s strict diesel as well as biodiesel specifications, meaning customers can use it with confidence. It also improves lubricity, which reduces engine wear and tear. And the best part is, each tank of Z Bio D has around four per cent less greenhouse gas emissions than a tank of regular diesel.”

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James Shaw, Green Party co-leader, PM Jacinda Ardern and Michael Wood, Minister of Transport at the Biofuels Mandate Announcement at Te Kora Hou.

The policy environment David spoke of in December is now on its way to becoming reality, and we have a much clearer view of the journey ahead to reach net carbon zero and the promise of the policies to get us there. As a business, this gives Z the confidence to invest further in being a part of the solution, whether that’s in biofuels, hydrogen or electrification. It also provides a clear path for many of our customers who are trying to decarbonise their own businesses.

Apply online and SAVE everytime you stop at Z, Caltex and Challenge.

Visit the REINZ Member Benefit page for more information.

In a recently published Spinoff article, Z’s Strategy Manager, Sheena Thomas said “We have the foundation of what we need to transition to net zero in transport. The technology exists and is rapidly scaling up, the people of Aotearoa have the necessary skills, drive and empathy, and we now have a sense of how government, businesses and consumers can work together to achieve big collective outcomes.”

This article was supplied by Z.

Z is using Highbrook to learn more about how customers are using a low-carbon fuel truck stop so we’re really keen on feedback: Feel free to share your thoughts with us by calling 0800 936 374 or emailing Zbusiness@Z.co.nz.

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INTEREST

6 things to think (and be clear about) before buying a real estate business

Jasmine Platt, Founder, Real Estate Leaders

Are you considering buying a real estate business or franchise?

Business ownership can be an exciting move – but, given the size of the decision (and the implications of it not going well) - there are six important points to consider before signing on the dotted line!

Who I am and what qualifies me to write this article?

I’m the founder of Real Estate Leaders, a business coaching company, specialising in assisting real estate business owners to focus on the right actions and outputs to build and grow their businesses.

One of the privileges of my job is having positive relationships with committed business owners and being trusted by our clients to discuss their challenges and share ‘the naked truth’ of their struggles.

This article is the product of years of experience working with real estate business owners, hearing those common challenges. I’ve also incorporated feedback from interviews with a number of owners and franchisors to gain their insight, experience and advice for those considering real estate business ownership.

Six important points to consider: 1. Business ownership is hard (probably harder than you think) Business ownership certainly appears

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to have some alluring benefits to the uninitiated. Many go into ownership thinking it will be easy, or relatively straight forward – and ‘give them their weekends back’.

The reality is that business ownership is multifaceted, time-consuming and often challenging. It requires you to understand and attend to many more areas of business than simply sales and customers.

On any given day, you will need to deal with admin, compliance, HR, risk managing cashflow, paying wages, completing GST and PAYE returns, sales meeting planning, training, recruitment, business meeting attendance, post-meeting follow-up, and conflict management (think commission splits and salesperson disgruntlement) – among other things.

Why are you considering business ownership? If it’s because you think things will be easier, in 99.9% of cases, they won’t be. If it’s because you like a challenge, that might be a good reason.

Are you willing to work harder (and stretch yourself and your comfort zone more) than you do now?

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2. Sales leadership is much more challenging than sales

3. What is the opportunity? Why THIS brand?

Your income relies on the efforts and success of your salespeople.

When considering ownership, it can be common to stick with the brand you know (or the one that approaches you). What’s more valuable (if you want your business ownership experience to be easier), is seriously considering (and making your decision largely based on) the brand offer to both salespeople and vendors.

Successful salespeople considering ownership often think that they’ll just “teach salespeople what to do and how to do it” – and that they’ll do it.

Newsflash: Salespeople, as independent contractors, are not as easy to manoeuvre as you might think (or have the skills for).

If you are expecting salespeople to listen to you just because you’re the owner – or because you’ve had a successful sales career, you’re probably going to be in for some surprises!

Sales leadership is one of the most difficult jobs out there. It’s really different from sales. There’s important psychology you need to build the kind of leadership and culture that brings salespeople along on the journey with you.

It’s also not as easy as finding yourself a good sales manager. In my article on ‘The problem with hiring a sales manager’, I explain how good sales managers are like unicorns – and it’s true.

Why? If you buy a business, salespeople and vendors will equally become your lifeblood. If the brand you choose doesn’t have a standout offer to both, recruitment and hitting your sales targets will become markedly harder as vendors and salespeople go to the competition to get what they want.

Be prepared to put in the time and effort to shop around, investigate your options and do your due diligence.

For a list of questions to ask yourself and the brands you are considering buying a business from, to help you evaluate the opportunity, email me at jasmine@realestateleaders.co.nz Continued over leaf

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INTEREST MANY GO INTO OWNERSHIP THINKING IT WILL BE EASY, OR RELATIVELY STRAIGHT FORWARD – AND ‘GIVE THEM THEIR WEEKENDS BACK. THE REALITY IS THAT BUSINESS OWNERSHIP IS MULTIFACETED, TIME-CONSUMING AND OFTEN CHALLENGING. IT REQUIRES YOU TO UNDERSTAND AND ATTEND TO MANY MORE AREAS OF BUSINESS THAN SIMPLY SALES AND CUSTOMERS. 4. Are you prepared for a drop in income?

