Property Quarterly (September 2012)

?

?

?

?

??

?

The S outhern Initiative

WaitakereRanges

HunuaRanges

HunuaRanges

?

?

?

?

?

?

?

?

?

HaurakiGulf

KaiparaHarbour

ManukauHarbour

WaitematāHarbour

TasmanSea

HaurakiGulf

Newmarket

Papakura

Manukau

Westgate /MasseyNorth

Botany

Takapuna

SylviaPark

New Lynn

Henderson

Albany

Pukekohe

Warkworth

Oneroa

Riverhead

Beachlands/ PineHarbour

SnellsBeach

Wellsford

Helensville

Waiuku

Kumeū /Huapai

City Centre& Fringe

Mixed ruralproduction



Publicopenspace

Public open space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralisland

Ruralproduction

Ruralproduction

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

0 5 10 Km

PublicOpen-Space

Rural -Island

GreatBarrierIsland

LittleBarrierIsland

´

This map should be read in conjunctionwith the relevant text in the

Auckland Plan development strategyand supporting chapters.

?

Last updated: 18 June 2012 9:30am

=< Port

o International Airport

D.1 DEVELOPMENT STRATEGY MAP

Urban development

Two big initiatives:

(AUCKLAND WIDE)

Most change

Significant change

Moderate change

Some change

Least change

Metropolitan centre

H Satellite town

kj Rural and coastal town

City Centre & Fringe / The Southern Initiative

Major business areas

Future urban business areas (pipeline)

Future urban residential areas (operative)

Future urban residential areas (pipeline)

Greenfield areas for investigation

_̂ Area subject to the Eastern Access Agreement including Pūkaki Marae, AC and AIAL.

0 5 10 Km

!

Bush livingCountry living

Major public open space

Defence land

Baseline 2010 Metropolitan Urban LimitRapid Transit Network (RTN)Proposed rail network

ââ ââ ââ ââ ââ ââ ââ ââ ââ ââ ââ

Existing rail network

Rural coastalRural islandRural production

Mixed rural production

Ferry routes

Regional Boundary (land)Regional Boundary (water)

In this issueForeign ownership of rural land Housing market in 2012 Consumer Law Reform Bill The Auckland Plan

Vol 2, Issue 3 • September 2012 • ISSN 2253-5179

INFR

AST

RUCT

URE

ACQ

UISI

TION

VAL

UATIO

N IS

SUES

VALUATIO

N ISSU

ES MED

IATION

EFFECTIVE OWNERSHIP STRUCTURES

DUE DILIGENCE ACQ

UISITIO

N O

VERSEAS IN

VESTMEN

T INFR

ASTRU

CTUR

E DU

E DILIG

ENCE ACQ

UISITIO

N O

VERSEAS INVESTMENT INFRASTRU

LEASIN

G LITIGATI

PROPERTY MANAGEMENT

EFFE

CTIV

E OW

NERSH

IP S

TRUC

TURE

S AR

BITR

ATIO

N DUE

DIL

IGEN

CE M

EDIA

TION

LITI

GAT

ION

INFR

AST

RUCT

URE

SUBDIVISIONLEASING

DISPOSALS SUBDIVISION

OV

ERSE

AS

INVE

PROPERTY MANAGEMENT EFFECTIVE OWNERSHIP

ARBITRAT

ION

DU

E D

ILIG

ENCE

We provide expert navigation.

Simpson Grierson’s national team of property specialists represent the interests of developers, vendors, purchasers, landlords, and tenants of all kinds of property.

We are unique – our property team focuses on property issues exclusively while other aspects of the law are tended to by experts in their field.

Phillip Merfield – Partner P. +64 9 977 5096 M. +64 21 935 407 [email protected]

Mike Scannell – Partner P. +64 4 924 3416 M. +64 21 437 644 [email protected]

Greg Towers – Partner P. +64 9 977 5051 M. +64 21 963 653 [email protected]

Michael Wood – Partner P. +64 9 977 5329 M. +64 21 772 974 [email protected]

Greg Allen – Senior Associate P. +64 9 977 5164 M. +64 21 534 464 [email protected]

www.simpsongrierson.com

Publication Committee

Iain Gribble Donn Armstrong Ah-Lek Tay

Contact details

David Clark Property Institute of New Zealand PO Box 11 380 Manners Street Central Wellington 6142

Phone: 04 382 7621 Email: [email protected]

Editor

Julian Bateson

Assistant Editor

Helen Greatrex

Bateson Publishing Limited PO Box 2002 Wellington Phone: 04 385 9705 Email: [email protected]

Advertising management

Julianne Orr Bateson Publishing Limited Phone: 04 09 406 2218 Email: [email protected]

Publisher

Property Institute of New Zealand ISSN 2253-5179 Print ISSN 2253-5195 Digital

Property Quarterly is published four times a year and a copy goes to every member of the Property Institute.

Property Quarterly articles are not peer reviewed. Articles in the magazine represent the unaudited views of the relevant authors. If you have any questions about the content of an article please contact the Editor or the relevant author.

Issue 3 • September 2012

ContentsCEO’s comment David Clark .................................................................................................................... 2

Feature articles

Foreign ownership of rural land Iona McCarthy and Bob Hargreaves ....................................................................... 3

Current state of the insurance market Malcolm Win .................................................................................................................. 7

Land valuation case book Phillip Merfield ............................................................................................................. 10

The New Zealand housing market in 2012 Dominick Stephens ......................................................................................................11

Earthquake prone buildings – valuation and management Graeme Kirkcaldie and Steve Sampson .................................................................16

The Consumer Law Reform Bill – a real estate perspective Niven Prasad .................................................................................................................20

Municipal rates and better local government Ian Campbell .................................................................................................................26

Ascertaining the viability of business ventures Deborah Battell ............................................................................................................29

The Auckland Plan Ree Anderson ................................................................................................................ 31

Voice recognition software Steve McNamara .........................................................................................................36

Conference 2012 Jenny Houdalakis.........................................................................................................38

ProfileKelly Beckett Seagar and Partners ...................................................................................................42

ObituaryAdrian John Brady .......................................................................................................44

INFR

AST

RUCT

URE

ACQ

UISI

TION

VAL

UATIO

N IS

SUES

VALUATIO

N ISSU

ES MED

IATION

EFFECTIVE OWNERSHIP STRUCTURES

DUE DILIGENCE ACQ

UISITIO

N O

VERSEAS IN

VESTMEN

T INFR

ASTRU

CTUR

E DU

E DILIG

ENCE ACQ

UISITIO

N O

VERSEAS INVESTMENT INFRASTRU

LEASIN

G LITIGATI

PROPERTY MANAGEMENT

EFFE

CTIV

E OW

NERSH

IP S

TRUC

TURE

S AR

BITR

ATIO

N DUE

DIL

IGEN

CE M

EDIA

TION

LITI

GAT

ION

INFR

AST

RUCT

URE

SUBDIVISIONLEASING

DISPOSALS

SUBDIVISION

OV

ERSE

AS

INVE

PROPERTY MANAGEMENT EFFECTIVE OWNERSHIP

ARBITRAT

ION

DU

E D

ILIG

ENCE

We provide expert navigation.

Simpson Grierson’s national team of property specialists represent the interests of developers, vendors, purchasers, landlords, and tenants of all kinds of property.

We are unique – our property team focuses on property issues exclusively while other aspects of the law are tended to by experts in their field.

Phillip Merfield – Partner P. +64 9 977 5096 M. +64 21 935 407 [email protected]

Mike Scannell – Partner P. +64 4 924 3416 M. +64 21 437 644 [email protected]

Greg Towers – Partner P. +64 9 977 5051 M. +64 21 963 653 [email protected]

Michael Wood – Partner P. +64 9 977 5329 M. +64 21 772 974 [email protected]

Greg Allen – Senior Associate P. +64 9 977 5164 M. +64 21 534 464 [email protected]

www.simpsongrierson.com

Vol 2, Issue 3, September 2012 Property Quarterly 1

CEO’s comment

CEO’s Comment Foreign ownership of rural land

Every year, the highlight for the Property Institute is the annual conference – and this year has been no exception. It was fantastic to see 300 delegates join us in Auckland in June for the 2012 conference. A comprehensive programme developed by the Property Institute – and in particular Jenny Houdalakis – saw a conference which catered to all delegates from across the diverse professional communities within the Property Institute.

If you are an occasional visitor to the Property Institute website at www.property.org.nz you will notice the extensive changes that have been made recently. Substantial work has been put in to making the website simpler to use and easier to navigate. It is a valuable source of information, including back issues of Property Quarterly. I would encourage you to drop by from time-to-time to check out what is going on.

This issue of Property Quarterly opens with an article on the foreign ownership of rural land. The political and media fallout from the sale of the Crafar farms to Chinese firm Shanghai Pengxin has pushed this problem well and truly to the forefront in New Zealand. Iona McCarthy’s article gives a valuable summary – both historically and the situation today. The sale of state owned energy assets may have pushed this issue off the top of the agenda for the moment, but we can be sure this is not going away.

The Canterbury earthquakes will be making headlines in our industry for years to come, and this magazine is no exception. Graeme Kirkcaldie and Steve Sampson provide an article on earthquake prone buildings, and in particular what our territorial authorities are doing about this and what mitigating steps homeowners can take. On the topic of disasters, Malcolm Win, with help from other authors, has provided an excellent article on the current state of the insurance market in New Zealand, with particular emphasis on the effect of the quakes.

Westpac Chief Economist Dominick Stephens has been a regular presenter at the Massey Spring seminars. In this issue of Property Quarterly he offers his predictions for the future of the New Zealand housing market.

Niven Prasad of Simpson Grierson covers the Consumer Law Reform Bill from a real estate perspective. This issue was featured in the media recently when the Real Estate Institute came out against some of the proposed provisions.

Finally, Kelly Beckett from Seagars is profiled in this edition. Kelly is a great example of the future leaders of the profession coming through. She is active in the Auckland Branch as well as participating in the organising committees for the recent Auckland conferences.

2 Property Quarterly Vol 2, Issue 3, September 2012

CEO’s Comment

Foreign ownership of rural land

Concerns about the foreign ownership of rural land in New Zealand have been around for a long time and seem likely to continue into the future. The first British settlers brought with them a concept of freehold land ownership which was completely alien to Maori who believed land was not something that could be bought and sold. Inevitably, disputes between the two cultures arose, and 170 years later many of these are still being resolved under the Treaty of Waitangi settlement process.


Iona McCarthy and Bob Hargreaves

Early on in European settlement, large tracts of grazing land mainly in the South Island were acquired by wealthy investors on a speculative basis. At the same time, pressure began to build on the government to provide more small farms for recently arrived settlers. The introduction of a graduated land tax, based on unimproved value, was aimed at the owners of large grazing blocks. This was one of the mechanisms used by the government to expedite the subdivision of this land. In addition, the land tax had a 50 per cent loading for absentee foreign owners.

Foreign ownership of rural land came into prominence again in the 1950s when enterprising real estate agents began to market a number of northern coastal properties and islands to overseas buyers, particularly to the United States. When the public realised some islands in the Bay of Islands were being acquired by foreign interests there was pressure on the government to stop further sales.

Changes to make it more difficult for foreign owners to acquire sensitive coastal properties were introduced with amendments to the Land Settlement Promotion and Land Acquisition Act 1952. This Act was repealed in 1995 and controls governing overseas investment in land were brought under the Overseas Investment Act 1973. This legislation has been reviewed and replaced by the Overseas Investment Act 2005.



Overseas Investment Act 2005The purpose of this legislation is ‘to acknowledge that it is a privilege for overseas persons to own or control sensitive New Zealand assets’. Authors Heatley and Howell note that the main focus for assessment of an application to purchase land under the Overseas Investment Act are the land area and characteristics. They summarised sensitive land as a freehold estate or any other interest for a term of three years or more in any −• Foreshore,seabed,lakebed,regionalpark,landreserve,

land held for conservation purposes or subject to a heritage order

• Non-urbanlandinexcessoffivehectares• Landinexcessof0.2hectaresadjoiningtheforeshore• Landinexcessof0.4hectaresthatadjoinsalake,

reserve, heritage or conservation land or includes an historic place, area or wahi tapu

• Landonspecificislands.An additional rule, introduced in 2011, directs the

Overseas Investment Office to consider a wider range of issues when assessing foreign investment in areas of farmland more than 10 times the average size of any given type of farm.

