Ray White Warkworth

Investor Gate Property Management Newsletter - June Issue

Market Report

The last month has been an interesting one in the Property Management Division, but then that is real estate in general.

Activity has been quite different in our various market places. Orewa, and the Hibiscus Coast have found that June has been a very quiet month with only a small number of properties being rented.

While there are a lot of tenants looking, they are unwilling to commit and are looking at a lot of properties before applying for a particular one. (Not too dissimilar to the sales side of real estate at present). Some tenants are now looking at the same property up to three times, before making a decision. In the Maungaturoto area rental applications have been very low for the past 9 weeks which means properties are now remaining vacant for longer periods.

Mangawhai has been experiencing fairly constant enquiry with a number of successful ‘lets’ taking place during the month. In the Warkworth area, inquiry has risen quite noticeably in the last period and many properties are being tenanted quite quickly, although there are always some that are more difficult to rent out and stick a little longer.

Prospective tenants are constantly scouring our websites for new listings becoming available. In areas, we have noticed that the quality of tenants applying for properties has declined somewhat and, the reason for this is unclear. However, we will not lower our standards for short-term results and we continue to decline applications for a variety of reasons. We believe it is better to be safe than sorry, and that our property owners would rather us take a long-term approach to the security and return of their investments.

Bond Rules Written in Stone

Law is designed to protect tenants—and there’s no wriggle-room, says Diana Clement from Herald Homes
 
Help! My landlord hasn’t lodged my bond, what can I do? How often have you heard that?
 
Some landlords think bond money is theirs to keep. It’s not. There are strict rules under the Residential Tenancies Act (RTA).
 
The law is very clear. Landlords have 23 working days after receipt of the bond to hand it over to the Department of Building and Housing (DBH). The logic behind this is that tenants’ money is   protected. Should there be a dispute at the end of the tenancy, it can be resolved by the Tenancy Tribunal, rather than by the landlord withholding money unfairly.  The law says that landlords can only ask up to four weeks’ rent as bond, no matter what is written in the tenancy agreement. The RTA always overrules tenancy agreements.
 
Both tenant and landlord should ensure that the bond cheque is made payable to the DBH, that the bond lodgement form is correctly filled in, and that both tenant and landlord signatures are included. Bonds can be paid in instalments if the landlord agrees.  It’s a good idea for all tenants to check with the DBH that their bond has been lodged by calling the number below. If it hasn’t, tenants can download a 10 working days’ notice from the DBH’s website and give or post it to their landlord or property manager. Once received, they have 10 days to ‘rectify the breach of the RTA”, ie, lodge the correct bond.
 
If a landlord doesn’t lodge a bond, says Scotney Williams, who runs The Tenancy Practice Service, tenants can claim exemplary damages through the Tenancy Tribunal, meaning that they’re awarded a sum of money in compensation. The tribunal will usually give the landlord a ‘work order’ to pay in the following seven days.  The exemplary damages outcome is a big stick that the tribunal wields to keep landlords in line over bonds. “Only the most courageous of landlords would not pay it in time of getting a notice of    hearing,” says Williams. If the landlord still doesn’t pay after receiving a work order, he or she will be in contempt of court. “[The seriousness] starts to ramp up quite quickly.”
 
Williams worked with one landlord who found himself in dispute with the property manager who was holding the bond in trust. When the tenants complained to the Tenancy Tribunal, the landlord had to deposit the bond out of his own pocket because the dispute was not the tenants’ problem.
  • For more information, contact the DBH on 0800 TENANCY (0800 836 262)

 

I’m sorry, your policy doesn’t cover that...

 
In last months issue of Investor Gate we drew your attention to the subject of insurance on rental properties and suggested you review your own policies to see what was and, what was not covered.
 
During this last month we have experienced the unpleasant situation where a rogue tenant and her illegal clowder of cats have made it necessary to replace the house-lot of carpet in the property being rented. On making enquiry to the owners insurance company they confirm that they were notified that the house was being rented out, they were charging a higher premium for it being rented out however, they did not have any contents insurance and therefore the carpets were not covered.
 