One common assumption is that you’ll make more money as a business owner.

What new owners tend to not understand until they’re in it, are the costs and financial obligations associated with business ownership (think building costs, admin and marketing staff salaries, tech subscriptions, franchise or membership fees, etc.) – and the lack of direct control on income.

There is financial benefit in a well-run business, but it takes time to establish and start turning a profit while you bed down your new role as business owner, trainer, coach, etc.

Are you prepared to take a drop in income and increase your risks while you build?

5. Capital After buying the business, do you have adequate capital and cash flow to invest in the critical things a business needs to survive and thrive? Think running costs, marketing, systems, administrative support, training, subscriptions, etc. Be sure to do your homework and properly understand the financial commitment required beyond buying the business. Plan to have a good number of months of capital set aside to help you get through the early months.

6. How willing are you to invest in your own learning and development?

There is no question that there are things to learn and skills to develop. The question

is whether your learning and development process is a deliberate one with clear objectives – or more of a ‘cross your fingers and hope for the best’ process.

We work with business owners and managers to help them to build the people and performance skills, systems and cultures required for effective sales leadership, recruitment and continuous improvement.

Do you have those skills? If not, are you prepared to invest time, effort, and money to develop them?

In conclusion Real estate business ownership is a good move for some people – and not a good life move for others.

It comes with challenges and the need to learn well beyond what you can imagine going into it. There will be times that you love it, and times that you’ll hate it. It can be rewarding, profitable and fun. It is also mighty hard work, with costs, risks, effort and stress associated with things you don’t currently have to think/worry/lose sleep about.

The question will be, once evaluating your options, are you up for it? Does it match your goals and the life you want?

In the next edition, I’ll be sharing the first tasks to undertake if you decide to go all in and commit to the business ownership journey! If you can’t wait till then to get clear on your business growth journey, feel free to drop me an email to set up a time to talk.

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

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

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

PropertySmarts is exclusive to members of REINZ.

INTEREST

Choosing the right builder for a renovation project

A well-designed renovation can be a great way to boost a property’s appeal ahead of a sale. But it can also be a stressful process.

If your vendors are considering giving their home a spruce up, one of the ways to reduce renovation stress is to choose a trustworthy, experienced builder. Here, we’ve collated a series of tips from a range of experts, to help your vendors get the right people for their project.

Planning stage Before even approaching a builder, the first step is to think about the scope of the project and jot down an initial plan for it.

According to Houzz contributor Hugo Tugman, having at least a set of drawings and a list of what will and will not be included can be a good way to obtain an accurate quote.

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The Real Estate Institute of New Zealand

Background checks Generally speaking, it’s also a good idea to check online reviews and testimonials, and research as much as possible about the builder and/or their company online.

Even more important, before signing on the dotted line, check that the builder is registered and has the necessary trade qualifications to undertake the work.

No question is too big or small With a shortlist of builders on hand, it’s time to ask for quotes from all of them. During that first meeting with each builder, vendors can ask additional information, including: •H ow many years the builder has been in business

And remember, not all renovation projects are the same; depending on scope and characteristics, certain building companies may be a better fit than others. Do your vendors need a specialist or a general builder?

• T heir track record in building or renovating properties

The power of word of mouth

•H ow often the company will provide updates on progress.

Friends, family or colleagues are always happy to recommend a trustworthy builder they have used in the past. Plus, those conversations can be a great opportunity to hear more about their first-hand experience with home renovations. How did they find the whole process? Do they have any advice they’d like to share?

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Karen Jackson, Managing Director, Lifestyle Finance

• Any references they can provide • How long consent will take • Estimated start and completion dates

Getting everything in writing Once your vendors feel comfortable with the builder and are ready to proceed, they will need to get everything in writing, especially cost estimates and quotes.

Renovations can be expensive and time-

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TRUSTWORTHY BUILDERS ARE THOSE THAT KEEP THEIR CLIENTS INFORMED THROUGHOUT THE PROCESS... consuming, so it’s always better not to rely on verbal agreements.

The more detailed the contract is around payment terms, drawings, and ‘what-if’ scenarios (e.g. what if the work is changed along the way?), the greater peace of mind it provides to both builders and home owners.

Staying in the loop Trustworthy builders are those that keep their clients informed throughout the process, contacting them as soon as issues arise with detailed reports. Things don’t always go to plan, but having a good line of communication with the builder can help get work back on track faster.

when renovating a valuable asset like a family home or an investment property. By setting the ground rules early, and following up throughout the construction phase, your vendors can keep renovation stress at bay while maximising their property opportunities.

Finding a balance between a high-quality renovation and staying on budget is all that matters. Depending on your vendors’ situation, they may be able to fund simple cosmetic changes from their savings.

But this often isn’t an option with more structured renovations.

