auckland apartments Archives | Apartment Specialists

Tag: auckland apartments

i worry about tax

There are commonly 3 taxes which can be charged when property is bought or sold.

These are:

  • Goods & Services Tax (GST)
  • Capital Gains Tax (CGT)
  • Stamp Duty

There is no Stamp Duty in NZ (but it is charged in Australia).

CGT only applies if you bought after November 2015 and sell within 2 years.

GST applies when an apartment is on a commercial lease.

Summary:

When selling your apartment, it is important to know what taxes you may or may not have to pay as this effects the outcome.

There are three main taxes involved when selling your property/apartment in Australasia but not all or any will apply to you necessarily.

New Zealand is a great place for property as the taxes charged are lower than any other first world country.

There is no Stamp Duty which is a tax charged on purchasing a property in Australia or the UK.

Capital Gains Tax only applies to you if you bought after November 2015 and sell within 2 years.

However, the one tax to look out for which many owners forget or are unaware of is GST.

Goods & Services Tax or more commonly known as GST applies to you if the apartment is bought with the intention to be used for what is called a taxable supply.

I.e. for a commercial capacity.

For example, a guaranteed rental, commercial lease or an apartment in a hotel lease.

The important thing here is if your apartment was intended to be used as a taxable supply make sure you talk to your accountant, as there is a good chance that when your sell your apartment a 15% tax will be applied or passed onto the next purchaser both effectively reducing what you are left with.

Summary:

As an owner you have to find an agent that best suits you and your needs when selling your apartment.

Finding an agent and building a relationship and setting expectations that both parties are happy with is the first and most important aspect of selling your apartment.

Once you have found an agency the rest is fairly simple. You will need to sign a listing agreement and as this is a legally binding document we suggest you get a lawyer to look over this for you. The difference with Apartment Specialists is that we don’t lock you in. You are in control.

The agent will advise you with all the details of the campaign, marketing, the current market and so on.

The final step is making sure you are kept up to date – setting these expectations and how much involvement you would like is up to you and we tailor these to suit you as an individual.

What a Sole Agency Agreement can mean for you.

What happens with you sign a sole agency agreement with an agency? Here are 3 examples from owners that we worked with who wanted to sell their apartment. Unfortunately the agencies with whom they signed just didn’t deliver at all or in a timely manner and this is due to the sole agency agreement in their contract.

Summary:

Signing and selling my apartment with a sole agency agreement and what that means for me. This is important to understand as a Sole Agency agreement is legally binding. At Apartment Specialists we don’t lock you in.

It is important to understand and know your rights as an owner when selling your apartment and what it means when signing a Sole Agency Agreement.

This is because it is a legally binding document and sometimes owners don’t realise this and what implications this may have.

The most common clause in an agreement is signing with an agency and being locked into 90 days with the agency. This means if you are not happy or you feel the agent is not working for you, you can’t change until that time period is up.

We trust in that if the service is good why would you want to leave.

The choice should be yours.

In any other industry this would not be accepted, so why real estate?

How is the value of your apartment calculated? Oftentimes real estate agents will look at the sales statistics for the apartments in your building and base the current value of your apartment off these previous numbers. But how can sales in your building alone be an accurate gauge on price?

SUMMARY:

The value of your apartment is usually calculated by a number of factors including recent sale prices, sales in the buildings and the buildings in similar areas.

Firstly, we look at apartments that are the same, these are usually in the same building. Most agents stop there; we go further and look at other buildings that are similar to help us gauge the real market value of your property.

This is where our expertise are superior, we have the knowledge of all the buildings in Auckland and understand our market well.

Calculating size, carparks, level and so on are all important factors to consider when valuing a property as well as record prices in the building and recent sales in both your building and other that are alike.

We can market your apartment without even entering the building as we have floor plans of all buildings in Auckland and know these buildings inside and out.