Public access rightsPublic access to lakes, rivers, beaches, islands and the remote high country has always been of particular concern to New Zealanders. In a number of cases the only practical access to fishing, hunting and tramping resources is through privately-owned farmland. In most cases, farmers have been willing to give access provided it does not interfere with farming operations such as lambing. However, in some cases where farms were owned by overseas interests, public access became blocked.

In one case in the North Island, boundary riders carrying guns warned off hunters and fishers who historically had access through the station. In another situation in the South Island, former Prime Minister Helen Clark and her party were allegedly denied access through a high country station and had to resort to hiring a helicopter to reach their destination. In both these cases it appears there were cultural differences between the overseas owners who strictly enforced the ‘right to exclude’ part of their property rights and the more relaxed attitude of most New Zealand farmers. The latter typically see themselves as stewards of the land and as such, are willing to go along with historical public access arrangements.

However, probably the most protracted argument about access, lasting 10 years, occurred on Waiheke Island when a New Zealand ‘rich lister’ blocked a paper road over his farm leading to the Stony Batter site. The Auckland City Council ultimately won the case at the Privy Council and public access was restored.

Right to roamOf course the demographic dominance and political power of the mainly urban-based population means that New Zealand is likely to move towards the British ‘right to roam’ model with designated walkways. An example of a farmer with the public interest at heart was the late John Aspinall of Mt Aspiring Station and his work with the New Zealand Walkways Commission.

Applications by foreign interests to invest in New Zealand rural land are considered by the Overseas Investment Commission, which operates under the Overseas Investment Act and the amendments. Criteria and factors listed under sections 16 and 17 of the Act include requirements that −• Farmlandisofferedontheopenmarkettolocal

purchasers• ForeigninvestorsinNewZealandfarmlandmustbeof

good character• TheinvestmenthastoshoweconomicbenefitstoNew

Zealand• Mechanismsmustbeinplacetoprotectorenhance

the resource.

Good examplesUnder this legislation there have been some good examples of situations for the absentee overseas owner and the New Zealand public where both are winners. One such example is the high country stations near Wanaka acquired in 2005 by Canadian singer Shania Twain and her then husband Matt Lang. Apparently, the initial reluctance by the Overseas Investment Commission to agree to this sale was overcome when the applicants agreed to provide public access under the walking access factor as set out in



the legislation. The 27 kilometres of walking track provide access to over 13,000 hectares of conservation land and a hut paid for by the Langs.

Another example situation has been provided by American Julian Robertson, developer of the Cape Kidnappers and Kauri Cliffs resorts and golf courses, on what was formerly average coastal sheep and beef farms. The intensive trapping operation and 10.5 kilometre predator-proof fence on Cape Kidnappers is reported to have been funded mainly by Julian Robertson.

Naturally not everyone sees these acquisitions as a benefit for the New Zealand public. There is a worry that wealthy foreigners drive up the price of rural land beyond the reach of what New Zealanders can economically pay for land on a productive basis. To some extent, existing farmers have a conflict when advancing this argument because they are usually happy to sell to the highest bidder, whoever that might be.

The argument against foreign buyers has more substance from the perspective of the financial burden placed on young farmers hoping to acquire their first farm. This may carry some weight if the trend of an increasing percentage of farmland sales to foreign ownership escalates. However, in recent years, the percentage of total farmland sold to foreigners on an annual basis has been very small, at around 0.1 per cent to 0.3 per cent each year.

Looking at the statistics The table below summarises the Overseas Investment Office approvals for purchase of freehold or other interests in New Zealand land along with the total freehold farmland sales recorded by Quotable Value. Farmland sales do not include forestry land. Quotable Value statistics for 2011 are not yet available, but the trend of a higher percentage of farmland sales to foreign ownership is most probable, given the increased land area approved by the Overseas Investment Commission.

Total land area approved for sale to foreigners and freehold farmland sales

Year

Freehold approved OIC hectares

Freehold farmland approved OIC approximate hectares

Other interests approved OIC hectares

Freehold farmland land sales hectares

Freehold approved OIC of total farmland sales

2011 68,054 28,477 23,627 ----- -----

2010 17,040 17,040 14,789 122,218 13.9%

2009 22,345 10,261 9,897 109,886 15.5%

2008 13,842 12,754 24,854 347,760 3.0%

2007 15,826 7,122 754 316,680 4.0%

2006 198,574 21,672 71,934 251,940 2.8%

Foreign transactions in 2011 were dominated by about 40,000 hectares of forestry land purchased by mixed

international interests including Swiss, American and Australian. A United Kingdom company, Soho Property Ltd, purchased 22,211 hectares of Crown Pastoral lease to add to the 8,579 hectares bought in 2009. Significant dairy land, mostly in Southland, was purchased by the German companies Aquila AgrarInvest and DAH Beteiligungs GmbH during 2010 and 2011. Before 2010, sheep and beef and forestry sales dominated purchases by offshore investors from a range of countries including the United States, Switzerland, Australia and the United Kingdom. The 2006 figures include the sale of the 176,900 hectares of the Carter Holt Harvey Forest Estate. The most recent agricultural census in 2007 records 14.7 million hectares of farmland in New Zealand, and the combined freehold and leasehold sales to foreign interests since 2006, equates to less than three per cent of this farmed area. Quotable Value statistics show that between 2006 and 2010 the annual turnover of rural farmland sold was between one and three per cent each year.

Crafar farm caseBefore farmland can be acquired by overseas buyers it must first be offered to New Zealand interests. In the case of the Crafar farms, selling has turned out to be a complex process. The farms were offered for sale by international tender, with prospective purchasers given the opportunity to buy a single property, a combination of properties or the entire portfolio of 16 farms. Although details are unknown it appears that the receivers had a preference to sell the entire portfolio. In this case the first potential Chinese buyer was turned down, but was reported to be offering a higher price than various New Zealand interests.

A second Chinese buyer, Milk New Zealand Holdings, a subsidiary of Shangai Pengxin Group, gained initial approval from the Overseas Investment Commission. This decision was successfully appealed in the High Court by a group of New Zealanders led by Sir Michael Fay and iwi interests. The Court’s decision appears to raise the threshold test for foreign applicants with respect to adding value to the transaction in a way New Zealand buyers could not.

The Crafar farms are a dairy farming operation and do not have the same sort of recreational values associated with them as do coastal properties and high country stations. They do, however, illustrate the increasing importance to foreign buyers from food importing countries of acquiring land for food security purposes.

Land grabsCompetition around the world for the control of good productive land is increasing due to rising population pressures and the competition between competing land uses including food production, bio-fuels, forestry, urbanisation and conservation. In addition, climate change and land degradation in some economies are limiting the food-

Foreign ownership of rural landForeign ownership of rural land


producing potential of some of the food-importing nations. The extent of land grabs over the last decade is hard to

define but has been estimated at around 80 million hectares, with more than 50 per cent in Africa. New Zealand has not featured in the land grab as land in this country is relatively expensive and a long way from major markets.

Foreign buyers from the Middle East, China and South Korea have tended to concentrate on what they describe as resource seeking − land and water − rather than market seeking acquisitions. An example of resource seeking might be the production of basic grains and animal feeds offshore. In the case of milk production this means controlling the supply chain from the production of grain overseas and its distribution to the milking platform in the home country, where it would be easier to monitor and control food standards.

Fonterra threatOne of the dangers to New Zealand of allowing overseas buyers to acquire large-scale dairy farms is the potential threat to the Fonterra co-operative ownership model. The overseas marketing power of Fonterra is potentially weakened by having reduced products and influence on the world trading market. New Zealand Milk Holdings, the prospective purchaser of the Crafar farms, noted an intention to establish a joint venture with New Zealand partners to develop, process and export dairy products to China. To protect New Zealand interests, the Overseas Investment Office listed consent conditions requiring at least half ownership or a control interest in milk processing facilities in New Zealand must be held by non-overseas persons.

Realistically, it seems unlikely New Zealand will shut the door on overseas investment in farmland anytime soon. As a nation we continue to be a net importer of capital and our free trade arrangements with various countries are likely to exclude moving much beyond the present Overseas Investment Commission regulations and the recent High Court decision.

From a theoretical standpoint there is an argument for having a capital gains tax on farmland capturing the speculative activity involved in by overseas and local buyers of farmland. With prices at around 40 times earnings since 1990, New Zealand farms are very highly priced compared to a range of 15 to 26 multiplier earnings for Australia, Canada and the United States. Such high price earnings ratios in New Zealand only make sense in a regime free of capital gains tax. The current political reality is a that capital gains tax seems unlikely to be implemented under the present government.

Crown forestry model for land ownershipWhile it is true that foreign owners cannot take the land with them, and eventually some of the land gets resold back to local owners, concerns about foreign ownership

remain. It may be possible to achieve a beneficial situation by separating the business of farming from the business of owning land. Land ownership has been retained by the indigenous inhabitiants in some of our Pacific neighbours such as Fiji and the Cook Islands and further away land ownership is retained by the government in China.

Could the Crown forestry model for land ownership be applied to foreign buyers of farmland? Readers will recall that when the government-owned forests were sold off to international buyers in the 1980s, the Crown retained the land and sold the cutting rights to the trees.

Rentals for this forestry land are based on a percentage of the value of the land exclusive of trees, and a large percentage of the land is now under the control of local iwi as a result of Treaty settlements. A new farmland model could provide for the land exclusive of improvements to be sold to New Zealand-only investors, such as the Cullen Fund, with a long-term lease of the improvements to overseas investors with a commitment to the business of farming.

Public opinion polls around the 2011 election campaign in New Zealand clearly showed there is a strong public preference to retain, and not partially privatise, the state-owned energy companies. Retaining this country’s farmland under local ownership has historically also been an issue most New Zealanders support. The current rules around overseas investments appear to be adequate provided they are enforced and the process is transparent. What does appear to be sometimes lacking is follow-up and monitoring when a foreign buyer does not abide by the original conditions of sale.

This article was first published in the journal Primary Industry Management.

Foreign ownership of rural land State of insurance market



Current state of the insurance marketThis article is about the rising insurance costs for commercial buildings in New Zealand cities. Malcolm Win an insurance broker, with assistance from Phil Hinton, Stuart Bent, Paul Mautz and Ah-Lek Tay property managers and consultants from around the country, give a joint perspective below.

State of insurance market

Effect of the Christchurch quakes on coverThe year 2012 will continue to be a very difficult time in the New Zealand insurance market. The Christchurch earthquake claims and the overall poor risk performance of the Pacific region have resulted in significant premium rate increases for natural disaster cover.

CapacityInsurance capacity has reduced during 2011 and 2012. This is mainly due to the withdrawal from the market of a number of the fringe insurers, along with the collapse of others. The larger players in the market are at or near capacity, particularly in the at risk areas like Wellington and Christchurch. Capacity is being reserved for their existing clients and is often used as building owners and businesses increase their insured values to avoid under-insurance.

Insurers need to have a balanced book comprising older and newer property risks along with at risk areas of Wellington and Christchurch versus the rest of New Zealand. A balanced book means that they can offer sustainable cover and premium rates.

ReinsuranceAt this stage the reinsurance market is still supporting New Zealand. We are lucky in this respect, especially when you consider the situation in Japan and California where it is very difficult to purchase earthquake cover, and Australia where flood cover is generally not available. We can only speculate as to what could happen if another large earthquake hits New Zealand. Reinsurance costs are still rising, but signs are that they will level out and it is unlikely that we will see the dramatic increases of the 2011 and 2012 reinsurance renewals. Reinsurance is


State of insurance marketState of insurance market

when an insurance company assumes a very large risk or has a widespread exposure to catastrophe. It will reinsure a portion of it through the reinsurance market. In simple terms, reinsurance is the insurer’s insurance policy.

Other factorsAs well as the regional location of the property other factors, such as those below, will continue to play a more critical part in the decision to offer insurance than we have seen in recent years. These include −• Ageandconstructionofthepremises• Occupationalusage• Physicallocation• Attitudetowardriskimprovements• Levelofearthquakestrengtheningforolderbuildings.

ClaimsOriginal estimates of the building reinstatement costs or repairs following the Christchurch quakes have proved to be significantly underestimated, in some instances by 50 to 70 per cent. As the rebuild is only just starting, it is apparent that the total rebuild will be significantly more than the original estimate. By 2011 reinsurers had paid out or committed to the following major catastrophe losses in the Asia Pacific since 2009 in Australian dollars.