Inspection list Another good tip is to make a comprehensive inspection list, to use towards the end of the project. The final stage can be a stressful one, being be well-organised, communicating clearly, and agreeing with the builder on one comprehensive list of incomplete works (which the builder will then rectify), can make all the difference.

The bottom line Choosing the right builder is paramount

Our ‘Renovate Now, Pay Later’ finance tool can help vendors fund their renovation needs, with no payments upfront and for the first 90 days – extra breathing space to spruce up the property and put it on the market.

Visit lifestylefinance.co.nz to learn more or call us on 0800 100 265 to get in touch.

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INTEREST

5 giving strategies that work

Julia Dyer, Founder, Real Estate for Good Initiative

How do you choose to give back? Is it working for you? Does it have an impact on your bottom line?

Giving back does not always have to be about giving away what you earn, it is also about being generous with your time and sharing information. The ‘connection’ economy relies on generosity, a way to create trust, which is a key factor in growing a sustainable business.

So, what exactly is generosity? You can interpret the word generosity in many ways, but in short, generosity is seen and felt when someone acts with the right intent.

When you give in this way, with no hidden agenda, you naturally create connections and build relationships, which will lead to the growth of your business.

You may have noticed that social change marketing is now becoming the norm.

Influential leaders from both small and large corporations are instigating inspiring initiatives or choosing to contribute to a wider cause, because they know it is not about profit loss; it is about profit gain.

Over the past decade, I have been incredibly impressed by the enormous amount of give back within the real estate industry on a local and global level. It is not unusual for an agent to be seen volunteering, sponsoring and donating as they go about their business. Many brands are now sharing their social change stories online.

For example, one agency website reads: “We believe it is our responsibility to work together to make a difference in our community. We are committed to supporting the causes that affect the communities around us. Each office contributes to their community via charity, event, and club sponsorships.” And then

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it goes on to state all of the causes they support.

If you are already contributing, thank you for doing your bit and positively influencing your colleagues and peers. If you would like to do more, here are 5 giving strategies you can implement today.

1. Recommend others How often do you give referrals? The next time you receive or witness a great act of service in your role, take the time to offer a review without being asked. This gesture should only take a few minutes of your time and will uplift the business owner and help them remember you in the future. This may be where your next referral comes from.

2. Help to promote local events The best way to be seen as a local is to know what is going on and help promote events. You do not have to be directly involved, as long as the event aligns with your values. The local farmers market is always good to share as well as council initiatives and grants. People will notice, and this activity will enhance your online presence.

3. Gift a Thankyou Handwash The next time you appraise a home, why not gift a Thankyou Co. Handwash. 100% of the profit will go to helping improve sanitisation in third world countries. Your gift will be well received and remain in the home for a few months and will remind potential clients of you. This kind gesture will help share your core values and build trust. You will begin to convert more often.

INTEREST

4. Inspire your team As a leader of today, can you set give back goals? You may like to arrange a team-building day that will create positive change. You could arrange to plant trees on National Tree Day or send your team to volunteer at the local homeless shelter.

Have a team meeting and brainstorm for the best ideas rather than only give one option.

This suggestion is a great way to enhance team culture and increase productivity and performance while giving back.

5. Align with an inspiring cause Why not support or subscribe to Will & Able, a social enterprise who provide jobs for people with disabilities and mental health challenges, by simply choosing eco-friendly cleaning products? This is not only a great way to be socially responsible, they have an awesome story to share and help promote.

Why not gift a box of products every time you list and sell, to show you truly care?

As you can see, there are many ways you can bring social change marketing into your business to help you better connect and make a positive difference in the process.

The next step is to learn how you can indicate that you choose to give back in your marketing collateral to become the agent of choice more often. Please feel free to learn more at www.realestateforgood.co.nz.

This article is written by Julia Dyer, Creative Marketing Strategist, Positive Prospecting Lead Gen Trainer, and founder of the Real Estate for Good Initiative. Visit juliadyer.com.au to connect today.

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INTEREST

You can send staff to training, but you can’t make them learn Have you ever started a new position in a company and had the inhouse expert try to teach you everything you need to know about the job? How well did that go?

Have you been the person tasked with teaching a new person and what you taught them just didn’t ‘click’ for them?

Both situations are familiar to me and are very common. I’ve been on both sides of this scenario more than once, throughout my career.

What you might not know is, there is a difference between procedural and declarative knowledge. Most of what we do on a day-to-day basis is done procedurally, and we follow these processes so many times, over so many years, that it becomes second nature… yet, when asked to explain, give clear working examples and teach another person what they need to do in order to achieve the same results, it doesn’t always translate in a way the person can confidently process and put into action.

Don’t get me wrong, there are some people that can do this, and they do it extremely well. The point I am making is that there are many people in positions of authority that assume their staff can simply ‘train a new person’, but then wonder why it wasn’t a successful outcome. The fault is with neither person, it sits with how the training and trainee have been matched.

Thankfully, with the right trainer you can get great results. Training is not just to give you information. As trainers, we want to transform you as learners.

There are three key factors that influence how much and how well people learn new information: • Our ability • Prior knowledge • Motivation.

