New Zealanders have a particular affinity for investing in residential property. We see large numbers of our clients retaining ownership of their first home when they are moving on to a second. This is an excellent strategy for getting onto the investment ladder.
Looking to rent out your residential property for the first time can be exciting but also daunting, especially if you’re looking to move and rent out a beloved family home!
We’ve put together our ‘top tips’ you need to consider when looking to rent out your residential property.
Ensure your property meets the current (and any anticipated) regulations:
The key responsibilities of a residential landlord are contained in the Residential Tenancies Act 1986 (eg bond, maintenance etc) including the Healthy Home Standards. The Healthy Home Standards set minimum requirements for:
All private rentals must comply with the insulation requirements by 1 July 2019. From 1 July 2021, all private rentals must comply with the remaining standards within 90 days of any new tenancy. There are different deadlines for other types of rental accommodation including boarding houses.
Other statutes that a landlord needs to be aware of include the Health and Safety at Work Act 2015 and the Building Act 2004.
We would recommend you speak with a person experienced with these matters and perhaps arrange for a property manager to undertake an appraisal of the property before you rent out the property (or if you are buying to rent, before or as a condition of your offer) so you know whether there are any compliance issues and what they may cost to bring up to the relevant standard.
Who should own the property?
Should you own it in your individual name(s), in a company or a trust? This is a question we can help you with in consultation with your accountant as what might be best for you legally, might not be best for you financially and vice versa.
Review your finances:
We would highly recommend that you speak to an accountant as to the potential tax implications/ requirements of renting out the property, especially if you’re considering using it for short-term rentals (i.e. through Airbnb).
If you’re looking at purchasing a property specifically to rent out, speak to a mortgage broker or directly to your bank. The deposit that the bank requires you to have for a rental property is normally higher than one required for buying a property you intend to live in.
Check your ability to rent the property:
If you already own your property and have granted a mortgage to the bank, check your mortgage documents to see if you are entitled to rent out the property – at the least you’re likely to need to notify/obtain the consent of your lender before you rent out the property.
If you own a Unit Title property you’ll need to check the Body Corporate Rules to see if there are any restrictions or requirements in relation to renting out your property. The same goes with checking your lease if you own a cross-lease property.
Know what type of tenancy is right for you:
Ensure you put the tenancy in writing and that it is appropriate for the type of tenancy you are entering into, Periodic or Fixed-Term. The Tenancy Services website (www.tenancy.govt.nz) has a basic tenancy agreement you may wish to use, as well as plenty of useful information for first-time landlords.
You’ll need special insurance called Landlords Insurance if you are renting out your property.
If you’d like more information or are looking to invest in a property, get in touch today by calling us on 04 970 3600 or send us an email to firstname.lastname@example.org.