2009 Bushfire Victoria Australia $1 billion2010 Hail Melbourne Australia $1 billion2010 Hail Perth Australia $1.1 billion2010 Earthquake Maule Chile $8 billion2010 Earthquake Christchurch Over $5 billion2011 Flood Brisbane Australia Over $2 billion2011 Earthquake Christchurch Over $10 billion2011 Cyclone Queensland Australia $0.75 billion2011 Earthquake Japan $14 to 36 billion

Total $44 to 66 billion

Increases in commercial property insurance At the bottom of the page is a basic table of the annual percentage increase for properties in a large property portfolio on a locational basis. Over the whole country, and for the spread of properties, the average increase was 47 per cent for the 2011-2012 insurance period.

The table demonstrates how these factors have affected the increases in each region. The main reasons for the differences are outlined here.

LocationThe main tool used to determine the effect of a region to natural disaster is the use of Cresta zones. The hot spot areas, like Wellington and Christchurch where there is a shortage of capacity, have generally been hit by larger increases.

Cresta zones are based on two facts. First, they take into account the possibility of a natural disaster for a region. Second, they depend on the richness of a region. The higher the value of the settlements in a region, the more an insurer will have to pay for reconstruction in case of natural hazard. In order for an insurer to calculate the risk premium distribution for each natural disaster type Cresta zones will be taken into account.

Age and construction of the buildingBefore the 1931 Hawke’s Bay earthquake there was no building code in New Zealand. Since that time there have been six codes which have progressively increased the structural performance criteria for buildings.

The Building Acts of 1991 and 2004 have included provisions which describe an earthquake-prone building. The latest Act has lifted the minimum structural performance criteria to be met by buildings. A building is deemed earthquake-prone if its structural integrity would

Northland Auckland Taranaki Waikato/BOP Manawatu Wellington Christchurch Australia

1 48% 43% 43% 53% 62% 60% 189% 31%

2 27% 42% 58% 30% 91% 52% 193% 47%

3 20% 46% 67% 52% 49% 52% 44%

4 45% 49% 52% 53% 70% 39%

5 26% 43% 58% 37% 58% 44%

6 41% 60% 74% 76% 38%

7 59% 22% 55% 87% 54%

8 41% 26% 94% 50%

9 26% 26% 43% 180%

10 47% 15% 40%

11 52% 63% 47%

12 32% 21% 48%

13 74% 58% 32%

Average 33% 43% 44% 51% 70% 55% 191% 53%


be exceeded in a moderate earthquake and it would be likely to collapse causing injury, death or damage.

Other than residential dwellings, the definition of earthquake-prone building can apply to any building regardless of construction. The definition is no longer restricted to buildings of unreinforced masonry, generally pre-1930s buildings. The definition excludes single-storey residential buildings, and those which have two-storeys as long as they have fewer than three household units.

The 2004 Building Act required all territorial authorities throughout New Zealand to adopt policies by 2006 for inspection and review of all commercial buildings for design strength to prove they were better than 33 per cent of the new building code. The acceptable design strength levels for buildings in New Zealand are expected to be lifted to levels approaching 66 per cent following the Christchurch earthquakes, although this has yet to be confirmed.

The Christchurch quakes highlighted the effect of land on property damage. For example, buildings

on reclaimed land are more susceptible to liquefaction. These factors will also push up premium levels for those buildings.

ConclusionThe New Zealand insurance market has changed significantly since the Christchurch earthquake events, and will continue to change in the future. As a country, we need to accept that we are a small player in the world insurance landscape and if we continue to be struck by large-scale insurable losses then premiums will rise further. In some cases buildings may not even be able to obtain insurance at all.

The flow-through of these rising costs will be felt by landlords and tenants for a long time to come, and will ultimately affect property occupancy costs and values. Property professionals need to be aware of these changes, and how they will affect the market sectors in which they operate and the nature of the advice they give clients.

State of insurance marketState of insurance market

Professional and trade advertising

Advertise in the Property Quarterly Professional and trade advertising

section

Contact Julianne Orr on 09 406 2218 or email

[email protected]

NATIONWIDE CORPORATE PROPERTY ADVISORS & NEGOTIATORS SPECIALISING IN PUBLIC LAND & INFRASTRUCTURAL ASSETS 12 OFFICES NATIONWIDE

Level 10, Technology One House, 86-96 Victoria Street, PO Box 2874, Wellington.Chief Executive: Wayne Crowley Phone (04) 470 6105 Facsimile (04) 470 6101

Email [email protected] Website www.propertygroup.co.nz

Improve indoor air quality with new Resene Fresh Air

Carparking, a semi-transparent waterborne satin topcoat

formulated with photocatalytic pigments to break down NOx

and organic atmospheric pollutants that come into

contact with the fi lm.

0800 RESENE (737 363) www.resene.co.nz

A breath of Fresh Air

A breath of Fresh Air


Housing marketLand valuation case book

Phillip Merfield Land valuation case book

The latest land valuation case book covers the period 1965 to 1992. Obviously in the period since 1992 there have been a large number of cases touching on or concerning the valuation of land. Some of these are significant and important decisions.

Many of you will be pleased to know that work has begun on providing a new case book to cover the major cases since 1992. This will be a major undertaking. This book will be the third in a series of case books which started in 1967, when Butterworths published The Land Valuation Case Book compiled by J P McVeagh and E J Babe. This book covered cases from the early twentieth century through to 1966.

The then President of the New Zealand Institute of Valuers, M B Cooke, stated in the foreword in the first case book, that he ‘believed there is sufficient material for a further volume, and I hope that subsequent editions will be produced in the years to come.’ The second case book mentioned was entitled Land Valuation Cases 1965-1992. It is obviously now time for the period after 1992 to be considered and a new case book completed as there is definitely more than sufficient material for this volume.

It is envisaged that the new case book will be slightly different from the previous case books, in that it is more than likely to be loose leaved and be produced so that updates can be added. It is obviously a difficult task when trying to incorporate cases over a long period of time in one update. It is much better for the authors and also the

readers that cases can be added to the book on a more timely and regular basis.

In addition it is envisaged that the book will be divided into chapters covering different valuation topics such as land compensation under the Public Works Act or valuation of Crown Forestry Licences. This will mean that the cases are grouped in some definable order. There will be an introduction to each chapter providing a brief outline of the focus of the chapter, the relevant law and principles of that chapter’s topic.

The aim is to provide each case in full and to incorporate at the beginning of each case, a short case note setting out the facts of the case, the issue or issues covered and the decision. As editor of the case book I am keen to receive any comments on how these case books can be improved or details of any cases members may think relevant. I am also keen to hear from members who are willing and able to analyse and summarise the outcomes and principles of relevant cases for the book. Please contact me at [email protected].

Phillip Merfield is a Partner at Simpson Grierson.


Dominick Stephens

The New Zealand housing market in 2012

House prices earlier in the year were rising rapidly in Auckland and Canterbury. We suspect this was due to local housing shortages, and not necessarily a leading signal for the rest of the country. However, low interest rates are stimulating the wider New Zealand housing market to some extent. For 2012 we expect another year of around five per cent house price inflation averaged across the country. We do not regard the current rate of gain in house prices as sustainable. We expect higher interest rates and a burst of construction activity to curtail the market in years to come.

Housing market

New Zealand’s housing market strengthened noticeably in the early part of the year. House sales were up, people were seeking more approvals for new mortgages and house prices rising. The Real Estate Institute’s measure of national house prices rose 4.3 per cent in 2011, which is very close to the forecast we issued early last year.

The most remarkable feature of the market has been variation between regions. Prices have been rising rapidly in Auckland and Christchurch for some time now. Elsewhere, prices were falling for most of 2011, but began rising modestly towards the end of the year. New Zealand has not seen anything like this degree of regional divergence since the 1990s. From 2000 to 2010, New Zealand’s regions experienced housing booms, busts and blips in more-or-less equal measure along similar timelines.

So what is going on? Are Auckland and Christchurch the vanguard of what is going to become a nationwide burst of house price inflation? Or are we experiencing something more like the mid-1990s, when prices in some regions took off while others languished? And how long will this period of rising prices last?

Land valuation case book



Housing market

A local shortage for local pricesOur analysis suggests that prices were rising more quickly in Canterbury and Auckland because both regions are experiencing local housing shortages. The implication is that other regions will not necessarily follow where Auckland and Canterbury have led and their house prices have

Housing turnover and mortgage approvals

Regional price developments relative to 2007 peak

New Zealand house price index with forecast

Housing market

built up a premium over other regions in the past year. This premium can be expected to persist until builders correct the local housing shortages.

The genesis of Canterbury’s shortage is obvious. The decline in population has been smaller than the decline in housing supply since the earthquakes, leading to a sudden shortage of housing.

Auckland’s shortage has occurred after an extended period of low building activity and high population growth. Over a three-year period to June 2011, the city’s population increased by seven people for each new dwelling consent issued. Auckland is actually the only region in New Zealand which experienced significant under-building over that three-year period. The average number of people per dwelling in New Zealand is 2.5. Roughly speaking, if there are more than 2.5 people for each new house built, then a region is under-building.

However, every region except Wellington and Auckland gained fewer than 2.5 new residents for each new dwelling consent issued over a three-year period. None of those regions under-built. Wellington’s population increased by 3.5 people for each new dwelling, so there may have been slight under-building. Auckland’s population increase of seven people per new house is in a league of its own.

House prices and under-building

The graph above suggests that regional house price performance in 2011 was associated with the degree of under-building over recent years, at least for the North Island. The South Island does not fit the correlation, probably because of the Canterbury earthquakes.

In Canterbury’s case houses are in short supply because of stock destruction – and the region has the strongest prices on the island. Meanwhile, other regions of the South Island experienced an unusual surge in population growth soon after the earthquakes, which may account for their slightly stronger prices compared to similar North Island regions.

Housing marketHousing market



Housing market

Net movement of people to or from other regions of New Zealand and to/from overseas, as percentage local population

Year to June 10 Year to June 11

Northland 0.1 -0.1

Auckland 0.5 0.6

Waikato 0.1 0.1

Bay of Plenty 0.2 0.1

Gisborne/Hawke’s Bay -0.3 -0.4

Taranaki/Manawatu-Wanganui -0.3 -0.1

Wellington 0.1 0.2

Nelson-Marlborough/West Coast 0.3 0.8

Canterbury ex Christchurch City 0.9 1.6

Otago 0.5 0.8

Southland -0.4 0.2

Christchurch City 0.4 -2.8

Net migration percentage of population

Re-enrolment of Christchurch school children in other regions as percentage of local population

The next two graphs illustrate that post-earthquake population movements have been much more important for the South Island than for the North Island.

A little something for everyoneHousing shortages cannot explain the recent market upturn across all regions in New Zealand, including the North Island, excluding Auckland. Most regions have no shortage of houses. We suspect prices across the country have received a shot in the arm from low interest rates.

Housing market

Housing market

The next graph illustrates the very strong relationship between interest rates and house prices in New Zealand. A recent Reserve Bank discussion paper found that interest rates were one of the most important factors in predicting house prices. We expect low interest rates to continue stimulating the market for the whole of 2012 – the small rise in rates we do anticipate would not be enough to prevent house price increases.

housing market. In addition, house prices in New Zealand remain

stretched relative to incomes. Those regions experiencing outsized gains at present should be wary of local prices under-performing once the shortage is alleviated. Auckland house prices surged in the early-1990s, but subsequently rose more slowly than other regions of New Zealand. By 2009, the old relativity between Auckland and the rest of New Zealand had been restored.

We can hope that if pre-existing relative prices are restored, the adjustment will take the form of slightly slower price gains in Canterbury and Auckland over a decade or more. But for Canterbury, in particular, there is a clear danger of prices overshooting in the short run only to fall sharply at some later date.

Boiling the available evidence down, we have settled on a forecast of five per cent house price inflation for 2012, zero in 2013, and minus one per cent in each of 2014 and 2015. Prices could rise more than five per cent this year if the Reserve Bank does not raise the OCR. The further prices rise in the short run, the further they could fall over a longer horizon.