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Angela Sutton, Training Team Leader, Palace

We are all blessed with a certain level of learning potential. This affects how we learn new skills and knowledge. This explains why there were some people that simply watched a YouTube video over lockdown and made the most incredible sourdough bread for the Lockdown Sourdough Challenge, while mine failed at least three times before something edible was created. My ability to just watch a video and recreate it is not as strong compared to my ability to create while being shown and critiqued in person.

Someone who holds a lot of prior knowledge on a subject will simply get bored or annoyed when they are expected to sit through a training session to learn a skill they already know. Having prior knowledge helps that person acquire new knowledge and skills faster which is why it’s important that all prior knowledge is recognised. This allows the training to be tailored to their needs so the focus is on advancing their knowledge.

For me, I’ve been baking bread since I can remember, but never sourdough. If there was a video tailored to include my prior knowledge on bread making techniques and covered the differences when making sourdough I may have had greater success the first time around.

When sending staff to a training session, do the staff concerned know why they are being asked to do this? Is it to advance their career? Is it to help the company achieve something? Or is it just to tick a box? The more a person values what is to be learned, the higher their motivation will be, resulting in more information being retained. Value and motivation go hand-in-

INTEREST

... HAVING PRIOR KNOWLEDGE HELPS THAT PERSON ACQUIRE NEW KNOWLEDGE AND SKILLS FASTER WHICH IS WHY IT’S IMPORTANT THAT ALL PRIOR KNOWLEDGE IS RECOGNISED. THIS ALLOWS THE TRAINING TO BE TAILORED TO THEIR NEEDS SO THE FOCUS IS ON ADVANCING THEIR KNOWLEDGE. hand with learning. This scenario reflects in my poor sourdough making skills – there really was no other reason than to distract myself from being housebound for weeks on end! There was no value, therefore no motivation to succeed. Maybe if I had a large family of small hungry humans, the motivation would have been far greater!

Learning with the goal to upskill is important and all training requires an investment to be made whether this is time,

monetary or both. Being able to do a job confidentially rather than second guessing a process or procedure will save a lot of headaches in the future. Always ensure the training is the correct fit for the person, not just training for the sake of training.

And lastly, for the people sent to training sessions and who haven’t been interested in the session, it’s important to talk about the why. Personal motivation will lift when staff know what the value of this training is to their position and the company.

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ADVERTORIAL

David Weaver talks: Inland Revenue targeting real estate agents David Weaver, Tax Barrister, began his career working with the Inland Revenue, providing legal advice to investigators and debt collection staff at Inland Revenue, as well as representing Inland Revenue in Court. David has represented both Inland Revenue and individuals, so he really does know both sides of the coin.

Since 2007, David has worked ‘on the other side of the fence,’ helping business owners struggling with tax debt, facing liquidation and bankruptcy or criminal prosecution.

Utilising his knowledge of the tax laws and Inland Revenue policy to represent his clients and help them get back on track.

Each year the Inland Revenue undertakes more than 100 prosecutions under either the Tax Administration Act or Crimes Act. Prosecutions are generally for ‘tax evasion’ which includes: PAYE prosecution, GST fraud, under reporting income or failing to file returns. Post-COVID, IRD has resumed their crackdowns on different industries, targeting their behaviours and auditing accounts.

Last month, Inland Revenue announced their next target will be real estate agents who under-report their income, or overstate their expenses, to pay less tax than they should.

IRD spokesperson, Richard Owen said that the industry was the next focus of its ongoing enforcement work to target the “hidden economy” and that, “real estate agents have been claiming high level of expenses relative to their income.”

“Inland Revenue believes the issue is widespread and we must act. People are claiming private expenditure, but not keeping logbooks or other business records to support the claim.”

Owen said that if IRD had concerns someone was over-claiming expenses, they would receive a letter requesting they proved the expenses claimed, for example by providing bank statements, invoices, or a logbook.

Owen said the IRD was working with

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David Weaver, Tax Barrister

the Real Estate Authority and the Real Estate Institute of New Zealand (REINZ) to “engage and educate their members”.

“We would far rather encourage customers to do the right thing from the start,” he said.

David Weaver offers, “The IRD knows exactly how much real estate agents earn in commission income. Their agency is required to declare commission income paid to its agents. Therefore, it is simple for IRD to match the commission income shown by the agency with the amount declared by the agent.”

Mr. Weaver continues, “To ensure that you are protected from prosecution, a Voluntary Disclosure is the best course of action.”

A voluntary disclosure means that you generally won’t be penalised or face prosecution. It also gives your representative the ability to negotiate any tax to pay. It is important to action this yourself, prior to any action taken by IRD – if they commence an audit prior to a voluntary disclosure being made, all potential protection is negated.

It is better to be up front and declare any under or over-reporting, prior to IRD investigating and a voluntary disclosure can protect you from any other potential action the IRD may take.

Mr. Weaver has already managed several real estate agent cases in 2021, showing that the IRD is already active.

Mr. Weaver and his team perform voluntary disclosures and negotiate the resulting tax bill, meaning that the client is able to continue earning without distraction and without the fear of bankruptcy, liquidation or pending prosecution action.