Even unfurnished properties need contents insurance to cover the replacement cost of carpets, curtains, blinds and light fittings. An expensive lesson has been learnt by the owners of the above property and hopefully, the following report will give a clearer insight into your insurance options.
 
Did you read the Fine Print?
 
Recently, we attended a morning where three different Insurers presented their options for insuring rental properties. It was interesting to hear that under the ‘Loss of Rent’ cover the most common claim was for tenants absconding and, the most common claim under the ‘Contents’ cover was for theft (predominantly, the curtains) and water damage (to contents).
 
All of the Insurers presenting were able to cover;

1.  Malicious Damage - by the tenant, their family or their invitees. Many standard policies only cover Accidental Damage or Malicious Damage caused by the tenant only.

2.  Damage to Chattels (Contents)

3.  Loss of Rent

  • after the tenant vacates the rental property without giving the required notice
  • following eviction of the tenant for non-payment of rent
  • where the rental property is untenantable as a result of malicious damage, vandalism or theft by tenants
  • due to the prevention of access, following accidental loss, including interruption to utilities supply 

 

4.  Legal Liability: Owners of rental properties are still exposed to the threat of legal action if they are prosecuted under the Occupational Safety and Health Act. This occurs when it is determined that the landlord has not employed adequate safety procedures in the maintenance of the property. Apart from the legal defence costs, the financial awards potential to the claimant can be considerable.

Owning a rental property has long been recognized as a sound investment option for people wanting to maximize their financial returns. However, the failure to protect your valuable asset can mean the loss of the all-important income it generates.
 
Choosing to insure can mean the difference between safeguarding this rental income and facing the prospect of being significantly out of pocket.  The minimum premium for any of these policies was $286.35 per annum (based on a minimum weekly rental of $225.00). The most comprehensive cover, with a premium not based on the weekly rent, can provide you with valuable peace of mind for just $320.00 (including GST). The only downside to this policy is that it is not available to private landlords. It can only be obtained through Approved Property Managers, on permanently leased properties, that is NOT holiday rentals.
 
We are able to provide brochures to any property owners / landlords who may wish to consider this style of insurance. In most cases this insurance compliments your Building Insurance - it does not replace it. However, the premiums are tax deductible as an expense and the risks they cover are often excluded from standard building insurance policies which may fail to provide adequate protection for your investment.
 
It is part of our responsibility as your agent to advise you of the risks associated with renting your property and the options available to offer protection for your investment.
 
At the very least, check out what cover you currently have on your property. You do not want to be in the unenviable position that one of our owners found themselves this last month.
 
 

Some actual examples of costs that would have been covered by Landlord Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property Manager’s Gut Instinct Leads to Drug Bust

 
Ray White Property Manager Belinda Sutton discovers over 300 marijuana plants in tenanted property...
 
Have you ever had that feeling before you enter a tenanted property for a routine inspection that it isn’t going to end well? That is exactly what happened to Director of Property of Management, Ray White Turramurra, Belinda Sutton in Sydney.
 
It was gut instinct that lead Belinda to take her Property Manager, Megan Sutton with her to the routine inspection she scheduled after only eight weeks of tenancy. The fact that the tenants had moved into the property and NOT contacted them was what led Belinda to feel that something wasn’t right. “Usually after a tenant moves in to a home in Turramurra, they present us with a list of maintenance items. This tenant did not and was hesitant when I offered to arrange the cleaning of the gutters for them.”
 
Following an extended knock at the front door, Belinda and Megan entered the property with their spare keys. They had disclosed their intention to access the property in their written advice to the tenant, notifying of the scheduled inspection.
 
They saw black plastic covering the windows, all the doors and walls from the bedrooms had been removed, large upright flood lights lit the entire space and unnerving buzzing and beeping sounds filled the house. The women continued down what used to be a hallway until they reached the old family room and behind the plastic they found what looked like about 50 tall marijuana plants. Needless to say they didn’t complete their routine inspection and they left the house immediately.
 
Terrified they had been spotted, they got themselves to the nearest coffee shop and ordered strong lattes and cake, then called the police. What happened next are lessons for every property manager who ever finds themselves in a situation of this kind.
 