Dominick Stephens is the Chief Economist for Westpac Bank

Auckland house prices versus rest of New Zealand

Fixed mortgage rates and house prices

Do not get too excitedWe suspect the current house price inflation will prove temporary for two reasons. First, interest rates will not stay this low for ever. We expect rates to rise substantially over the 2013 to 2015 period as the Reserve Bank struggles to contain inflationary pressures arising from the Canterbury rebuild. Higher interest rates would put the brakes on the

Housing market



Earthquake prone building valuation

Earthquake-prone buildingsValuation and management routines

This article is mainly for property valuers but is also intended to enhance the awareness of all property service providers. Their advice is relied on for the assessment, management and maintenance of client’s assets, and can therefore extend to advisors, infrastructure and plant valuers, facilities and property managers.


Graeme Kirkcaldie and Steve Sampson

A leading consulting engineer, who has had considerable involvement with the Canterbury Earthquakes Royal Commission of Inquiry, made a comment recently. He said that the 34 per cent minimum compliance threshold under the New Building Standard, promulgated by the Building Act 2004, was deliberately set at a low level to encourage property owners to lift seismic resistance levels of their buildings where appropriate. This was intended to preserve the integrity and value of their properties. His qualified expectation is that a higher than current minimum standard could be legislated in the foreseeable future.

Territorial authority surveyA nationwide survey of territorial authority earthquake-prone building policies by a leading firm of consulting engineers showed that of 73 authorities −• 56hadpublishedearthquakebuildingpolicies• 33haveactivepoliciesonseismicupgrading• 34recommendseismicupgradinggreaterthanthe34percentminimum

threshold • 21recommendseismicupgradingabove67percentthestandard• 45havestatedtimeframesforstrengthening• 42haveanaverageof2.1yearstoidentifyearthquake-pronebuildings• 51haveanaveragetimeframeof9.9yearstocarryoutstrengthening.

The capital city’s stanceLong regarded as the most vulnerable main urban area in New Zealand, Wellington City Council first began identifying earthquake-prone buildings around the CBD in the mid-1960s. They then arranged reviews of its original seismic grading following the introduction of the Building Act in 1991. More recently, in 2008, the Wellington City Council further commissioned consulting engineers who used a curb-side assessment technique to update the records in terms of measurement against the building standards under section 124 of the Building Act 2004.

Owners of Wellington buildings recently assessed as earthquake-prone have been served with notices requiring upgrading to not less than the minimum NBS of 34 per cent. Some of the assessments, usually if tabled below the NBS, have been independently reviewed when individual owners have employed engineers to carry out preliminary assessments.

The routine for these assessments generally involves an inspection of the building exterior and interior, review of the structural drawing records, and calculations to measure the relationship with the threshold. In one instance, the curb-side grading at 19 per cent of the NBS was found by the building owner’s engineer to be significantly at error, with the correct preliminary assessment in the order of 60 per cent to 70 per cent. A modest outlay will lift that particular structure to 100 per cent of NBS.

Problems for some

Not all building owners are so fortunate. Many face much greater remedial outlays, especially where there are heritage classification factors. Most at risk in this context are late nineteenth and early twentieth century masonry buildings, a number of which are in institutional ownership. There is limited financial capability for economic upgrading while preserving the valued architectural elements.

Some multi-storey commercial buildings, generally dating from the 1960s, also have significant deficiencies in terms of floor plate attachment, column dimension and stairwell integrity. But engineers are devising innovative and cost-efficient reinforcement solutions which will lift the status of those structures to 67 per cent or greater.

Major property owners are not exempt as witnessed by the very significant outlay, in excess of $30 million, to be made on the Majestic Centre, a landmark 1980s Wellington CBD structure. In July 2012 the Engineering, Printing and Manufacturing Union will consider a remit requiring employers to warrant that their buildings as safe and, if not, carry out strengthening to achieve an acceptable seismic resistance status. However, collective advocacy of this type could be tested in litigation by employers.

Totals, and averagesDate policy adopted by council Earliest - 8 Nov 05

Median - 31 May 06Latest - 21 Sep 07

Policy found on council’s web site Yes 49 No 24Total 73

Identification method – whether action required to a timeframe Active or at consent application Passive

Active 33Passive 23Active/Passive 17Total 73

Recommended improvement much greater than 1/3 New Building Standard

Yes 34No 39Total 73

Recommended improvement greater than 2/3 New Building Standard

Yes 21

Timetable for strengthening given? Yes 45 No 28Total 73

Minimum time in years required to identify earthquake-prone buildings

Count 42Minimum (>0) 0.25Average 2.1Maximum 5.5

Maximum time in years required to identify earthquake-prone buildings

Count 41Minimum (>0) 0.25Average 5.4Maximum 25

Minimum time in years required for initial assessment

Count 21Minimum (>0) 0.25Average 2.2Maximum 11

Maximum time in years required for initial assessment

Count 21Minimum (>0) 0.25Average 4Maximum 14

Minimum time for strengthening Count 51Minimum (>0) 1Average 9.9Maximum 26

Maximum time for strengthening Count 52Minimum (>0) 3Average 21.1Maximum 50

Different timing for heritage buildings Yes 26 No 47Total 73

Different improvement level for heritage buildings

Yes 17 No 56Total 73

Seismicity or risk assessment summary Yes 56

Who pays forIdentification Owner 8

Council 63Council or Owner 2Total 73

Inital assessment Owner 25Council 44Council or Owner 2Total 71

Detailed assessment Owner 66Council 2Council or Owner 3Total 71

TA earthquake-prone buildings policy Summary of information included in policies

Earthquake prone building valuationEarthquake prone building valuation



Unfortunately the economic effect on small building owners is significant. They may have previously upgraded their structures to meet the 1991 standards, but many now face further major outlays, coupled with associated vacancy which could be very salutary. However, without those remedial procedures being carried out there are distinct prospects of increasing permanent vacancy, with obvious implications on earnings and debt servicing capacity.

An important facet of Wellington City Council’s earthquake-prone buildings record system is that it is readily accessible and constantly under review. While it is probably not the case with all Territorial Authorities, there is now increasing expectation that property experts will know the extent to which the public database can, on the one hand, be easily searched and, on the other, relied upon.

Effect on occupation and sale prospectsReal estate agents throughout the metropolitan areas of Auckland and Wellington have shown increasing reluctance over the past 12 months to market commercial properties without a clear view of the NBS status of the buildings. This is a direct reflection of the attitudes of lenders, insurers and prospective investors. Many institutional tenants now require building owners to supply them with up-to-date seismic rating reports as part of their review processes for continuing occupation, renewing, or committing to new leases.

Insurance and financial riskA predictable complication lies with insurance underwriters. They are now well attuned to the compliance or non-compliance status of buildings, as well as ground shaking, tsunami and liquefaction classifications of the land throughout New Zealand. They are likely to apply rising premium rates, expand excess limits, decline renewals or refuse new owner cover. This has an inevitable effect on a property’s saleability, as well as the owners’ risk profile and relationship with mortgagees.

The major banking institutions are well acquainted with the implications of earthquake-prone buildings and the rapidly expanding concerns of tenants to occupy safe working environments. While schemes to remediate deficient structures secured under existing loan contracts may be available in some instances, new owner facilities for properties with sub-standard buildings are becoming increasingly difficult to secure.

Valuation approach In assessing market values, rentals and insurance allowances, valuers should familiarise themselves with the implications of a sub-standard building. We would refer you to the article entitled ‘Seismic ratings are affecting Wellington CBD values’ by Mike Horsley, published in Property Quarterly March 2012. This outlines the significant variances which have emerged between building types, and suggests appropriate valuation modelling.

No one process will necessarily quantify a finite answer as there are many intangible factors, but the



important point to appreciate is whether or not the building complies. If it does not, the valuer should make a reasonable attempt to obtain a best estimate of the upgrade costs and give consideration to the Territorial Authority’s implementation date, the construction period, interim loss of earnings and unreimbursed expenses.

In addition, thought should be given to the new position in the market which will be generated for the property on completion of the work. In the interim there is a question which arises. Is there an enhanced value for those properties which meet or exceed the NBS and, if so, what is an appropriate means to reflect the distinctively better saleability that may be generated?

A valuer’s failure to identify and make allowance for sub-standard structures could expose an existing or prospective property owner to a raft of regulatory costs. The valuer might then be liable to an unwelcome claim for negligence. Therefore, it will pay dividends to all concerned to thoroughly check the building’s NBS status and, if appropriate, recommend an independent engineering review with related cost estimates. Once those factors are to hand, the valuer can decide how to reflect the present status of the building in the valuation exercise.

Other property services affected Infrastructural assets such as roads, wharves, railway lines, pipelines, transmission towers and a raft of other utilities are founded on ground of varying stability. Plant and

machinery may be housed in earthquake-prone structures, and the valuer will have to consider if there could be building code requirements to upgrade mounting structures and attachment systems for replacement. There could also be additional removal costs in the event of major damage to the building and related infrastructure. Matters of this nature should, to some extent, also now lie with facilities and property managers, as well as property advisors.

Should an advisor, infrastructure plant and machinery valuer, or property and facilities manager undertake the same inquiries, offer similar advice and make equivalent monetary allowances when necessary to those made by the real property valuer? We suggest that the very least they should do is −• Takereasonablestepstoidentifythestatusofthesite,

or building, housing the plant or accommodating the enterprise

• Eliminateimponderablesasfaraspossible• Recommendindependentengineeringadvice• Enhancetheclient’sawarenessofthepotentialrisksin

the reporting process. The additional work involved will doubtless be

labour intensive, but there is no reason a fee cannot be applied as appropriate inquiry will be integral to the service. A correctly formatted engagement letter or contract should cover unforeseen time and expense.

Graeme Kirkcaldie is a Registered Valuer and Steve Sampson is a Registered Property Manager.

Earthquake prone building valuationEarthquake prone building valuation


Consumer Law Reform BillConsumer Law Reform Bill

Niven Prasad The Consumer Law Reform Bill: a real estate perspective

A review of New Zealand’s consumer laws was initiated in 2009 to bring ours in line with Australia’s. The Ministry of Consumer Affairs released a discussion document in 2010, received submissions, and subsequently published two additional Cabinet papers.

Legal cases

The Consumer Law Reform Bill was finally introduced on 20 April 2011 and had its first reading on 9 February 2012. Further submissions were called for closing on 29 March 2012. The select committee report was due on 9 August 2012 so there could yet be further changes to the Bill. This article specifically examines the real estate issues and covers the two main areas of concern − • Anoverhaulofthelawofauctions• Thenewoffenceof‘unsubstantiatedrepresentations’as

they relate to real estate transactions.

AuctionsCurrent and proposed regulation is designed to protect against what are considered potential areas for significant harm in the auction industry. These are −• Auctioneersfailingtoaccounttovendorsforthe

proceeds of sale• Auctionsbeingusedasamechanismtosellstolen

goods, although less applicable for real estate• Manipulationoftheauctionsothatlowerorhigher

prices are obtained.You can find the current law of auctions and

auctioneers in the Auctioneers Act 1928. This deals mainly with registration of auctioneers, part of the Property Law Act 2007 (PLA) and the Real Estate Agents Act 2008 (REAA), which deals with conduct at auctions, and generally in contract and agency law.

What is new? The Bill aims to repeal and replace the Auctioneers Act 1928, and consolidate all auction conduct provisions in the Fair Trading Act 1986 (FTA). Three issues arise from these changes −

• Amoderniseddefinitionof‘auction’• Arevampoftheauctioneers’registrationsystem• NewconductprovisionsforauctionsintheFTA.

A modernised definition of auction

The Bill modernises the definition of ‘auction’ to accommodate changes in technology. Modernising this makes sense, but how does it reconcile with the definition of real estate agency work in the REAA? The short answer is that this does not seem to have been addressed. The new definition of auction does not distinguish real estate agency work in any sense. Therefore arguably an auctioneer will be ‘carrying on the business of an auctioneer’ but also carrying out ‘real estate agency work’.

At present, auctioneers do not have to be licensed under the REAA if they are selling land by auction. Conversely, licensed real estate agents do not have to register as auctioneers to buy or sell land by auction. That exception for real estate agents is preserved in the Bill but the exemption of auctioneers from the REAA is repealed.

The issue this raises is whether auctioneers will have to be registered as both auctioneers and real estate agents. With the introduction of the REAA in 2008 there has been a decline in registered auctioneers selling land. The exemption for real estate agents being registered as auctioneers has meant that it is safer and cheaper for professionals auctioning land to simply be licensed as real estate agents only.