ADVERTORIAL

THE IRD KNOWS EXACTLY HOW MUCH REAL ESTATE AGENTS EARN IN COMMISSION INCOME ... THEREFORE, IT IS SIMPLE FOR IRD TO MATCH THE COMMISSION INCOME SHOWN BY THE AGENCY WITH THE AMOUNT DECLARED BY THE AGENT.

Mr. Weaver’s team of experienced tax professionals take a holistic approach to tax problems, knowing that if you do not solve the issues which led to the debt in the first place, the problem can often be repeated.

Here are their top tips for ensuring you are protecting yourself and accounting for tax correctly: 1. Commencing logbooks and keeping business records is not only advisable with regards to audits, but good business sense as well 2. Commence a GST savings account and contribute 15% to it each time you are paid – do not touch it until your GST payment is due!

3. Consider tax-pooling for your income tax if you are a sole trader – or placing yourself on PAYE if you are operating under a company, providing in advance for tax is critical for cashflow and compliance 4. Do not ignore a tax problem – the quicker it is disclosed, the better the outcome 5. Remember, you are ultimately responsible for your tax position – if you aren’t happy with your accountant, change them and seek assistance for any debt from a qualified tax professional.

Stay abreast of the latest tax advice or seek legal assistance for any tax issue at taxlawyernz.co.nz or call David on 0800 706 960.

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INDUSTRY

Nadine Thomas, Industry Insights and Engagement Manager, REA

Moving at pace? Make sure you’ve got a signed Agency Agreement In a pressured residential property market, it is not surprising that we’re seeing vendors wanting to move at pace to make the most of the hot sales environment. As the licensed real estate professional supporting these eager clients, it’s important to take the time to make sure you’re meeting your regulatory obligations, even in a fast-moving transaction.

Don’t bypass your obligations for a quick sale At the Real Estate Authority, we’ve received reports of licensees undertaking real estate agency work before an Agency Agreement has been signed.

Licensees need to ensure they are acting under the authority of an Agency Agreement before offering or marketing a property. REA understands that, in a hot market, vendors may not wish to sign an Agency Agreement until a licensee has a prospective purchaser. However, it is important licensees take the requisite steps before finding a purchaser for a vendor client.

Similar issues may arise if a licensee is acting as a buyer’s agent. Licensees should be aware that an Agency Agreement is required regardless of whether they are working as a vendor’s or buyer’s agent.

When you enter into an Agency Agreement with someone who is selling a property, you

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need to meet a number of requirements that are set out in the Real Estate Agents Act 2008 and the Code of Conduct.

Protecting the interests of consumers in relation to real estate transactions is an important purpose of the legislative framework underpinning real estate agency work. Licensees must take the time to explain to prospective vendor clients important elements of the Agency Agreement they are entering into. This would include matters such as marketing costs and the basis for commission, and licensees should recommend that the client seek legal advice before signing any agreement.

The legislation requires that the Agency Agreement must be signed by or on behalf of the vendor and the agent. You must supply a copy to the vendor within 48 hours of it being signed. You can’t show prospective buyers through a property until the agreement has been signed.

INDUSTRY

Clearly identify who your client is It should be clear to everyone involved who the licensee is representing in a transaction.

Under rule 9.1 of the Code of Conduct, a licensee must act in the best interest of their client. The client is the person the licensee is acting for. The client is usually the vendor, but it could be the buyer if the licensee is acting as a buyer’s agent.

In a transaction, an individual agent can represent either the vendor or the buyer – never both. A licensee cannot claim two commissions on a sale.

Produce a current market appraisal With any Agency Agreement with a vendor, a current market appraisal (CMA) is required. It must reflect current market conditions realistically and be supported by comparable information about sales of similar properties. If it is not possible to provide comparable information, you should say so in the appraisal. The CMA must be provided before the Agency Agreement is signed. It is important that licensees do not describe appraisals as valuations.

Valuations are provided by independent registered valuers. Buyers should be encouraged to obtain an independent valuation as part of their due diligence prior to making an offer.

Approaching a vendor when you already have a buyer in mind We also receive complaints from vendors who have been approached out of the blue by a licensee with an offer from a buyer. The licensee asks the vendor to sign an Agency Agreement with them so they can present an offer. In this scenario, the licensee often won’t discuss other sale options with the vendor but will simply facilitate the sale between the buyer and the vendor.

This may cause serious issues because the licensee won’t have acted in the best interests of the vendor if they haven’t discussed other options for selling the property and what might be possible if the property is taken to the open market. The licensee won’t have been acting for the vendor when they facilitated the offer from the potential purchaser, so it’s unlikely it was drawn up with the vendor’s interests in mind.

Provide the Agency Agreement guide Remember, before a vendor signs an Agency Agreement, you must give them a copy of the Real Estate Authority Agency Agreement Guide (if it’s a residential property sale). You must also obtain written confirmation that they have received it.

You can order printed copies of this at rea.govt.nz/guides, or download a free PDF version. While you’re there, order some free printed copies of our Buyer Journey Guides – these include content from our website settled.govt.nz, designed to help consumers navigate the property transaction with confidence.

