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<title>Social Housing (Audio version of the book)⎜Ep. 28 | Opes Partners</title>

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Social Housing (Audio version of the book)⎜Ep. 28

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In this episode, you’ll learn why (long-time labelled as profiteering) private property investors are being offered tax incentives from the government to help solve our national social housing problem.

<p>In this episode, you’ll learn why (long-time labelled as profiteering) private property investors are being offered tax incentives from the government to help solve our national social housing problem.</p>

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Hi there, I'm laying in this is property explained, these are my words and now I'm going to read them to you episode 28, social housing. What is it? And what are the opportunities for property investors? There is an endless list of kiwi families waiting for social and public housing. So and then unusual move the government has reached out to private property, investors to help solve this National crisis. They did this by offering a tax incentive to those who decided to Help the government, solve the social housing problem, but as a tax incentive worth it and is it the right decision for your portfolio in this article? You're going to learn what social housing is, where the social houses are and the new interest deductibility laws and the tax incentive for property. Investors who choose to rent to a social housing provider. So, let's get started. What is social housing? Social housing is the collective term for any and all subsidized, rental provided by the government. Now, that doesn't mean that the Not necessarily owns all the houses. Yes, they do own some, but they also rent properties and then release them to social housing. Tenants clanger order is the new housing, New Zealand and it manages most of these rental properties. However, some social housing is also run by community housing, provider organizations, such as churches, kiwi and housing, trusts, but there are no special favors or exemptions for anyone. All social housing providers have to follow the residential, tenancies act just like the landlord's in the private rental market. Diet, for instance, community housing providers have to register with the regulatory Authority and meet the required standards. Kainga audit is also pumping a ton of investment into social housing, Builds an account for about 10% of the rental market. It's more than likely that you already live on the same street as a kayaking order property and you don't know it. As I've said earlier kayaking or Auto accounts for about 10% of the rental market and community, housing providers, provide even more. And the article that you're listening to, there's a map that shows where social housing is most prevalent. The map shows the number of social houses rented by a king or order as a percentage of all the houses within that area. So for instance, in Auckland, there are twenty nine thousand nine hundred and twenty-three rentals managed by caiiing order. There are four hundred ninety, eight thousand, seven hundred and eighty-three occupied dwellings and total. So six percent of properties in Auckland are managed by caiiing order. So in other words, for every 16 occupied houses that you drive past an Auckland, one of them is going to be managed by buying order. These social houses are also prevalent imported or city in the Wellington region. The are caiiing order houses managed to make up 11 .02 percent of homes that have someone living in them. So that means for every nine houses, you drive past one will be kayaking order managed, it's really easy to link low. Socioeconomic areas to these sorts of builds but the reality is that they're everywhere. There's no discrimination here. So what are the rent charges for social housing? As common for Vistas to worry that if they rent to social housing that they'll get less, rent, this isn't true property investors who rent their houses as social housing still received the same rent, that's in line with the market for that area. And this is because kayaking order pays you the rent. This is because the rent that is actually paid a split between the tenant and the government. So, the amount, the tenant actually paste as based on their household income. This is called the income-related rent and is based on about 25 percent of their net income for those. Those who earn a household income below the cutoff rate, the government, then pays a difference between what the tenant pays and the normal Market rent. There are some instances where the government will pay. The entire rental amount such as if the tenant is receiving sole parent support. If they're getting New Zealand, superannuation or a veteran's pension, so property investors who rent their homes as social housing don't necessarily lose out on rent. But of course, there are some other risks which I'll get to in a minute. So what are the tax incentives to rent through public housing? The Interest deductibility laws state that if a property investor rents her house through public housing, they'll have access to a special tax incentive. And this news has turned heads and property circles, and this is because the government is changing how property investors tax is calculated before. The changes came in, calculating your investment properties taxable profit would include your interest costs as a taxable expense. This is no longer the case interest costs are now left out of the equation. So your property He looks more profitable, but any investor who rents to public housing can still calculate their tax under the old rules so they will pay significantly less tax. For example, an investor with a seven hundred thousand dollar mortgage could save up to seven Grand a year of renting through the public housing system. This is why many investors are now considering a move to rent their properties through. Clang order or through a registered community. Housing provider, however, while investors are desperate to find a way to get around this Hefty new tax. Might pause at the thought of renting, their investment property to social housing because stereotypes are bound at the thought. These new interest deductibility laws are complicated. And if you want to find out more, my full article interest adaptability, as found on the Opus website. So with that in mind, let's break down what exactly public housing is and who you will be renting to. Because it's important to know that, not all social housing is provided by caiiing order. And while you might think that they're all the same thing, they're actually different. UND public housing. Quote-unquote can be broken into two groups, there's State housing, which is organized, through coding order. But then there's community housing, which is provided by the registered community. Housing