For auctioneers selling land by auction, the Bill makes it so that auctioneers have to be registered as real estate agents as well. It will be interesting to see if the


exemption for auctioneers from the REAA is addressed at all after the select committee report comes out.

Revamp of the auctioneers’ registration systemCurrently, auctioneers are registered under the ‘negative licensing’ system in the Auctioneers Act 1928. This means that people can be registered auctioneers unless they are not ‘fit and proper’ persons. Positive licensing requires obtaining certain qualifications in order to be licensed.

The licensing of real estate agents under the REAA is a combination of negative and positive licensing. There is the ‘fit and proper person’ test and aspirant licencees are required to have passed certain examinations. At present, the District Court decides whether someone is a fit and proper person to be licensed as an auctioneer. This process under the 1928 Act is considered archaic for these three reasons −• ThereisnocentralDistrictCourtregisterandso57

different courts decide who is a fit and proper person for the purpose of licensing auctioneers.

• A$1,000bondhastobelodgedwithafidelityfundoran insurance company, and this bond has rarely, if ever, been called upon

• Ninetypercentoftheregistrationfeegoestothelocalcouncil. The original rationale for this is outdated. Most auctions originally concerned the sale of livestock and therefore the councils would bear the costs of cleaning up after auctions.

The Bill establishes a new register of auctioneers with a registrar to be appointed by the Ministry of Economic Development. While it is logical to move the registration away from the courts, there already exists an unofficial national register with the Auctioneers Association. The Ministry of Justice and this association have an agreement whereby the latter is notified of a new auctioneer within a month of registration or renewal.

Two issues arise in relation to registration. Is the form of licensing in the Bill sufficient? How does this affect the interface with the REAA? Submissions have noted the need for real estate professionals to be up to date on current law such as zero-rating in land transaction and new unit titles laws. This view supports the licensing of auctioneers selling land as real estate agents so that the standards in the REAA apply.

On the other hand, this will increase costs for professionals to be registered under two regimes. Having different codes and standards in different places can confuse consumers and even the professionals registered under those regimes. Again, the Bill could be clearer in expressing whether auctioneers selling land by auction should also be registered as real estate agents, and therefore subject to the standards in the REAA.

Conduct at auctionsAt present, the PLA sets out most of the provisions

regulating conduct at real estate auctions. The Auctioneers Act 1928 deals with an auctioneer’s duty to account for sale proceeds to the vendor. How does the Bill deal with these conduct provisions? First, it repeals the provisions in the PLA and the Auctioneers Act 1928 and transplants them into new sections 36V to 36ZC of the FTA. The new provisions largely restate the current law but add details in the wording.

There are again three main issues to be aware of in relation to auction conduct –• Vendorbids• Accountandpaymentofproceeds• Startandendofanauction.

Vendor bidsThe Bill re-states the existing law whereby vendor bids are permitted if all participants are notified about this before the auction begins. It attempts to make clear that an auctioneer must ‘clearly identify’ each vendor bid as it is received. This is particularly relevant when the auctioneer is bidding on behalf of the vendor and even more so when there are multiple vendor bids in succession.

The risk for auctioneers is that any individual vendor bid during an auction has the potential to be misleading and deceptive under section 9 of the FTA if not identified clearly as a vendor bid. This was the subject of the Court of Appeal case of Commerce Commission v Grenadier Real Estate Limited [2004] 2 NZLR 186, where the court said that unidentified vendor bids can ‘be misleading to create the illusion of real competition where there is none’. The Court of Appeal further noted that vendor bids have to be ‘expressly notified and that every such bid is able to be recognised by members of the relevant section of the public for what it is’.

However, there needs to be a practical balance struck where vendor bids are clearly identified, but auctions are not halted because an auctioneer has to announce vendor bids an impractical number of times. This can be the case if there are multiple lots for sale. The current Bill does not provide any such procedure, but does provide flexibility in allowing auctioneers to decide how they want to make vendor bids clear.

The Bill also disallows vendor bids above the reserve price or at ‘no reserve’ auctions. The Bill reflects what is already set out in the REINZ Auction Code of Practice and, to a lesser extent, the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 (Rules) and the Auctioneers Association’s Code of Ethics.

Account and payment of proceeds

A new section 36ZC sets out the obligations an auctioneer has to a vendor to account for the sale within 10 working days of the sale of property by auction or within a minimum of five working days if agreed otherwise. However, if a licensed real estate agent conducts

Consumer Law Reform BillConsumer Law Reform Bill


EMPOWERING YOUR PROPERTY VALUATION BUSINESS

iPad & Bluetooth DISTO – Sketching just got easy...

Uses ValuePRO’s unique, world first DISTO Bridge Technology. ValuePRO is currently the only iPad sketching software in the world that integrates with the Leica DISTO.

Use your Leica Bluetooth DISTO to wirelessly and accurately sketch your floor plans on ValuePRO for iPad.

8.94

Australia:Call 1300 88 60 35www.valuepro.com.au

New Zealand:Freecall: 0800 000 686www.valuepro.co.nz

... and NOW take your business to the next levelIs your business Up-to-Date?

Is your Practice Management

System keeping up with the

times? ValuePRO users benefit

from the constant stream of

innovations we bring to the

industry – we re-invest more than

$1M annually in R&D alone.

Did you know ValuePRO is used every day for

preparing sophisticated commercial, rural and

industrial valuation reports?

We have support for:

� Detailed Re-usable

Lease Data

� Customisable Commercial

Sales Database, and

� A host of additional features

designed by practicing

Commercial valuers

Its not JUST for residential

Report Generation – MORE than just the basics

ValuePRO lets you take your favourite MS Word

and MS Excel reports and calculation models – no

matter how complex – and bring them in as re-

usable templates. You can create simple to highly

sophisticated reports, invoices and quotations, with

features of your own design, such as:

� Embedded Excel calculations

� Graphs and charts populated with data from

relevant Sales and Leases

� Automatic property location maps

� Documents within documents

� If..then..else style logic and formulae

Are you STILL double-keying data?

ValuePRO is an all-inclusive operating system for your

valuation business. It eliminates double keying of

information by seamlessly integrating:

� Faxes, SMS, E-Mail, Your Web Site orders and Quotes,

PropertyIQ Panel Work, Voice Mail, etc..

� Sales & Property Data from PropertyIQ and Terralink

� Field Notes, New Sales evidence, Photos, Videos &

Dictation from iPad, iPhone and Windows Tablet

� Customisable QA rules and compliance checking

� One click report creation & sending by Email, Fax,

SMS, Web Site collection and XML for Panel Systems

� Bi-directional Synchronisation with MYOB,

QuickBooks & other Accounting packages

Ready to find out more?Call us for an on-line demonstration and guided tour on your desktop at your convenience.

0800 000 686 – Option 2Or e-mail us for more information on:

[email protected]

110 Implementations across Australia,

New Zealand, Asia and Africa.

10 years of experience with firms of all sizes and

geographic spread. ValuePRO users benefit from

our depth of experience, scale and growth. They

get access to snappy, savvy technical support and

super-fast, reliable service infrastructure.

Unparalleled Experience

YEARS

ValuePRO

EMPOWERING YOUR PROPERTY VALUATION BUSINESS

iPad & Bluetooth DISTO – Sketching just got easy...

Uses ValuePRO’s unique, world first DISTO Bridge Technology. ValuePRO is currently the only iPad sketching software in the world that integrates with the Leica DISTO.

Use your Leica Bluetooth DISTO to wirelessly and accurately sketch your floor plans on ValuePRO for iPad.

8.94

Australia:Call 1300 88 60 35www.valuepro.com.au

New Zealand:Freecall: 0800 000 686www.valuepro.co.nz

... and NOW take your business to the next levelIs your business Up-to-Date?

Is your Practice Management

System keeping up with the

times? ValuePRO users benefit

from the constant stream of

innovations we bring to the

industry – we re-invest more than

$1M annually in R&D alone.

Did you know ValuePRO is used every day for

preparing sophisticated commercial, rural and

industrial valuation reports?

We have support for:

� Detailed Re-usable

Lease Data

� Customisable Commercial

Sales Database, and

� A host of additional features

designed by practicing

Commercial valuers

Its not JUST for residential

Report Generation – MORE than just the basics

ValuePRO lets you take your favourite MS Word

and MS Excel reports and calculation models – no

matter how complex – and bring them in as re-

usable templates. You can create simple to highly

sophisticated reports, invoices and quotations, with

features of your own design, such as:

� Embedded Excel calculations

� Graphs and charts populated with data from

relevant Sales and Leases

� Automatic property location maps

� Documents within documents

� If..then..else style logic and formulae

Are you STILL double-keying data?

ValuePRO is an all-inclusive operating system for your

valuation business. It eliminates double keying of

information by seamlessly integrating:

� Faxes, SMS, E-Mail, Your Web Site orders and Quotes,

PropertyIQ Panel Work, Voice Mail, etc..

� Sales & Property Data from PropertyIQ and Terralink

� Field Notes, New Sales evidence, Photos, Videos &

Dictation from iPad, iPhone and Windows Tablet

� Customisable QA rules and compliance checking

� One click report creation & sending by Email, Fax,

SMS, Web Site collection and XML for Panel Systems

� Bi-directional Synchronisation with MYOB,

QuickBooks & other Accounting packages

Ready to find out more?Call us for an on-line demonstration and guided tour on your desktop at your convenience.

0800 000 686 – Option 2Or e-mail us for more information on:

[email protected]

110 Implementations across Australia,

New Zealand, Asia and Africa.

10 years of experience with firms of all sizes and

geographic spread. ValuePRO users benefit from

our depth of experience, scale and growth. They

get access to snappy, savvy technical support and

super-fast, reliable service infrastructure.

Unparalleled Experience

YEARS

ValuePRO

Consumer Law Reform Bill

the auction, then the provisions in Part 5 of the REAA apply instead. There is no substantial change to the law in relation to this issue. But, as discussed earlier, if auctioneers are expected to deal with issues such as taxation in real estate transactions, then their level of training may need to be sufficient to reflect that.

Start and end of an auctionThe Bill proposes that if an auctioneer accepts an offer within one working day after the close of bidding, then that property may be treated as having been sold at auction. While the provision reflects the nature of auctions where deals often occur after the bidding process, there are two concerns with this proposal.

First, post-auction negotiations sometimes extend beyond one working day before an offer is accepted. Submissions have commented that parties should be free to agree in writing that the auction terms apply for a reasonable period post-auction. Secondly, there is concern that disclosure of the type of sale will affect whether a real estate agent breaches Rule 6 of the Rules which disallows misleading a customer or client. In this context, a real estate agent or auctioneer who represents a sale as being by auction after it has concluded could potentially be accused of misleading a customer or client.

Submissions have proposed consequential amendments to the Rules to make it clear that representing a property being sold at auction within the meaning of the new provision is not misleading. An alternative would be to add a qualification to the provision allowing a sale to be treated as being by auction to the effect that doing so will not, for the purposes of any other statutory provision, be considered misleading or deceptive.

Conclusion on auctionsWhile the law of auctions is being modernised in an environment where auctions are becoming more popular, attention should be given to the interplay between the new provisions and the REAA. In particular, auctioneers licensed only under the Auctioneers Act 1928 or the new regime will have to be careful to make sure they are also licensed under the REAA. As discussed, the select committee report is due in August, so watch this space.

Unsubstantiated representationsIn this part of the article, the offence of ‘unsubstantiated representations’ in the real estate context is considered. The Bill defines ‘unsubstantiated representation’ as −

… a representation made by a person who does not, at the time of making the representation, have reasonable grounds for the representation, irrespective of whether or not the representation is in fact false or misleading.

The representation can be in connection with ‘the sale or grant or possible sale or grant of the interest in

land’.Mechanisms already exist in the FTA to make

misleading and deceptive conduct an offence, and in the Contractual Remedies Act 1979 to prohibit misrepresentations. In the real estate industry, in particular, Rule 6 of the Rules as discussed, provides that licensed real estate agents must not mislead clients or customers.

Given these existing mechanisms, there is a concern that introducing the offence of making ‘unsubstantiated representations’ will lead to uncertainty and open the floodgates to claims. These flaws in this area, as they specifically relate to the real estate environment, are discussed below.