Have a question? We’re here to help These are just some of your statutory obligations when it comes to Agency Agreements. On the REA website, you’ll find guidance about discussing different options for selling the property, explaining marketing and advertising costs, disclosing rebates and discounts, informing the vendor if you have a conflict of interest, confirming vendor identity under the Anti-Money Laundering and Countering Financing of Terrorism Act and more – visit rea.govt.nz/ agencyagreements. If in doubt, you can always call us at the Real Estate Authority on 0800 367 732.

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LEGAL

Pressure from multi-offer situations

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LEGAL

Amesha Rama, In-house Lawyer, REINZ

Melisa Beight, General Counsel, REINZ

Licensees will be well aware of the pressure a multi-offer situation brings to the table. It occurs when there is more than one offer in writing. In a multi-offer situation, the vendor can choose the offer that works best for them, from a number of offers.

Multi-offer situations must be carefully managed to ensure that everyone involved is on the same page. It can be tricky because of the number of parties involved, in combination with the fast-paced, high pressure environment that is generally associated with multi-offers.

It can be difficult for licensees to navigate their legal obligations in a multi-offer situation.

Issues with multi-offers Complaints from purchasers or prospective purchasers have highlighted the following issues: • Lack of clarity about how a multi-offer process is run • Lack of communication about how a multi-offer situation arises • Failure by the licensee to advise that there is another offer that may be acceptable to the vendor, and that there might, therefore, not be an opportunity to submit a higher offer • Disclosure of the details of other competing offers to a prospective purchaser, who then assumes that their own price and terms are being conveyed to other prospective purchasers (i.e. a confidentiality breach).

Real Estate Agents Act (Professional Conduct and Client Care) Rules 2021 (Code of Conduct Rules) The Code of Conduct Rules govern your conduct. Failure to comply with these Rules in a multi-offer situation could leave you with a finding of unsatisfactory conduct or misconduct.

Where a property is in high demand, the chances are that more than one buyer will make an offer on the same property. Given the temperature of the real estate market, and the shortage of housing stock, it is highly likely that this will be the case.

You must remember to ensure that you treat all parties fairly in a multi-offer situation and ensure that the process is transparent.

Rule 6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

You must ensure that you are not placing any undue or unfair pressure on either party.

Rule 9.2 A licensee must not engage in any conduct that would put a prospective client, client or customer under undue or unfair pressure.

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LEGAL Another aspect which is crucial to managing multi-offers correctly, is communication. You must ensure that you keep the vendor updated with all offers and interest in the property from prospective purchasers.

Rule 9.3 A licensee must communicate regularly and in a timely manner and keep the client well informed of matters relevant to the client’s interest unless otherwise instructed by the client.

Implement a robust multi-offer policy With the above issues in mind, an agency should develop and implement their own multi-offer policy, to ensure these situations are handled by all licensees within the agency in a compliant and consistent manner.

REINZ has a draft Multi-Offer Acknowledgement Form available for members on our Advisory pages, reflecting best practice.

Running a multi-offer process Below are some practical suggestions for running a multi-offer process that deals fairly with all parties, and ensures all interest in the property is conveyed to the vendor in a timely, confidential manner: • Licensees should ensure all interested

parties understand they are participating in a multi-offer. Explain clearly your agency’s multi-offer process before asking the prospective purchaser to sign the acknowledgement form • Take extra care if the prospective purchaser has difficulty understanding (e.g. if they are a first home buyer, or cannot understand English well) • A purchaser can refuse to sign a multioffer acknowledgement form, or refuse to acknowledge that they are in a multi-offer situation. However, Rule 10.10 of the Rules requires that an offer is still presented to the vendor • If your agency’s protocols, or the vendor’s instructions are to call for other interest once an offer is received, then explain this clearly to prospective purchasers at the outset • Licensees need to ensure that the prospective purchaser understands they may only have one opportunity in terms of making their best offer, so their offer should be their ‘best and highest’ offer • Prospective purchasers should be made aware that the vendor may choose to negotiate with one prospective purchaser to the exclusion of others, or negotiate with all interested parties • Prospective purchasers still need to be made aware of their entitlement to legal and technical advice • If a prospective purchaser submits an

offer before a multi-offer process starts, you need to give them a chance to review it when the process becomes multi-offer • Similarly, if the prospective purchaser is told that a sale is a multi-offer process, but this then changes to theirs being the only offer, you must tell them this and give them an opportunity to review their offer and submit a new offer if they wish • Confidentiality is critical. No disclosure of any offers should be made to competing offerors. Licensees should assure prospective purchasers of the confidentiality of their offer • A final close-off time for presentation of offers should be imposed (in agreement with the vendor). All written offers should be in a sealed envelope, and presented to the vendor at the same time • A robust multi-offer policy should also address situations where a licensee within the agency, or a person related to that licensee, stands to benefit from the transaction. A senior independent person within the agency should run the process and supervise the presentation of the multiple offers • Speak to your branch manager or supervisor if you have any concerns.

