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When The Neighbour Knocks

If a neighbour asks you for permission for a new building it’s likely it breaches a rule which may negatively impact your property.

By: Matthew Gilligan

31 January 2023

Q My neighbour is planning on building a new garage on their property and has approached me with the plans and asked me to sign permission. Do I need to give permission if I believe it could affect my property?

A If your neighbour has approached you for permission for a new building, this is likely because the project breaches a rule in the district plan which may have negative effects on your property. This is called written approval. For example, the new building may be too high, or it may be located too close to the boundary fence. In these situations it is likely the project will require a resource consent under the Resource Management Act 1991 to breach rules in the district plan (this is different to a building consent).

You are not required to give written approval to your neighbour’s project, and you do not need to give reasons for refusing to give approval. If you do give written approval then the council cannot consider any negative effects the project may have on you as a neighbour when deciding whether to grant or notify resource consent. For some activities, your written approval may mean that resource consent will no longer be required.

Accordingly, before giving your approval it is important you carefully review the application and plans provided by your neighbour and decide whether you are comfortable with the project. Ask your neighbour to explain the proposal or for more information if needed. You can even suggest amendments to your neighbour which would make you more comfortable with the project. If you are not satisfied, then remember you are not required to give your approval. - Shane Campbell

Q Now that trust rules have changed should I still use them to structure my property portfolio?

A When you say “trust rules have changed” we presume you are referring to the new “rollover relief” rules, which allow for property to be transferred in certain circumstances without the negative tax consequences that would usually arise. As to whether you should go ahead and restructure your current property portfolio, this is a question that can only be answered with the benefit of knowing the details of your situation. What I can say is that the rollover relief rules provide much more scope for restructuring than was available prior to their enactment. That said, this does not automatically mean that a restructure can, or should, occur.

The rollover relief rules do not apply to all restructure transactions. There are also other tax issues that can arise that are not covered by rollover relief. For example, there could be depreciation recovery or GST consequences to consider. You also need to ensure your financing will remain in place post restructure. In summary, you need detailed advice based on your specifics from an accountant who is across the latest tax changes, such as GRA. - Matthew Gilligan

You are not required to approve a neighbour’s plans to develop their property.

Q I have a tenancy agreement that was signed before February 11 last year under the old tenancy rules. Since then the tenancy has been reassigned twice. The previous tenants reassigned it to two young professionals. It had been a fixed-term tenancy. I would like to know: (a) Can I ask the tenants whether they are going to continue the tenancy after the fixed term ends as I do not wish to roll over the tenancy so it becomes periodic? I am only keen on a fixed-term tenancy ending in February 2024. Demand is higher for rentals in February and there is a better choice of tenants. (b) The tenants are paying $510 a week for a two-year-old, two-bedroom townhouse in Hamilton. The rent has been the same for two years. Is it reasonable to increase the rent by $15 a week? (c) if I have a new tenancy agreement under the new rules can I still have a fixed-term tenancy that expires on February 9, 2024 if the existing tenants want to stay?

A If the tenants are still in place when the tenancy ends then the fixed term ends and it reverts to a periodic tenancy the following day. Communication is the key when negotiating tenancy agreements with tenants. You should contact your tenants and ask them what their intentions are in terms of staying in the property. It could be they intend to leave and the sooner you know this the better so you can get the property rented. If the tenants do want to stay on, then you can discuss with them another fixed-term tenancy. Point out the advantages of a fixed-term tenancy to them in terms of security of tenure.

Once you have found out their intentions and if they do wish to stay then talk to them about the proposed rent increase and explain your reasons for the increase. Make sure the increase in rent still keeps it at “market value” and if you have information you can show the tenants to confirm this is the case it will help you justify
your increase. - Ryan Weir

Q I’m currently on a fixed mortgage interest rate of 3.09 per cent for the next three months. I’m worried that interest rates are going to keep going up. Should I break my current rate and fix at 6.5 per cent now before rates keep going up?

A Most banks will let you fix your rates 60 days before expiry, so you may want to wait and lock in shortly so you get that last couple of months of cheap interest. Be careful though as not all banks will allow this long as rates are definitely still nudging up. - Kris Pedersen

Q Is a chattel valuation really worth it for a new build? I am thinking I’ll just use what the developer gave me.

A If the developer can accurately identify the cost of the depreciable fit-out items that is perfectly acceptable. If this is not possible, the service provided by a chattel valuer to identify and apportion the value of the depreciable chattels is often worthwhile. - Mark Withers

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