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“Despite housing prices showing a slight increase over the last three months, residential conveyancing remains steady,” reports property lawyer Jim Eddy.
Overall, Christchurch residential properties were up 0.7% for that three-month period. Banks Peninsula leads the trend at 2.6%, and the southwest residential sector at 1.1%. The average value of all homes across New Zealand increased 7.6% over the last year.
So now would seem as good a time as any to buy with further increases predicted. If you are buying or selling between now and Christmas please take advantage of our special pricing available for agreements entered into during that period. If you register between now and Friday a further 10% discount is available.
COVID insurance cover: will it happen?
In New Zealand, we have ACC to provide cover in case of accidental injuries. We have EQC to provide cover for natural disasters.
Could we see a similar form of insurance arise to cover COVID-19 or other pandemics?
That’s one of the ideas touched on in this recent piece from interest.co.nz. In particular, public-private insurance models might help jump-start travel and tourism globally.
Which is fairly important to our economy. Before COVID-19, tourism was New Zealand’s biggest export industry. For the year ended March 2019, total tourism expenditure was $40.9 billion, of which $17.2 billion came in from international travellers.
Needless to say, that spending has changed dramatically in 2020.
And if you had travel planned and booked this year, you may have run into complications getting relief from your travel insurance. Many companies could rely on specific epidemic or pandemic exclusion clauses, or else one relating to government intervention (of the sorts that prevented travel between most countries in at least some points of this year).
And that’s because things like pandemics aren’t traditionally covered by insurance. As the Insurance Council puts it, policies will usually “exclude events where the potential loss is extreme or can’t be quantified – such as acts of war or pandemics”. Insurance is based on diversifying risk globally. Something like a pandemic affects a lot more of global society than, say, house fires or car thefts.
Not to mention that it’s not just travel affected by COVID-19. Business interruption insurance and other policy types could also require rethinking.
So that’s where a public-private partnership might work—where both governments and private insurers share the risk.
But you’re still looking at an enormous expense, which has to be covered somewhere. And if that requires businesses or private citizens paying for additional insurance types, will it seem worthwhile if it feels like a pandemic like this might be a once-in-a-century event?
There are no easy answers. But in the meantime, if you need legal advice on your existing policies, let us know. In particular, we’ve got a lot of experience navigating thorny insurance issues following the earthquakes. We’re ready to help you with any issues here.
Is buying a home with less than a 10% deposit a risk worth taking?
The usual mortgage deposit on a property is a minimum of 20%. There are exceptions, though. A first-home buyer’s First Home Loan (formerly Welcome Home Loan) allows for a deposit as small as 5%. More significantly, the removal of loan-to-value ratio (LVR) restrictions earlier this year means banks will potentially be able to make more loans to people who have just a 10% deposit available.
Still, there are some risks to that. Banks will generally charge higher mortgage interest rates to buyers with less than a 20% deposit, pushing up their mortgage payments. Plus, because those owners will have less equity in their home, they have less ability to restructure their mortgage if interest rates go up significantly, or if they suffer a major loss of income.
But is that a risk worth taking?
Getting into their own home sooner means they start paying off that mortgage earlier. And it would take half the time to save a 10% deposit as it would to save a 20% deposit, all other things being equal.
We’re not offering financial advice. But we noted with interest a further piece from interest.co.nz, which looked at the position of home owners who purchased their first home ten years ago. It suggests that even those who bought with just a 10% deposit would be in a good place to move to the next rung on the property ladder and buy a better home. This is in particular thanks to capital gains, and a big decline in mortgage interest rates.
Still, those interest rates might not sit there forever. But with 44.3% of first home buyers purchasing with less than a 20% deposit in May this year, it’s a risk that many seem to consider indeed worth taking.
Changes to Residential Tenancies Act now in force
A number of changes introduced to the Residential Tenancies Act this year are now law, which will be relevant to both landlords and tenants. Some are in effect now, with others coming into force in February and August next year. The changes, per Tenancy Services, are below.
Changes now in effect (as of 12 August 2020):
Well, that’s it for our news this month. We look forward to chatting next time.
As always, we’re just an email or phone call away for any questions, help or advice.