Remember, these situations could also trigger sections 134 or 136 of the Real Estate Agents Act 2008, which imposes additional disclosure requirements on licensees.

CONFIDENTIALITY IS CRITICAL. NO DISCLOSURE OF ANY OFFERS SHOULD BE MADE TO COMPETING OFFERORS. LICENSEES SHOULD ASSURE PROSPECTIVE PURCHASERS OF THE CONFIDENTIALITY OF THEIR OFFER.

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LEGAL

The bright-line period is extended to 10 years – What does it mean?

Lindsey Smith, Senior Registered Legal Executive, Rainey Collins

The Government has recently announced an increase to the bright-line period for residential land under the Taxation (Annual Rates for 2020-21, Feasibility Expenditure, and Remedial Matters) Act (“the New Legislation”). The increased ten year period came into force on 27 March 2021.

What is the bright-line test?

Firstly, let’s recap what the bright-line test is. It is a law used to determine if a residential land owner is required to pay tax on any profit of a sale.

The bright-line rule is clearly defined and leaves no room for interpretation.

You can think of it as someone drawing a line in the sand. It’s clear when you cross that line. It does not allow for a change in circumstances. For example, illness or a change in financial circumstances.

Key Dates The 10 year bright-line period A ten year bright-line period will apply to residential properties acquired from 27 March 2021.

The 5 year bright-line period The five year bright-line period applies to properties acquired on or after 29 March 2018 until 26 March 2021.

The 2 year bright-line period The two year bright-line period applies to residential properties acquired between 1 October 2015 and 28 March 2018. Any properties purchased prior to 28 March 2018 will of course no longer be captured.

Bright-line start date The bright-line period starts from the date of registration of the transfer of title,

which is generally the settlement date.

Therefore, if a registration of the transfer of title (i.e. settlement) did not occur by 27 March 2021, the ten year bright-line period will apply, unless the transitional period below applies.

Transitional Period There is a transitional period for agreements entered into prior to 27 March 2021, even if settlement occurred after this date. Those who signed agreements during this period may fall within the five year bright-line period. Owners should seek advice from their lawyer or accountant to clarify the bright-line position.

New Builds The bright-line period for new builds is calculated differently. The bright-line period generally starts the date the agreement is signed (rather than the registration/ settlement date). The start date may be affected by a nomination of another entity to complete the purchase.

The ten year bright-line period is not intended to apply to new builds. It is intended that new builds will remain subject to a five year bright-line period.

It is our understanding that the definition of a “new build” will be subject to consultation later in 2021.

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Main home exclusion If the property being sold is a person’s main home, an exemption to the bright-line test may apply.

The criteria of what constitutes a main home will differ depending on when the property was purchased (or last transferred).

The five year main home rule If the property was purchased after 29 March 2018 and before 26 March 2021 the five year main home rule will apply, as follows: • The owner must have lived in the property for at least 50% of the time; and • The owner must have occupied at least 50% of the property area. For example, if 40% of a property is used as a main home and 60% is rented as a granny flat, the owner will not be entitled to use the main home exclusion if the property is sold within the bright-line period.

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The ten year main home rule If the property was purchased on or after 27 March 2021, the ten year main home rule will apply.

There have been substantial changes to what constitutes a “main home”. A main home exclusion is now applicable when that property has been used as a main home for the entire time that it has been owned. It is important for agents to bring this to the attention of any vendor selling a property within the bright-line period.

If the property was not used as a main home for any continuous period or periods of more than 12 months, the main home exclusion will not apply to that period. The owner will need to pay tax on the portion of profit that relates to that period. This is the ‘change-of-use’ rule.

The IRD has issued guidance that there is a grace period of up to 12 months to give owners some flexibility around moving dates.

If an owner has a period of time when they are not living in the property (for any reason at all) they should keep records of these dates as this information will be required by the IRD when they come to sell.

Limitations to main home exclusion If a person has more than one home, the main dwelling is determined according to which one the person has the “greatest connection to”.

Furthermore, the IRD has the ability to view a person (or an entity) as being a “habitual seller” if there is a regular pattern of acquiring and disposing of residential land which could mean tax is payable on any profit, even if it is the person’s main home.

Main home exemption It is very important to note that an owner can only claim two main home exemptions in any two year period.

If an owner has already claimed two main home exemptions in that two year period, the owner will not be entitled to use the main home exclusion explained above.

When selling a property within the brightline period, agents need to be aware of this limitation so that you can ensure your clients get appropriate advice to avoid an unexpected tax bill.

Other exemptions to the bright-line rule There are still other limited circumstances when the bright-line test may not apply, including the following: • If the property was acquired from a relationship property settlement, there will be roll-over relief for the person who receives the property. There must however be a formal separation agreement signed in order to be eligible for such roll-over relief

• I f the property is inherited, it does not matter when the property was originally purchased by the deceased, the brightline period does not apply.

Impact of a change of entity It is important to note that a change of entity will re-start the bright-line period. For example, a transfer to a family trust, or to a company.

A change of trustees does not mean a change in entity. A change in trustees will not re-start the bright-line period.

What can agents do?