Main issues with unsubstantiated representationsThere are compelling arguments against making ‘unsubstantiated representations’ an offence under the FTA −• Existinglawsasdiscussedalreadysufficientlycover

such claims• Prohibiting‘unsubstantiatedclaims’iscontrarytothe

government’s pledge to ‘remove requirements that are unnecessary, ineffective or excessively costly’

• Uncertaintyaboutstandardsofcompliancetosubstantiate claims will increase compliance costs for businesses

• Theprovisionraisesthepossibilityofcompetitorharassment if businesses are required to substantiate their claims, irrespective of whether they are true or have caused any harm.

These problems arise clearly in the real estate context. Real estate agents, in particular, will face difficulties with timing of making representations, having reasonable grounds for a representation, and be exposed to complaints even where no harm to consumers has occurred.

Timing of representationsReal estate agents and professionals make representations early in the marketing process and work as teams. Representations during an open home, for example, may need to be substantiated by checking with the client, branch manager or listing agent holding the necessary information, or at times with the relevant local authority the next working day. The process of property purchases can sometimes be stressful, and it is not unusual for agents and a customer to have different recollections of what was said or how a statement may be qualified.

The provision for unsubstantiated representations can therefore act as a device for consumers to abandon responsibility for satisfying themselves that a property meets their requirements and place onerous obligations on the property professional instead. The Rules already require agents to disclose information to a certain standard and strike a balance with the commercial reality that




agents are in the business of selling property. Having to substantiate representations at the exact time when it is made does not fit comfortably with that commercial reality.

Reasonable grounds for the representationThe Bill provides some guidance on what constitutes ‘reasonable grounds’. In considering these grounds a court will have regard to −• Theresearchorotherstepstakenbyapersonbefore

making the representation• Thenatureofthegoods,services,orinterestinlandin

respect of which the representation was made• Thenatureoftherepresentation,forexample,whether

it was a representation of quality or quantity, or of fact or opinion

• Theactualorpotentialeffectsoftherepresentationonany person

• ThepurposeoftheBill.In a property context, much of a real estate

agent’s information is gathered from a client’s property description sheet. It is difficult, if not impossible, in some cases for agents to have grounds for their representation beyond the instructions received. For example, details of properties not apparent from a physical inspection are difficult to substantiate. It is widely accepted that even construction professionals have to sometimes guess what construction material may be behind a wall without invasive testing.

There are examples where real estate professionals make representations based on the client’s specific instructions, and on knowledge of commonly accepted practices attained over years of experience in the real estate industry that are not misleading or incorrect but can be difficult to prove. Such representations include statements such as large bedroom, bungalow, city fringe, ideal first investment or spacious one bedroom apartment.

Placing the onus of proof on the property professional in the above examples would be inappropriate, not to mention time-consuming, for the Commerce Commission which would require significant resources to investigate these claims if the representation is challenged. Such investigations should not be initiated unless the originating complaint is justified.

Irrespective of being false or misleadingThis requirement in the ‘unsubstantiated representation’ definition has the potential to open up the floodgates to complaints. Associated compliance costs for vendors and those involved in selling real estate will increase. Without adequate thresholds for a complaint to be made, property professionals are exposed to unwarranted or frivolous complaints where there has been no harm to a consumer.

Most submissions on the Bill take the position that the words ‘irrespective of whether or not the representation is in fact false or misleading’ should be deleted. As mentioned earlier, sufficient avenues already exist for consumers to make complaints about conduct or misleading information.

Conclusion on unsubstantiated representationsAlready we can see that the area of ‘unsubstantiated representations’ presents a number of major potential problems for those in the real estate sector. They are not confined to this sector. Submissions from non-real estate bodies have voiced similar concerns to those outlined in this article. The provision deals with an area of law with adequate existing regulation already, so again, watch this space for changes effected to the Bill when the select committee report is released.

Niven Prasad is a solicitor at Simpson Grierson

Legal cases




Municipal rates

Ian Campbell

Municipal rates and better local government

This article reports on the current local government reforms announced at the beginning of this year. The reforms are aimed at refocussing local authority responsibilities under the Local Government Act 2002, as well as improving efficiency and financial responsibility within the local government sector. It also reports on the municipal rates increases expected from July 2012. These are mainly as a result of the 10-year long-term plans issued by each local authority after public consultation covering the period 2012/13 until 2021/22.

Municipal rates

Better local government reforms The Better Local Government reforms announced by Prime Minister John Key in March this year are aimed at keeping rates affordable and local government debt at prudent levels. As indicated by the Minister of Local Government, the Hon David Carter, these reforms will refocus council core roles, setting clearer fiscal responsibility and offering more opportunity for them to better manage their costs.

The Local Government Act 2002 Amendment Bill, at the time of writing, re-evaluates the existing local government legislation, which had the effect of widening the scope of council responsibilities since that law was passed over a decade ago. The Bill aims to rebalance changes made since 2002 which has now seen the average rates costs increase by seven per cent a year and council debts quadrupling from $2 billion to $8 billion.

Long term plansThe Bill passed its first reading on 12 June 2012. By contrast, local authorities have also been finalising their 10-year long-term plans for the 2012/13 to 2021/22 period as required under the current Act. These plans will need to be revised once the Amendment Bill becomes law.

Rates are changingYour rates work hard all around Auckland

Now they’re fairer all roundFrom July this year, the way your rates are worked out is changing. There is now a single rating system, that over time will mean properties across Auckland of a similar value and use will be charged a similar amount of rates.

Your rates pay for many things, such as transport, events and parks that make Auckland a great place to live.

As one council, for the year ahead we’ve agreed on the biggest capital investment in Auckland’s history, while saving $121m in operating costs, keeping service levels the same and the average rates rise to 3.6 per cent.

However, some ratepayers will experience a larger increase or decrease either side of the average, which is why there is a transition adjustment to smooth the impact of any change.

Check out an estimate of your new rates today. Visit www.aucklandcouncil.govt.nz/rates or call us on 09 301 0101.

Rates change 2012 Fairer all round








As long-term plans are vigorously debated by local authorities, media reports across the country have alerted ratepayers to imminent rate increases from July 2012.

Particularly at the extreme, Kaipara District ratepayers are reported to be revolting against their 31 per cent general rates increase. As a background to Better Local Government, the reform will focus on eight specific initiatives but may not be ready until later this year. The first four, introduced to Parliament in May 2012, examine the purpose of local government, introduce fiscal responsibility, and seek to strengthen council governance and streamline council procedures.

The balance of the reforms aim to address local government efficiency, a framework around local and central government roles, an investigation into efficient infrastructure provision and a review of development contributions, undertaken in consultation with Local Government New Zealand. These work streams will also link with the Productivity Commission’s current investigation on regulatory roles between central and local government and the Auditor General’s review into development contributions. Based on all of these findings, a second reform Bill is expected in 2013.

Local Government in New ZealandNew Zealand’s 78 local authorities make up four per cent of gross domestic product, spend $7.5 billion a year of public money and manage $100 billion worth of public assets. Current reforms brought through the Local Government Act 2002 Amendment Bill aim to limit expenditure growth of local authorities to no faster than inflation and population growth, with the exception given to extraordinary events such as disaster recovery expenditure for Christchurch City.

The Local Government Funding Agency, a council-controlled organisation operated by 18 local authority councils and the Crown, borrows on behalf of local authorities. The authority has been enabled under the Local Government Borrowing Act 2011 and was incorporated on 1 December 2011. Of interest, the newly-formed agency estimates that local authority debt will rise to about $11 billion over the next decade. Accordingly the authority aims to diversify funding sources for shareholder councils and achieve favourable interest rates moving forward.

Municipal rates increases 2012/13Invercargill City up 4.08 per cent As reported by the Invercargill Mayor Tim Shadbolt on 6 June 2012, the general rates increase for Invercargill and Bluff for the 2012/13 year will be 4.08 per cent. This is lower than the 4.47 per cent increase projected in the city’s draft long-term plan.

Dunedin City Council up 4.9 per centFollowing a meeting of the Dunedin City Council on 25 June 2012, a 4.9 per cent rates increase was approved.

The Council has also adopted its long-term plan 2012/13 to 2021/22 and confirmed the rates increase, after a consultation which attracted nearly 1,000 people. The Council will borrow an extra $43 million during 2012/2013, mainly for large capital projects, including the upgrade of the Dunedin Centre and the Tahuna wastewater plant.

Queenstown Lakes District up 2.68 per cent Queenstown Lakes District Council has chipped 0.13 per cent from the overall rates increase of 2.81 per cent for the coming 2012/13 rating year. The recommended average rate increase for 2012/13 is now 2.68 per cent.

Buller District up 3.3 per cent Buller District Council has reported that at the onset of the 10-year plan process, their initial increase in general rates was 7.7 per cent. However, a reduced increase will now be smoothed over two financial years with increases proposed at 3.3 per cent for 2012/2013 then 3 per cent for the 2013/2014 rating year. The Council’s 10-year plan provides for population growth but with sustainable debt levels. It provides for a $60.5 million capital expenditure programme with borrowings decreasing over the 10-year period.

Christchurch City Council up 7.08 per cent Christchurch City Council has announced a combined increase of 7.08 per cent, partly because of extra costs linked to the 22 February 2012 earthquake. The council advises that because of the earthquake, there is a budget deficit of $73.8 million over the next three years. It proposes an additional rate levy at 1.76 per cent to pay for this, over and above the 5.32 per cent general rate increase indicated before 22 February. The government has now given the council power to adjust rates more often. From July 2012, it will be able to change rates during the financial year rather than only at the start. Rates will therefore be immediately adjustable to reflect the rateable value of properties. This will apply if a house is demolished, a new building is completed and land is subdivided.

Hurunui District up 3.59 per cent Hurunui District Council has adopted its annual plan and confirmed an average 3.59 per cent rates increase for the 2012/13 year. Hurunui Mayor Winton Dalley says that the council is comfortable it has been able to produce a budget and plan which will serve the district well in the year ahead. Gains coming from the operation of the Hanmer Springs Thermal Pools and Spa complex have helped offset costs.

Nelson City Council up 4.6 per cent Nelson City Council has proposed an average rates and charges increase of 4.6 per cent each year for the first five years from 1 July 2012. For the next 10 years, total rates are proposed to rise by 35 per cent, or an average 3.5 per cent each year. The Council has confirmed that the

Municipal rates


Responsibility of business ventures

proposed rate of 4.6 per cent has been made possible by using a smoothing loan which allows a uniform rates rise for the first five years.

Wellington City up 4.4 per cent Wellington ratepayers faced a 4.4 per cent rise in the next financial year. The increase takes the Council over its self-imposed limit of 3.8 per cent.

Palmerston North up 4.8 per cent Palmerston North City Council’s budget provides a 4.8 per cent increase in overall rates for the coming year. At the time of this report, the council was seeking feedback on where to accept a growth plan that would include capital works on new projects at an extra one per cent rate increase above the 4.8 per cent level.

New Plymouth up 4.80 per cent New Plymouth District Councillors passed a 4.8 per cent rates increased following 19 hours of debate. This was lower than the 5.7 per cent increase initially expected. A record number of submissions were received on the long-term plan, with the proposed $28 million TSB multi-sport stadium redevelopment the most controversial issue. In response, councillors have elected to postpone the redevelopment back one year to 2016.

Hastings District up 3.4 per cent Following the release of the Hastings District Council’s long-term plan, the average rate increase for the 2012/13 year was marked down at 3.4 per cent, but increasing to 3.8 per cent for the following 2013/14 year. A $15 million seven year loan to fund the council’s infrastructure and capital works programme has been secured through the Local Government Funding Agency.

Napier City up 2.4 per cent Napier City Council advised in its long-term plan to limit rate rises, excluding growth, to no more than 1.1 per cent a year above the Consumer Price Index. The proposed increase for the 2012/13 year will be 2.4 per cent, then increasing to 4 per cent in the following rating year.

Gisborne District up 4.4 per cent Gisborne District Council’s draft 10-year plan indicates that total rates are forecast to increase by around 4 per cent each year during this same plan period. The Council

is currently considering participating with the Local Government Funding Agency as a shareholder council as a means of reducing interest costs on future borrowings.

Hamilton City up 8 per cent Hamilton City Council has confirmed an 8 per cent rates increase following an earlier meeting to set the budget for the year. The council considered 1,605 public submissions to their long-term plan, before settling on the final 8 per cent increase. There was no additional financial expenditure approved following the submission process.