The police first required a statement from Belinda and Megan as a part of their process for obtaining a Warrant to enter the property and secondly the police had to understand for what purpose they had entered the property and whether this was for a legal purpose.  Without these key elements, the police would not have been able to act on the supplied information.What happened next? The police accessed the property and found 383 growing marijuana plants. The tenant was arrested, although the information Belinda held for the tenant was incorrect - he had used forged personal identification for the application for tenancy.
 
More lessons - it appears in this instance that the landlord of the property was not insured for the damage. The damage included most of the walls and floors being removed, if not damaged, and curtains and light fittings destroyed. The landlord’s insurance policy is for building and contents but as he had not advised the insurance company that the property was tenanted, the claim may be refused. An outcome has not yet been determined but if this kind of illegal activity can happen in Turramurra, Sydney, then it can happen anywhere.
 

 

 

 

 

 

 

 

 

 

Recent Rentals

DBH = Department of Building and Housing - 1/12/10 - 31/05/11

 
 

Warkworth

Warkworth

Matakana

Algies Bay

Warkworth

3 bedroom + office, 3 bathrooms, double garage

3 bedroom, close to schools, single garage

1 bedroom, detatched cottage, nice gardens

Executive 3 bedroom, 2 bathroom, double garage

4 bedroom, on 1.3ha, large barn, double garage
Our Figure   (per week)  $450  $360  $250  $565  $600
DBH Statistics Median Price  $380  $340  $240  N/A  N/A
 
 

Orewa

Wainui

Orewa

Mangawhai

Mangawhai

3 bedroom, 1 bathroom, single garage

5 bedroom, 2 bathroom, double garage, short term

2 bedroom, 2 bathroom, single garage

3 bedroom Lockwood, separate garage / workshop

4 bedroom older style 2 level bach with views
Our Figure   (per week)  $445  $600  $330  $300   $310 
DBH Statistics Median Price  $450 $600 $340 $281 $310

 
  
WARKWORTH   Auction   WAR21388
Investment/Income Property. Wall-to-wall income from this 6 bedroom, 2 bathroom, low maintenance beauty. Sits smugly on a 1670m2 site. Possibility to subdivide.
 
Currently rented $500.00 p.w.
 
 
 

WARKWORTH   $415,000   WAR20779

Flat walk to all amenities from this spacious 3 bedroom, north facing family home. The basement area offers many options. Sheltered and private. Priced for a quick sale.
 
Currently rented $350.00 p.w.
 
 
 
SNELLS BEACH $299,000 WAR21073
50m2 2 bedroom Bach on 847m2 double section. Double section would also appeal to a builder/developer who is interested in building two dwellings on the site. The view is an absolute treat.
 
Currently rented $210.00 p.w.
 
 
 
Maungaturoto $147,000 WAR21362
Plain Jane. 2 bedrooms with a sun-room or another small bedroom. May look plain but a smart handyman will make short work of what needs to be done here. Priced to Sell.
 
Expected rental return $220.00 p.w.
 
 
  
OREWA      $419,000      ORW20875
Modern 3 bedroom, 2 bathroom apartment. Very well presented with an internally accessed single car garage, private courtyard garden and 2 balconies with views to the ocean.
 
Expected rental return $380-$400 p.w.
 
 
 
OREWA      $529,000      ORW20922
One level B&T, north facing townhouse.  Spacious open plan living flows to a private garden courtyard. 3bedrooms, ensuite, garage with internal access, many extra features to view!
  
Expected rental return $430 p.w.
 
 
 
OREWA      $419,000      ORW20908
Fronting onto park in a very desirable area. Attractive 2bedroom unit, complete with master with semi ensuite, 2 toilets, and a separate laundry. Kitchen and living area opening onto conservatory.
  
Expected rental return $340 p.w.
 
  
HATFIELDS BEACH      $369,000      ORW20853
3 bedrooms, sunny elevated living, fully fenced grounds, double garage & extra off street parking. Exterior repainted approx. 3 years ago along with new carpet so the jobs partially complete.
 
 
Expected rental return $370 p.w.
 
 
 

Disclaimer

In preparing this document we have used our best endeavors to ensure the accuracy of all the information provided. We accept no liability or responsibility for any errors or inaccuracies and recommend that all recipients make their own enquiries to verify any information given.