If you are listing a property for sale or are discussing with vendors or purchasers what the changes to the bright-line legislation mean: 1. Ensure you understand the rules about the start date/date of acquisition

2. Ask the vendor when the property was purchased and if there has been a change of entity 3. Obtain a historical title search. This will ensure that you know when your vendor will need to seek further advice about the bright-line legislation 4. Be aware of the differences between the five and ten year main home rules 5. Refer any vendors or purchasers to their legal advisors and/or their accountants for personalised advice about the effect and implications of bright-line legislation.

As always, we would be happy to answer any questions you may have regarding the bright-line legislation.

For more information, visit www.raineycollins.co.nz or email lsmith@raineycollins.co.nz

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Money laundering in real estate – SIGNS AND PREVENTION TOOLS Chris Caigou, Co-Founder & Chief Customer Office, First AML

Money laundering involves filtering income from illegal activities through legitimate transactions, disguising its source and preventing detection by the authorities. Property purchases can be an effective way to launder funds, as they tend to involve large sums of money changing hands, complex transactions and little oversight.

That’s one of the reasons New Zealand’s Anti-Money-Laundering (AML) regulations were expanded in 2018. For real estate agents, compliance with the new laws is a given, but it’s also essential to have a good grasp on the issue – how money laundering works, red flags to spot and effective prevention strategies.

Money laundering methods in real estate Criminals use real estate transactions to launder money in several ways, including using third parties to buy property, filtering cash through a mortgage or renters, or simply buying and reselling quickly to legitimise funds.

Third-party purchases In this scenario, people with a criminal record use a third-party – like a friend or family member – to purchase property on their behalf. This keeps the criminal off the title and other documents, reducing the risk of authorities flagging the purchase for investigation. A third-party might purchase the property using illicit funds transferred by the actual purchaser, or the criminal party may pay the deposit, but keep their name off the documentation.

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Once the purchase has gone through, the money launderer can either pay the mortgage by filtering money through the lender, or on-sell the property quickly to recoup the investment.

Laundering through loans Sometimes, money laundering doesn’t start until after a purchase is complete.

Criminals buy property using legitimate funds for the deposit, then take out a mortgage on the remainder – as with a normal purchase.

The mortgage is then paid with funds from criminal activity. Because mortgage payments are rarely over the $10,000 threshold which triggers a laundering investigation, this lets people sift money through the bank without being detected.

When the house is sold, the money from the sale is legitimate and far less likely to be traced back to its source.

Property price manipulation Paying a different price for a property than the market can be another way to launder money through real estate. There are two ways to manipulate prices for gain.

Undervaluing occurs when a buyer pays

LEGAL

much less for a property than expected – on paper at least. The buyer pays the vendor the difference in cash or through other means. When the property is sold, the ‘profit’ from the sale is deposited in the bank as legitimate income.

Overvaluing happens when a criminal buys a property for more than it’s worth to get a larger mortgage. The larger the mortgage, the more funds can be laundered while the debt is being paid off.

Successive on-selling Buying and selling properties in quick succession can be a sign of money laundering. This method involves buyers purchasing property, then selling it for a higher price to a related third-party, trust or business, giving the appearance of legitimate profit without the need to give up the property.

Switching ownership and recording profit in this way can legitimise large sums of money and muddy the waters for auditors, making it harder to track illegal activity.

people doing it are working hard to keep authorities in the dark – including the agent.

Apart from complying with AML legislation and doing your due diligence on every new client, it’s smart to keep an eye out for irregular activity and things that just don’t add up. Red flags to watch for: • Third-party involvement: someone other than the buyer handles most of the purchase, or the buyer joins the process at the last second to avoid background checks • Complex business or trust: a trust or business with a complex or confusing structure could be trying to hide the real buyer • Irregular sale price: the purchase price is much higher or lower than expected – this might be a sign of price manipulation • Buying remotely: the purchaser is located far from the vendor and property without a good explanation

Real estate red flags

• Cash transactions: large amounts of cash are used to pay deposits or other fees

Money laundering can be difficult to spot if you don’t know the signs. After all, the

• Unusual client behaviour: your clients’ activity may appear inconsistent from

the appraisal stage right through to settlement.

Preventing money laundering with regulation The AML/CFT amendment came into effect in 2019. It’s designed to combat money-laundering activity and stop terrorist organisations moving funds around New Zealand.

It requires real estate agents, banks, and other financial institutions to conduct rigorous due diligence with new customers, keep financial records, monitor accounts and set up a compliance programme to monitor the entire process.

The bill puts the onus on business, forcing them to be aware of the risks and on top of compliance at all times.

It can be difficult to keep up with compliance when you’re running a busy real-estate business. Make sure your business has a digital AML compliance process to onboard customers, access records easily and meet all the requirements.

In the fast-moving world of real estate, it could make all the difference.

WINTER 2021

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BIG OR GO HOME Properties marketed on Full Pages in Property Press are perceived to be worth 17% more than those on Half Page and 38% more in a Double Page Spread than a Full Page* Maximise the sale price of your vendor’s home (and your own profile) with Property Press

www.propertypress.co.nz *Horizon Research Apr19