SUMMARY:

Planning on how long this process will take is an important aspect to consider when selling your property. We can’t say exactly but we can estimate due to averages that a freehold property takes around 30 days to sell including the campaign and then another 3 weeks to settle from there.

Leasehold properties are different, and typically take double the time to sell (around 60 days) but the same time for settlement, 3 weeks.

Bearing in mind that if your property is tenanted (Periodic) in both situations you are legally obligated to give them 42 days notice in writing if a purchaser prefers vacant possession.

?find apartment actually worth

What is the difference being a specialist for you, an apartment owner looking to sell? With thousands of apartments in the Auckland CBD and surrounding suburbs and at least 100-150 apartments selling every month, you need the right information so you can make the best decisions for you.

Apartment specialists looks at the value of apartments, not just in your building, but of those in the surrounding buildings as well. The apartment market moves all the time and we make sure we’re aware of it when valuing your apartment.

SUMMARY:

There are over 26,500 apartments in the Auckland CBD and fringes and around 400 buildings which will become up to 450 in the coming years. Each month there are 100 to 150 sales of apartments.

We know this by understanding our market well. This is done by constantly keeping up to date and being in the know. It is not just about being an agent but about being a specialist in the market.

We look at apartments that are the same, these are usually in the same building and look at other buildings that are similar to help us gauge the real market value of your property. Calculating size, carparks, level and so on are all important factors to consider when valuing a property as well as record prices in the building and recent sales in both your building and other that are alike.

By being well informed, we can help you make the best decision that works for you and selling your property.

If you’re looking to sell your apartment in Auckland, although there’s no real ‘right’ time there is definitely a period you want to avoid which. we recommend the only time you avoid is December through to early January. If you sell during this time, it can cost you anywhere from $20,000-$50,000.

SUMMARY:

Selling at the wrong time can end up costing you more than you may have anticipated. However, apartments are very different to houses and most of the year is a good time.

However, the only time to avoid would be the December, early January period – the holiday period, this is due to a lot of events happening in people’s lives, end of deadlines, holidays, family commitments and so on.

Summary:

Only buildings built before 1976 are required to have an earthquake rating. If you do find a building that was built prior to this date it is because the council have simply not been able to conduct these rating due to the number of buildings in Auckland but they will be done.

The reason is the council is only identifying or doing assessments on buildings that are built before 1976. The reason for this is because in 1976, the code changed. What changed was a loading element, which meant it had to pass certain regulations, which means everything built after 1976 is a lot stronger. Often times, it’s so it can handle earthquakes. Logically, they’re only assessing buildings from 1976 or before, or earlier than 1976.

There is a chance that earthquake ratings can change however this usually works in your favour and the buildings come out as stronger. However in my opinion it is very unlikely that the IEP (earthquake rating) will be changed.

TRANSCRIPTION:

Good day, Andrew Murray here from the Apartment Specialists, talking about earthquake ratings and why all apartment buildings don’t have earthquake ratings. I often get asked the question when I’m showing a person through an apartment.

It may be built in the 80s and what’s the IEP rating or earthquake rating? I said, “It doesn’t have one and the people are going, “Well why not? The one that I saw down the road’s got one, and an older one has one. I want to make sure this is not earthquake-prone.” So, I thought I’d do a podcast on it.

The reason is the council is only identifying or doing assessments on buildings that are built before 1976. The reason for this is because in 1976, the code changed. What changed was a loading element, which meant it had to pass certain regulations, which means everything built after 1976 is a lot stronger. Often times, it’s so it can handle earthquakes. Logically, they’re only assessing buildings from 1976 or before, or earlier than 1976.

I’ve also come across some heritage buildings or buildings that are older than 1976 that don’t have an earthquake rating. It has always baffled me and the reason for that is because they only started doing these IEP ratings, earthquake ratings in 2010 have until 2015 to have them all done. They just haven’t had them all done yet, and there’s no reason other than that. You’ve got to think of how many buildings are in Auckland, and how many they’ve got to go and do these assessments for.