Tauranga City up 4.6 per cent Tauranga City Council’s planned rates increase is 4.6 per cent, and is line with its targeted increase at the level of inflation plus 2 per cent.

Auckland Council up 3.6 per cent Auckland Council has moved to a single rating system following the amalgamation of its eight councils last year. The cost of rate rises will be eased through a three-year transitional period, and changes have allowed increases to be capped at 10 per cent, with business rates phased in over this same three-year period. All Auckland households will receive an average 3.6 per cent rate rise as well as an annual general charge of $350. However, rate rises will vary from one household to the next, with some ratepayers facing a far higher percentage increase than that reported.

Whangarei District Council up 3.52 per cent Whangarei District Council proposes to use the Local Government Cost Index produced by Business and Economic Research Limited as its guide to the proposed increase in general rates for the 2012/13 year. Currently the index is running at 3.52 per cent.

Kaipara District Council up 31 per cent Kaipara District Council has proposed a general rates increase of 31 per cent for the 2012/12 year to ensure that it can move towards a more financially sustainable position. Current debt levels are expected at $79.6 million and have been attributable to capital projects, mainly the new Mangawhai sewerage scheme. Media reports of ratepayers threatening to revolt at the proposed rate increase have been widely distributed.

Municipal rates









Deborah Battell

Ascertaining the viability of business ventures − whose responsibility is it?


In the current economic climate it is not uncommon for customers to complain to the Banking Ombudsman Scheme about the failure of banks to ascertain the viability of a business proposition before approving lending. Complainants feel that if the banks had undertaken proper due diligence, they would never have agreed to lend in the first place. They would then not find themselves in their current situation − owing money to the bank, in the process of mortgagee sales or in debt collection.

Lending viabilityWe have recently investigated complaints of this nature from property investors, farmers, wine growers and a range of property purchasers. It has become clear that some customers expect that the bank will automatically have assessed the viability of the proposition as part of the lending process. It is important for customers to know that this is not necessarily part of a bank’s assessment of a lending proposition and that customers must undertake their own due diligence.

It may also be helpful for customers to know that we cannot look at the bank’s commercial judgement. We can, however, look at the way in which the bank has administered the lending process. The customer’s ability to repay a debt, for example, is a very important factor.

Although it can be difficult for a lender to assess a customer’s ability to repay business or investment propositions, we do expect a bank to properly obtain and assess all of the available information about the prospects for success and we do consider whether the proposition met the bank’s normal lending guidelines.

In addition, we assess whether there was any evidence to show that the bank


Auckland Plan

had, in fact, given advice about the merit of a customer’s proposed venture. If a bank has chosen to give advice, it may bear some responsibility if it gives that advice negligently.

Farming customer case studyThe following case, involving farming customers, illustrates these issues well and may be helpful for people considering taking on lending with a reasonable degree of associated risk. In this case, the complainants were lucky to avoid residual debt to the bank, but they did need to sell a farm that had been in the family for some time.

The backgroundMr and Mrs D were experienced farmers who had a number of term loan and overdraft facilities with their bank. In 2004, they approached the bank for finance to purchase the neighbouring farm. The property needed some development and was able to be subdivided. The couple provided an updated valuation for the property to the bank. Based on the bank’s knowledge of Mr and Mrs D’s current farming operation and the value of the property, which it considered offered sufficient security, the bank approved the application. The finance was advanced, interest only was repayable for the first four years of the loan, and the interest rate was fixed.

Some months after the purchase, the couple engaged a farming consultant who advised them that the farm venture they planned on the new property would be viable once the development was complete. Over the next few years, Mr and Mrs D continued to farm and to develop the new property. During this time they suffered set-backs due to drought and poor lamb prices. The new farm never reached the level of productivity needed to service the debt.

After four years, a different farm consultant advised Mr and Mrs D to sell their farm and realise the equity. They decided to continue with the farming operation, however, as the outlook for the meat industry appeared to be improving. Their loan was refinanced for a further four years on an interest only basis, with the interest being fixed over this period.

The couple carried on for a further year before deciding that the farming venture was unsuccessful. They sold their properties and repaid the bank in full. The bank charged Mr and Mrs D an early repayment cost as the lending was on a fixed interest rate, and interest rates had fallen since they refinanced their loan.

Mr and Mrs D complained to us that the farming venture was never viable, and that even given good seasonal conditions and improved market prices the venture would not have generated sufficient income to meet the debt servicing requirements. While they accepted that they did not do their own due diligence on the farming venture, and that they were willing borrowers,

they believed the bank should have carried out an in-depth analysis of the farming venture before advancing the finance. They sought repayment of the early repayment cost.

The decisionAfter investigating, we decided that the bank was not responsible for Mr and Mrs D’s situation. This was on the basis that − • Thereisnogeneraldutyonbankstoanalysea

customer’s business ventures for viability when assessing applications for credit

• MrandMrsDdidnotdotheirownduediligenceon the farming venture and could not, by asking for finance, transfer this responsibility to the bank

• Therewasnoinformationtoshow,nordidMrandMrs D claim, that the bank had led them to believe it would analyse the venture for viability, or assume a role as their adviser

• UndertheCodeofBankingPractice,banksstatethatthey will only provide credit when the information available to them leads them to believe the customer will be able to meet the terms of the facility, but this does not mean they must carry out due diligence on a business venture

• Inthiscase,thebankknewMrandMrsDascustomers and as experienced farmers and it was comfortable with the level of security provided

The bank was being asked to finance what was effectively a new business venture on the new farm and where the property required some development. It is not possible to guarantee the success of new business ventures at the outset. In the normal course of business, the risks associated with business ventures are borne by those undertaking them.

ConclusionThe decisions of banks to lend are usually based on whether borrowers can provide sufficient security for the lending and on whether they have some comfort about the borrower’s ability to repay at the time that the loan was taken out. Unless a bank has explicitly taken on responsibility for providing advice, customers must satisfy themselves about the viability of their business ventures, and seek advice from their own advisers if necessary.

The Banking Ombudsman Scheme cannot investigate matters involving a bank’s commercial judgement. However, we can investigate the administration of the lending process to determine whether it has properly obtained and assessed all of the available information about the prospects for success, and whether the proposition was consistent with the bank’s normal lending guidelines.

Deborah Battell is the Banking Ombudsman



Ree Anderson

The Auckland Plan

Auckland has a widely-shared vision to be the world’s most liveable city. For the first time in our history it has a single, comprehensive plan for all of Auckland and its people. The Auckland Plan was adopted on 29 March 2012 by the Mayor and Auckland Council. It is a comprehensive 30-year strategy for the city’s growth and development and includes social, economic, environmental and cultural goals required by the Local Government (Auckland Council) Act 2009 which established the new Auckland Council.

Auckland Plan

?

?

?

?

??

?

The Southern Initiative

CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany

Westgate / Massey North

Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai

Beachlands/ Pine Harbour

´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change

! Metropolitan centre

! Town centre (varying degrees of change)

E Emergent centre

H Satellite town








_̂ Area subject to the Eastern Access Agreementincluding Pūkaki Marae, AC and AIAL

Ferry routesExisting rail networkProposed rail networkStrategic road networkArterial roadsRapid Transit Network (RTN)

! ! ! ! ! ! Baseline 2010 Metropolitan Urban LimitBush livingCountry livingMixed rural productionMajor public open spaceRural coastalRural islandRural productionDefence land

The preparation of the plan was led by the Mayor and the Council, However it was developed by harnessing the collective goodwill and knowledge of government, iwi, business, non-government organisations, and with input and feedback from communities across Auckland and beyond.

Preparing the planThe process of preparing the Auckland Plan included the release of a discussion document Auckland Unleashed in March 2011. This was only four months after the new Auckland Council had been established and sworn in. The legislation which requires a spatial plan for Auckland has no timeframe. However, the Mayor asked that the plan be produced within a year as it sets the direction and course for Auckland.

There were extensive conversations and discussions with many sectors, advisory panels and communities throughout the entire preparation of the plan. The discussion document Auckland Unleashed allowed Aucklanders and others to provide informal written submissions and feedback in the early stages.

Subsequently a draft was published in September 2011 and was subject to the special consultative procedure under the Local Government Act. The Council received 1,974 written submissions to the draft plan, and 671 of those who submitted asked to be heard and talk to their submissions before the Mayor and Councillors.


?

?

?

?

??

?


WaitakereRanges

HunuaRanges

HunuaRanges

?

?

?

?

?

?

?

?

?

HaurakiGulf

KaiparaHarbour

ManukauHarbour

WaitematāHarbour

TasmanSea

HaurakiGulf

Newmarket

Papakura

Manukau


Botany

Takapuna

SylviaPark

New Lynn

Henderson

Albany

Pukekohe

Warkworth

Oneroa

Riverhead


SnellsBeach

Wellsford

Helensville

Waiuku

Kumeū /Huapai

City Centre& Fringe




Publicopenspace

Public open space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralisland

Ruralproduction

Ruralproduction

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

0 5 10 Km

PublicOpen-Space

Rural -Island

GreatBarrierIsland

LittleBarrierIsland

´



?


=< Port



Urban development


(AUCKLAND WIDE)

Most change

Significant change

Moderate change

Some change

Least change

Metropolitan centre

H Satellite town









0 5 10 Km

!



Defence land






Ferry routes


Discussion and conversationHearings sessions were developed. These included full-day sessions where submitters from across Auckland came together and sat at allocated tables based on the topic of their submission along with other submitters they may never have met before. This allowed for a discussion and conversation on the topic. Each table had a Councillor, a facilitator and a subject matter expert. To ensure all Councillors heard the submissions there were reports from the tables during the course of the session. Very positive feedback was received about this process.

Other innovations included a postcard campaign ‘Make Auckland Awesome’ to obtain children and young people’s views. A total of 10,000 postcards were distributed through youth networks. Around 6,000 postcards were returned and the common themes from five to 25-year-olds were ‘listen to us’ and ‘care for us and our families.’ Following the hearing and analysis of all submissions, and the gathering of further evidence, the draft plan was amended to become the Auckland Plan.

Transformational changesSix transformational changes and two big initiatives have been identified in the plan to ensure actions, programmes and investment are focused and prioritised in areas that will produce the results. The six changes are −• DramaticallyacceleratetheprospectsofAuckland’s

children and young people

• Stronglycommittoenvironmentalactionandgreengrowth

• Movetooutstandingpublictransportwithinonesystem

• Radicallyimprovethequalityofurbanliving• SubstantiallyraiselivingstandardsforallAucklanders

with a focus on those most in need• SignificantlyliftMaorisocialandeconomicwell-

being.

The challengesAuckland faces significant challenges and these are identified in the plan. They include −• Rapidpopulationgrowthofbetween700,000anda

million additional people by 2040• Growingsocio-economicdisparitiesthatmanifest

themselves in identifiable parts of Auckland• Historicalunder-investmentinarangeofinfrastructure

to meet Auckland’s growth and business needs• Increasingchallengestofundthelevelofinvestment

required to enable Auckland to reach its potential and be a competitive international city

• Acriticalunder-supplyofhousingandanincreasingshortage of affordable housing for low to medium income households.

The development strategyThe Auckland Plan addresses these problems with its high level development strategy and supporting directives. The plan −

•Recognisesthatimprovedandbalancedsocio-economic development is required to strengthen Auckland as an international city. It aims to improve the city’s economic performance by promoting innovation clusters such as film, food and beverage, health, marine, tertiary, business and financial services, by being business friendly, extending trade networks in the Asia/Pacific rim, supporting an export-driven economy and investing in growing skills and jobs.•Promotesabetterqualityoflifewithan emphasis on building strong, inclusive communities around local neighbourhoods and centres with good access to jobs, recreation, culture and leisure activities•Ensuresnaturalmarineandbuiltenvironmentsare cared for, acknowledging that Auckland’s environment is a defining feature which contributes to well-being and gives it an advantage over other international cities•Includestwodevelopmentstrategymapsshown which will guide where and how growth will occur over 30 years.This includes moving towards a quality, compact Auckland by generational change.

Auckland Plan


?

?

?

?

??

?


WaitakereRanges

HunuaRanges

HunuaRanges

?

?

?

?

?

?

?

?

?

