2018: The Year of the Law

Posted by Jack Vale on January 16, 2018 10:00:00 AM NZDT
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The wonderful thing about new years is that we get one every 12 months. No matter whether you had a challenging year or you finished 2017 with a bang, 2018 is now upon us offering plenty of opportunity in the property investment space.

2017 saw the rental market in Wellington go from strength to strength and with a shortage of rental stock predicted for the new year, there aren’t many signs of this slowing down despite the change in government.

But to really capitalise on the growth 2018 could provide, it’s essential to know what you can expect along the way.


Unless you have a crystal ball, you can never be sure about what’s around the corner. 🔮



However, we reckon we’ve read the signs, looked to the stars and can map out three of the most important things that landlords can expect to deal with in 2018.

If you’re looking to start a business in 2018, it might not be a bad idea to explore heat pumps and a residential warrant of fitness business. The healthy homes guarantee bill is set to be introduced to law and will have a huge impact on landlords and property managers.

According to the parliament website, the purpose of the bill “is to amend the Residential Tenancies Act 1986 to provide that the Ministry of Business, Innovation and Employment must set minimum standards, bringing on landlords, for the heating and insulation for every rental home in New Zealand."


Essentially, to break this down into English, rental properties must be insulated and have a source of heating. 🔥🔥




The bill also spreads wider and may include a warrant of fitness scheme for rental properties.

So what does this mean for you as a landlord? You will need to ensure that tenants can maintain the property to a yet to be decided temperature level. This could come at some expense to landlords and we may see that landlords with larger portfolios and less cash flow could begin to sell their homes.

This would present the opportunity to expand your portfolio quickly and effectively if you are in the position to do so, but we also expect that the rents may increase as landlords seek to recover the cost of any additions they need to make to the property.


Expected to be bought into law quickly in 2018, it is understood that landlords would have a grace period until July 1st 2019 to comply, although this is yet to be confirmed. 🙏


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Source: Stuff.co.nz


While we may see more property coming on the market as a result of the healthy homes guarantee bill with landlords struggling to finance the necessary changes, property investors may be easier able to achieve finance now for new acquisitions.


The reserve bank are set to ease LVR restrictions as of January 1st 2018 allowing 5 percent of each bank’s new mortgage lending to residential property investors at LVRs of more than 65 percent, an ease from the current 60 percent rule. 💰💰


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Source: Stuff.co.nz

This could better see landlords being approved for finance on purchasing new property and may allow you to achieve quicker expansion throughout your portfolio. Expansion opportunities should be carefully considered. Adding the right property to your portfolio is much more important than adding multiple of the wrong property just for the sake of expansion.

Run the numbers, calculate the costs and above all make sure you seek expert advice on rental prices. It is after all a business decision that you’re making!


One of the major talking points of 2017 has been methamphetamine contamination in rental property. 💀




Landlords can expect more regulation around this in 2018, but more rigorous processes must be introduced by discerning property investors to better protect their asset from contamination and what to do in the event of contamination.

There have been rumblings that methamphetamine cover may be pulled by insurers, but all advice that we have received from the professionals in this space suggest that products will remain the same but may have more stringent wording around the policies. That is to say, prudent landlord behaviour will be imperative to your policy cover.


Testing before and potentially even during tenancies may be necessary. 🔬


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Source: tvnz.co.nz


There may even be more legislation around this, but one thing that is for sure is that there will be plenty of activity around this space in 2018.

So 2018 looks set to be an exciting year for property investors. Plenty of new opportunities will present themselves, new hoops will be there to jump through and the landscape of property investment could change thanks to legislative changes.

One thing that can be for sure though is that 2018 will be a good a year as any to invest in property in New Zealand and specifically Wellington.


To find out more about how you can set yourself up for a bumper 2018, give our Business Development Manager Jack a call on 04 979 6363.




Topics: insulation, heating, meth testing, rental finance