providers sure, caiiing order may be better known, but property investors can qualify for the tax exemption by using either organization and the names of the community. Housing providers are ones, you already know. Well, they're the Salvation Army, the Auckland City Mission and other lesser known ones like link people. But it's not just texting centers that are causing property investors to consider switching to public housing. There are a few more Pros as well, which I'll go through. Now, community housing providers, don't charge for property management fees. This means you've got an additional eight to twelve percent savings on the rent percentage that you would otherwise pay to a property management company. Not only that but community housing providers will often pay the property investors rent, even if the house is empty for context, investors usually budget for 26 percent of the year with their property is going to be empty and therefore receiving no rent. This is called vacancy, you don't have to worry about this. In this instance these two factors combined are tipping the scales, in favor of social housing especially if an Investor's property isn't covered under the new build exemption. And again that's going back to the interest deductibility laws and what's exempt and what's not exempt. But of course, there are drawbacks to renting your property, through a social housing provider as a property investor, you'll more than likely And to be aware of the drawbacks associated with renting through a community housing provider for starters. You don't have a choice over who your attendant is compared to when you're renting privately. Secondly, some tenants are naturally going to have a range of social issues or problems in this could negatively impact your property if the tenants are disrespectful or aggressive. This fact alone might be enough to scare some investors off for others. Especially investors were smaller portfolios. The financial incentives may be enough to make the switch But while social housing providers pay you the market rent today, you do have to be wary of signing for a long-term commitment, for instance, in the past, some investors have signed 10-year contracts with housing, New Zealand, and while the rent was at Market level at the start of those contracts, sometimes, the ability to increase the rent was held back by the contract. In practice this meant that rents in the broader Market. Went up much more quickly than the public housing contract allowed. So while investors might not have started earning less rent. They could have they gradually earned less over time, but again, it depends on the contract that you sign. If it's a shorter term contract and not locked in, then sure, you might be okay. But if it's longer term, then you need to make sure you go through your contract with a fine-tooth comb. While we understand that community housing providers are crying out for properties, it's not as straightforward as here. Use this house of mine community, housing providers won't just take any property that an investor wants to offer them. It's certainly not a free-for-all, the houses have to make Sense for the people who are in need of property right now. In this can be influenced by which city the property is in, how many bedrooms it has or the type of access, for example, of the 26 something, odd thousand people currently on the social housing. Register 48.8% require a one-bedroom property 31.3%, require a two-bedroom property and just 13.8% need a three bedroom property. Similarly, the demand for social housing changes, depending on the location. So there are currently five social houses needed per 1,000 people in Auckland. But in South Canterbury, there are only nine houses needed in total. That's 1.1 houses. Required per 1000 people in the article that you're listening to. There's a map breaking down the demand for new social housing across the country. What this means is, if you have a one or two bedroom property located in Auckland, then you have a better chance of renting through a community housing provider compared with, if you had a Ed room property in South Canterbury. We are no, five-bedroom properties are required again. There's not a lot of demand for extra social housing at the bottom of the south island. So as a landlord is going to be harder to rent your property out as social housing, if you're in Southland. Whereas if that same property was on the east coast of the North Island, you would have a better shot and that's because there's lots of demand for new social housing. There though is also important to note that even though there is lots of demand for one bedroom properties, not everyone bedroom property. Will be appropriate for every social housing tenant. Some tenants have specific needs for instance, wheelchair access. This might make it harder to rent a property with stairs. Then one, that doesn't, these are things that you just need to bear in mind. So if you're a property, investor, who is considering renting through social housing, you can find the full list of properties required. Through the social housing. Register, use this data to see whether the property you have is needed in the community where it's based. You can also find a Ed community housing provider in your area through the community housing regulatory authorities. Register both of these links are in the article that you're listening to and get in touch to see what sort of properties are tenants need right now. So my final point do we really need landlords and why can't the government just provide rentals? One? Good thing about this change other than the fact that investors have an option to decrease, the amount of tax that they pay is that it recognizes property. Investors can be part of the solution. The government has struggled Build and find all the properties needed to house. Our country's most vulnerable. So by incentivizing and calling investors to be a part of the solution. There are multiple benefits as it solves. A social problem by using private Capital. The government has struggled to build and find all of the properties needed to house. Our country's most vulnerable. So incentivizing and calling investors to be part of the solution has multiple benefits as it solves a social problem by using private capital. Good luck.

Social Housing (Audio version of the book)⎜Ep. 28

About this episode

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Social Housing (Audio version of the book)⎜Ep. 28

About this episode

Read transcript

Furnished vs. Unfurnished: How much more money can investors get for a furnished property? (Audio version of the article)⎥Ep. 108

Renting my property over Christmas – what’s the game plan? (Audio version of the article)⎥Ep. 106

How long do i need to own my property to make money? (Audio version of the article)⎥Ep. 107

How much does property management cost? Top 5 hidden costs revealed (Audio version of the article)⎥Ep.105