Another thing I get asked is, “Okay, is the earthquake rating going to change?” I addressed that in another podcast. In my opinion, it’s a NO! But it doesn’t mean the IEP rating that the building has is set in stone, because that can be changed. If you do a more detailed report, and that often leads to a building being stronger. Anyway, if you search in my podcasts you’ll find more about that particular one on how to change your IEP rating.

Andrew Murray, Apartment Specialists. Hope that this has been helpful.

Cheers, bye.

Summary:

The benefits of having an apartment in hotel lease are:

  1. There is less wear and tear as the people only stay for short periods of time and generally are corporates
  2. You don’t have to pay for the damage should any occur, this is the hotels costs
  3. Maintenance like painting is less as the apartment is continually being cleaned
  4. You have a hands off role and don’t need to worry about having your place vacant

As a long term investment you can make this way of purchasing work in your favour.

TRANSCRIPTION:

Good day. My name’s Andrew Murray from The Apartment Specialists and today I’m talking about the benefits of having  Auckland apartments in a hotel lease.

Now, there are five main benefits. The first thing is less wear and tear. Because you’ve got hotel guests or short term people staying in your apartment complex, that means you don’t have your general tenants, you don’t have your risks of having parties and all that kind of thing. You’re generally going to be having corporate tenants in there or ones staying for a very short period of time, so there’s less wear and tear.

Another one is damage. Now, you don’t have to pay for any damage, you don’t get caught out with tenants because under the hotel lease or the lease, they all cover any damage to the unit so the only thing you’re going to have pay for is if in a couple of years, it needs new carpet because of that general wear and tear, which is less anyway.

Thirdly is maintenance of the unit. Now, if you notice if you don’t clean a unit for a long period of time, you’re more likely to get things like flies which means you’re more likely to have to paint the unit or obviously more likely to get mold which destroys the paint and the furniture. Well, having it in a hotel lease means it’s constantly cleaned and maintained to the standard of the hotel so that also contributes to the condition of your apartment.

Now, I think the biggest one is the hands-off, as in you don’t have to do anything. You don’t have to deal with a property manager. You don’t have to worry about vacancies because let’s face it, there are times when tenants move out and over that Christmas period, it can be quite stressful because it’s hard to find tenants when everybody’s on holiday. So I think the biggest bonus is really the hands-off investment and a long term investment where your income, okay, it is a focus but maximising it isn’t so much; it’s more stress-free and that’s why it suits a lot of overseas owners.

That’s your benefits generally with buying Auckland apartments in hotel leases. Now, what you’ll find is generally, though, as you’ll see in my next podcasts, the downsides of being in a hotel lease. It’s something you really want to be aware of before you a, purchase or b, continue having your apartment in that lease.

Thank you, cheers.

Summary:

Owners are often under the assumption when selling, that the only costs involved are marketing and the agents commission however, there are hidden costs that most are not aware of.

You need to be aware of a pre-contractual disclosure coast – sometimes a Body Corporate wont charge you for this and others can charge upwards to $350. This is mandatory to get and the agent cannot sell an apartment to you without one. If requested through us at Apartment Specialists we can potentially save you that fee.

While requesting the Body Corporate minutes might only be small fee of around $25, be aware there is a fee for these.

Lawyers fees need to be taken into account too, these can be anywhere from around $1000 up to around $1400.

Today’s podcast shares information about hidden charges that Auckland Apartment sellers are not aware of. Find out what surprise costs can disrupt the process of selling your apartment quickly, and frustrate the heck out of you.

You need to budget for a potential loss of income as a seller if your tenant vacates the property prior to the settlement date.

Be aware of the 15% GST you will be charged on top of your commission costs. This is important to factor in so as not to be surprised or disappointed.

TRANSCRIPTION:

Good day, my name is Andrew Murray from the Apartment Specialists. Today, I’m talking about hidden costs in selling Auckland apartments that you need to be aware of.

