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October - In the News and other interesting stuff!

Posted 23/10/2019

In this blog post, we cover the most interesting rental articles in the last month, and look at some important changes that affect rental properties.

In the news...


There has been lots happening in the news recently. Here are some interesting articles that relate to rental properties that you may have missed.

Here is a great article about how not to run a rental property. There is no written agreement in place, the landlord tries to move in, and then changes the locks to end the tenancy.

A very important change in the law - the Residential Tenancy Act. This article on Stuff goes through the major changes. The biggest change is the way damages caused by a tenant are treated and making the tenant (partially) liable. The full write-up is on the Tenancy Services website here.

In New Plymouth, the council are proposing new rules with a 90 day cap on using residential houses for short-term stay accomodation (such as Airbnb). These are similar rules that have been applied in Auckland. The NPDC are asking for public feedback.

On the Oneroof website, there is a good article talking about the things to consider to maximise your returns from a renovation.

And this is the latest development from Fletcher Building to help cut build times from 22 weeks down to 6 weeks (by having a massive factory produce much of the building).

 

Ring-fencing of losses on the horizon


If you haven't kept up to date of this change - there is a change from the 2020 tax year that for rental properties you will not be able to off-set any losses generated from your rental property against your other income that you earn.

Instead, any excess deductions will be available when the rental property does make a profit in the future. This will impact on a lot of rental properties as many do make a loss each year. Instead of being able to get an instant tax refund, you will have to wait until the rental property is profitable to be able to utilise these extra deductions.

For quick summary, see the Inland Revenue's website here.

 

Mate's Rates


Are you familiar with the phrase “Mate’s Rates”?

“Mate’s Rates” is where you get a special discount because you know the right person. This might be because you are part of their family, a friend, or a close colleague. “Mate’s Rates” is a special price.

What about the price that everyone else has to pay? That is the normal price. However, there is another word for it – Market Value. The market value is the normal price that other people would pay for a similar item.

Sometimes there are Mate’s Rates deals when it comes to rental properties. You may own a rental property and have a family member move into it. They can’t afford to pay full market rent at the moment, so you have given them a big discount on their weekly rent.

There are some tax issues when you charge rent for a rental property at “Mate’s Rates”. The best solution to implement depends on whether the rental property making a loss or making a profit.

We talk more about this topic, along with the solutions in the Rental Coach course - this is in all of the versions we have produced (along with a lot more!).