Overall, Christchurch residential properties were up 0.7% for that three-month period. Banks Peninsula leads the trend at 2.6%, and the southwest residential sector at 1.1%. The average value of all homes across New Zealand increased 7.6% over the last year.
So now would seem as good a time as any to buy with further increases predicted. If you are buying or selling between now and Christmas please take advantage of our special pricing available for agreements entered into during that period. If you register between now and Friday a further 10% discount is available.
COVID insurance cover: will it happen?
In New Zealand, we have ACC to provide cover in case of accidental injuries. We have EQC to provide cover for natural disasters.
Could we see a similar form of insurance arise to cover COVID-19 or other pandemics?
That’s one of the ideas touched on in this recent piece from interest.co.nz. In particular, public-private insurance models might help jump-start travel and tourism globally.
Which is fairly important to our economy. Before COVID-19, tourism was New Zealand’s biggest export industry. For the year ended March 2019, total tourism expenditure was $40.9 billion, of which $17.2 billion came in from international travellers.
Needless to say, that spending has changed dramatically in 2020.
And if you had travel planned and booked this year, you may have run into complications getting relief from your travel insurance. Many companies could rely on specific epidemic or pandemic exclusion clauses, or else one relating to government intervention (of the sorts that prevented travel between most countries in at least some points of this year).
And that’s because things like pandemics aren’t traditionally covered by insurance. As the Insurance Council puts it, policies will usually “exclude events where the potential loss is extreme or can’t be quantified – such as acts of war or pandemics”. Insurance is based on diversifying risk globally. Something like a pandemic affects a lot more of global society than, say, house fires or car thefts.
Not to mention that it’s not just travel affected by COVID-19. Business interruption insurance and other policy types could also require rethinking.
So that’s where a public-private partnership might work—where both governments and private insurers share the risk.
But you’re still looking at an enormous expense, which has to be covered somewhere. And if that requires businesses or private citizens paying for additional insurance types, will it seem worthwhile if it feels like a pandemic like this might be a once-in-a-century event?
There are no easy answers. But in the meantime, if you need legal advice on your existing policies, let us know. In particular, we’ve got a lot of experience navigating thorny insurance issues following the earthquakes. We’re ready to help you with any issues here.
Is buying a home with less than a 10% deposit a risk worth taking?
The usual mortgage deposit on a property is a minimum of 20%. There are exceptions, though. A first-home buyer’s First Home Loan (formerly Welcome Home Loan) allows for a deposit as small as 5%. More significantly, the removal of loan-to-value ratio (LVR) restrictions earlier this year means banks will potentially be able to make more loans to people who have just a 10% deposit available.
Still, there are some risks to that. Banks will generally charge higher mortgage interest rates to buyers with less than a 20% deposit, pushing up their mortgage payments. Plus, because those owners will have less equity in their home, they have less ability to restructure their mortgage if interest rates go up significantly, or if they suffer a major loss of income.
But is that a risk worth taking?
Getting into their own home sooner means they start paying off that mortgage earlier. And it would take half the time to save a 10% deposit as it would to save a 20% deposit, all other things being equal.
We’re not offering financial advice. But we noted with interest a further piece from interest.co.nz, which looked at the position of home owners who purchased their first home ten years ago. It suggests that even those who bought with just a 10% deposit would be in a good place to move to the next rung on the property ladder and buy a better home. This is in particular thanks to capital gains, and a big decline in mortgage interest rates.
Still, those interest rates might not sit there forever. But with 44.3% of first home buyers purchasing with less than a 20% deposit in May this year, it’s a risk that many seem to consider indeed worth taking.
Changes to Residential Tenancies Act now in force
A number of changes introduced to the Residential Tenancies Act this year are now law, which will be relevant to both landlords and tenants. Some are in effect now, with others coming into force in February and August next year. The changes, per Tenancy Services, are below.
Changes now in effect (as of 12 August 2020):
- Transitional and emergency housing (funded by the government or part of a special needs grants programme) is exempt from the Residential Tenancies Act.
- Rent increases are limited to once every 12 months.
Well, that’s it for our news this month. We look forward to chatting next time.
As always, we’re just an email or phone call away for any questions, help or advice.
Regards,
Clive, Grant and the Team at Canterbury Legal