You see when the owner comes to sell an apartment, they are given the cost i.e. commission and marketing. That’s pretty much it. There are actually quite a few other costs involved and that can be really, really frustrating for an owner when they try to budget, figure out what they need to sell the apartment for and all those kinds of things. Nobody wants surprises.

So we have come up with basically five topics. One being pre-contractual disclosure or 418. Number two, being extra information on the apartment or complex. Three, lawyers fees. Four, being around rent income and missed rent income. And five, being GST and tax components which often aren’t included or aren’t thought about until after the fact.

Okay, I just thought I would go through things pretty quickly. Now, number one, pre-contractual disclosure. This is something that, as an agent, we cannot sell your apartment without. This is something that’s only for either titles or apartments, which when you sell your apartment, it’s basically saying “Have there been any issues? Have there been any claims maintenance?”, that kind of thing about your apartment. This has been made compulsory since the Act came in in May 2010 – The New Zealand Titles Act.

The reason why it’s compulsory is because too many purchasers were purchasing apartments without being aware of what they were purchasing. So you can understand it’s very important. But it comes with a cost. This document is charged to you by the body corporate, and the fees range from – some don’t charge anything and some up to about $350. Now, if you went with a specialist, they can actually create a 418 for you and give you all that information. And you can contact your body corporate but not actually have to pay that fee. But most agents won’t do that. However, just ask us and we can help you with that. There’s still a little work on your part but hey, you are saving $300.

Again, number two, extra information.  Now, a lot of real estate agents who maybe don’t specialise will need each information and will need body corporate minutes. Now, you may have a copy of them.  You are often going to be charged for extra copies by the body corporate – $25 here and there, three of them for $75 right there.  So that’s often something the owners are not aware of. So you’ve got to include that in your budget.

Number three, lawyers fees. Be aware of conveyancing. It’s what it is called when you sell your apartment. And re title, basically, it is being charged over to the purchaser, and that is around $1,000 including GST.  Now, if you’ve got a mortgage on your property when you sell it, there’s going to be an added component to lessen that mortgage which adds around about $300.  So I’d probably budget around $1,300 for your conveyancing costs.  So that’s something that a lot of owners forget about. It’s not something that I like to charge, but that is something that a lot of owners don’t take into account when they are going to sell their apartment.

Number four, missed renter income. Often, a purchaser will want it to be vacant. This vacancy will happen, maybe a week, two weeks, three weeks before it actually settles. That’s income that you were getting, and then all of sudden, you weren’t. You may not have budgeted for that. Be aware that you may need to budget for a loss of rental income when you’re selling your apartment, maybe for a couple of weeks. Generally, there’s a change over.  Often, it can be made so it doesn’t occur. But it does happen, especially with people who don’t specialise in apartments.

Now number five, it’s not calculating the GST component. Now, obviously you have commission in selling your apartment. That’s what we do, that’s how we get our money, and how we get paid. But the commission amount is not just the commission amount. You’ve got GST. A GST component of 15% in New Zealand and then it gets added on to that commission amount. For example, let us say the commission is $11,500. It’s approximately going to be just over $14,000. It’s what you’ll be charged. So, be aware of that GST component, and put that into the sum when calculating what the costs are when you’re going to sell your apartment.

I hope that helps. Just to round it up again, make sure that you’re aware that a pre-contract for disclosure is going to be needed and you’ll get charged that around $350. Number two, extra promotion on your apartment, or complex, can range up to $100 if you’re dealing with an agent who doesn’t specialise in apartments. Number three, lawyers fees, about up to $1300 if you’ve got a mortgage, $1000 without. Number four, rental income and that change over, maybe one or two weeks. Number five, not calculating GST component on a commission when you’ve signed your property.

I hope that helps you get a full picture and gives you information, or allows you to form the information you need to figure out what’s best for you moving forward.

Thank you and good day. Cheers!