HaurakiGulf

KaiparaHarbour

ManukauHarbour

WaitematāHarbour

TasmanSea

HaurakiGulf

Newmarket

Papakura

Manukau


Botany

Takapuna

SylviaPark

New Lynn

Henderson

Albany

Pukekohe

Warkworth

Oneroa

Riverhead


SnellsBeach

Wellsford

Helensville

Waiuku

Kumeū /Huapai

City Centre& Fringe




Publicopenspace

Public open space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralcoastal

Ruralisland

Ruralproduction

Ruralproduction

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

0 5 10 Km

PublicOpen-Space

Rural -Island

GreatBarrierIsland

LittleBarrierIsland

´



?


=< Port



Urban development


(AUCKLAND WIDE)

Most change

Significant change

Moderate change

Some change

Least change

Metropolitan centre

H Satellite town









0 5 10 Km

!



Defence land






Ferry routes


Auckland Plan

?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











The development strategy maps provide for 60 per cent to 70 per cent of total new dwellings to be built within the existing urban footprint. As a result, between 30 per cent and 40 per cent of new dwellings will be in new greenfield developments, the two satellite towns Warkworth and Pukekohe, and rural and coastal towns. The maps show areas where there is likely to be − • Leastchangesuchasareasofhistoricheritage• Moderatechangeincluding33towncentressuchas

Panmure, Manurewa, Browns Bay, and Glen Eden• Mostchange,thecitycentreandthe10metropolitan

centres such as Takapuna, New Lynn and Papakura. The maps also identify major business areas which

are hubs for employment. In addition, at least 1,400 hectares of additional greenfield land will be provided for business activities, bringing the total area of land available for business development in current and future capacity to

3,270 hectares. This provides 109 hectares a year over the life of the plan.

The maps indicate the rural strategy which is to avoid sporadic subdivision throughout the rural areas and contain additional population growth, generally in rural coastal townships and areas identified for country living. This reflects the value Aucklanders place on their rural environment and a thriving rural economy.

Moving to a quality compact AucklandAucklanders support living in denser urban environments, but they do so on the basis that neighbourhoods, town centres and suburbs will be planned and designed to ensure they are places where people will want to live. The plan includes a priority to ‘demand good design in all development’ and incorporates good design principles which are to be applied when assessing new developments. These principles will be reinforced as the unitary plan and an accompanying design manual are developed.

The development sector has supported the emphasis on quality and good design on the basis that quality will encourage quality. It is appreciated, however, that generational change is required over three decades because of the serious under-supply of dwellings in Auckland. This generational change is indicated below, which is included in the plan.

The diagram identifies a trajectory of growth in housing with each decade having a different focus. The first decade focuses on developing a track record for quality buildings, places and processes, and building capability across the development sector. The second decade assumes quality will encourage a greater demand for quality compact housing. The third decade is where momentum is gained in producing quality housing which is affordable and well located to access transport, jobs and amenities.

Auckland Plan


?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











?

?

?

?

??

?


CityCentre

& Fringe

HuntersCorner

Papatoetoe

Waitakere Ranges

ManukauHarbour

?

?

?

?

?

?

?

?

?

Kumeū /Huapai

Beachlands/ Pine

Harbour

Riverhead

OneroaGlenfield

Northcote

Highbury

Te AtatuPeninsula

GlenEden

Mt Albert

Pt Chevalier

Avondale

RoyalOak

Onehunga

GlenInnes

Pakuranga

Ōtāhuhu

Māngere

Ōtara

Manurewa

Remuera

Ellerslie Panmure

Sunnynook

Ormiston

BrownsBay

St Lukes

Whangaparāoa

ThreeKings

Silverdale

HighlandPark

Ōrewa

Howick

Milford

Takanini

Albany

Henderson

New Lynn

Newmarket

SylviaPark

Papakura

Takapuna

Botany


Manukau



Publicopen space

Publicopenspace

Ruralcoastal

Ruralcoastal

Ruralproduction

Ruralproduction

Ruralproduction

Bushliving

Bushliving

Countryliving

Countryliving

Countryliving

WaitematāHarbour

HaurakiGulf

0 52.5 Km

k

k

k

k

k

k

kkj

j

j

j

j

j

jj

H

HPukekohe

Warkworth

Oneroa

Waiuku

Riverhead

Wellsford

Helensville

Snells Beach

Kumeū/ Huapai


´



?


=< Port



Urban development


(URBAN CORE)

Most change

Significant change

Moderate change

Some change

Least change



E Emergent centre

H Satellite town











The form of housingThe plan expects a range of housing types from low rise up to four storeys, to high rise of nine or more storeys. Intensification does not require high rise everywhere. The plan anticipates high rise being mainly in the city centre or metropolitan centres. Medium rise development of five to eight storeys may occur in metropolitan, town or local centres and the two satellite towns.

Whether or not the development in these respective areas is medium rise will depend on more detailed assessments of each of the centres, taking account of good design principles. The plan acknowledges there will be areas of intensive urban development, as well as examples of more traditional forms of urban housing − detached low rise residential dwellings on 400 to 800 square metre sites. Ultimately the plan provides for choice so that people can age in place and housing is available for different stages of the life cycle.

It is acknowledged in the plan that the size of houses has increased significantly over the last 20 years, from an average from 144 square metres to 220 square metres. The size of a house is one factor contributing to affordability. Other factors include costs of land supply, construction, regulatory and servicing.

An immediate project that the Council has approved is the development of a strategic housing action plan. By December 2012 this will identify what will be used to do its part in improving housing supply and affordability. This is in addition to undertaking further investigation of greenfield land identified on the development strategy maps to enable future urban land supply and the development of a 2040 rural urban boundary.

This investigation will inform the unitary plan which is currently under preparation and will effectively be Auckland’s regulatory land-use plan. This will provide a

basis for the staged release and development of land inside the rural urban boundary.

The two big initiativesThe city centre Successful international cities have a geographical heart. The city centre is a main visitor destination and a commercial, financial, educational and cultural centre. It is also gaining popularity as a place to live. A city centre master plan has been adopted to guide its growth and development.

The long term plan provides the 10-year budget allocation determining what is affordable to achieve the Auckland Plan. It was also recently adopted, and provides approximately $130 million over 10 years for initiatives in the city centre.

The southern initiative This includes four local board areas − Papakura, Manurewa, Otara-Papatoetoe and Mangere-Otahuhu. The population of this area is approximately 300,000, with 80,000 residents being under 15 years of age. It is an area of high social need yet significant economic opportunity.

Central government is the major investor of social services in this area. The Auckland Council and its local boards invest in the area via physical and social infrastructure, such as parks, libraries, leisure centre and events. The purpose of the southern initiative is to work with central government, iwi, communities and businesses for a long-term programme of coordinated investment and actions to bring about transformational change.

Ree Anderson is the Manager Regional Strategy, Community & Cultural Policy for Auckland Council

Auckland Plan



Voice recognition software

Steve McNamara

Voice recognition softwareThe answer for smaller operators into the future

With most smaller valuation practices throughout New Zealand being owned and operated by those less familiar with typing, I believe voice recognition technology has the ability to increase the longevity of many of these businesses. This is especially so now, with more and more pressure going onto firms to provide reports electronically and within shorter timeframes.


What is voice recognition?Voice recognition, or more correctly speech recognition, is the translation of spoken words into text. This most commonly occurs where the user speaks into a headset attached to a PC. Some speech recognition systems use training where an individual speaker reads sections of text into the system. These analyse the person’s specific voice and use it to fine tune the recognition of that individual’s speech, resulting in a more accurate transcription. Most modern speech recognition systems have a very high level of accuracy immediately, in excess of 99 per cent, with minimal training required.

Speech recognition applications include −• Voicediallingsuchas‘callhome’• Callroutingsuchas‘Iwouldliketomakeacollectcall’• Searchsuchas‘findapodcastwhereparticularwordswerespoken’• Simpledataentrysuchasenteringacreditcardnumber• Speech-to-textprocessingsuchaswordprocessorsoremails.

Dragon Naturally Speaking Speech recognition runs across many industries, but this article focuses on its

practical use within the valuation industry. To help I will use Property InDepth as an example, to demonstrate how we use a speech recognition product called Dragon Naturally Speaking Version 11.

Before doing this I will give you a brief overview of the capabilities of a product such as Dragon. Most people understand that this type of technology is able to convert voice into text into a document such as Word. In addition to this Dragon is also able to −• Cutandpastesections• Addpagenumbers• Highlightandunderline• Format.

When it is all complete it can then read the document back to you so you can check that the grammar is correct. Dragon is also able to undertake a number of commands such as opening, saving and printing files. You can also use it to search the internet, create and send emails, search for words or phrases within documents or on the internet, post to Facebook, and many other office tasks. This is all done by voice control and without lifting a finger.

Practical exampleOur valuers use our custom built electronic on-site data collection which offers a variety of tick-box and drop-down options as well as free text boxes. What Dragon enables our valuers to do is use free text boxes without the need to type while on-site. They can also use this technology to describe comparable sales while in the field, meaning that they can accurately describe all facets without the need for any typing.

Above is an example of how Dragon integrates within our software to complete free text fields. The valuer can either speak into a headset or straight into the tablet computer to record the description

Useful for valuers and managersWe find that because of the ease by which this can be done, our valuers tend to include more commentary about the subject property and comparable sales as well as other facets of valuation including zoning, location, land description and market commentary.

From a management perspective voice recognition also gives managers, who are more often than not less familiar with typing, the ability to construct lengthy emails and documents. This also avoids the need to have these dictated, typed elsewhere and approved before sending off. I know from my own experience that this is invaluable. I am now more inclined to explain things more fully while having the ability to process more work without the time restraints of it being typed elsewhere.

In summary, voice recognition software offers a multitude of uses. However, where we believe it has particular relevance to the valuation industry, is to enable those who are less skilled at typing to integrate on-site data collection products such as ours into their businesses. They can therefore provide consistent reports with significantly reduced secretarial input. This will become important as more pressure is put on valuers to produce comprehensive reports in shorter timeframes.

Steve McNamara is the Managing Director of Property InDepth Limited, Hawke’s Bay.




Conference 2012

Jenny Houdalakis

Conference 2012

Themed ‘Let’s get on with it!’ the 2012 Property Institute conference in June was a great event, with over 300 delegates in attendance and over 30 speakers presenting sessions sourced from New Zealand and Australia. The conference was opened by Auckland’s Mayor, Len Brown, followed by a session from Carl Deveruex and Warwick Issacs, General Manager Operations of the Canterbury Earthquake Recovery Authority. Carl had substantial involvement in the emergency response and recovery following the recent Canterbury earthquakes. Warwick has managed the demolition and operations work programme, both residential and commercial, throughout greater Christchurch.

Conference 2012

Break-out sessionsBreak-out sessions flowed during the morning with speakers such as Brendon Gibson from Korda Mentha who gave a presentation on property through a receiver’s eyes. He is a chartered accountant with over 22 years of experience in insolvency and financial consulting. His range of consulting and insolvency assignments has extended from large public companies to SMEs.

Another speaker was Chris Stanley of Telfer Young who spoke to delegates about insurance premiums on commercial and residential markets. He has had many years of experience valuing all classes of urban property, and currently specialises in consultancy and valuation of CBD commercial and industrial property, with a focus on assets such as airports and the health sector.

Phillip Hinton of KCL Property Management gave a presentation on syndications. He is the Executive Director of KCL Property, a commercial property company which manages in excess of $560 million worth of retail, industrial and other commercial property throughout New Zealand and in Brisbane. David White of the Government Property Management Centre of Expertise spoke to members on improving property management performance in the New Zealand public sector. He has 20 years of experience in the property

industry in this country, covering both the tenant and landlord perspective as an internal consultant.

Boyd Gross, Director of Logan Stone, spoke on the plight of horticulture and viticulture. He is experienced across the primary sector with a focus on the specialised property types of viticulture, horticulture and controlled environments.

Workshop

A workshop on the latest trends in relation to the Public Works Act 1981 and Reserves Act 1977 affecting property advisors was presented by Phillip Merfield and Michael Wood of Simpson Grierson. Phillip practices in the area of property with a bias towards infrastructure, local authority and forestry clients and Michael is a partner in Simpson Grierson’s commercial property group. He advises local authorities and other bodies on buying, selling, developing, leasing, managing and operating their property assets.

Dan Kneebone of Bunnings Limited gave a presentation on the challenges of a national roll-out of large retail site selection problems. He manages the property interests of Bunnings which is the largest hardware distributor in Australasia, with an annual sales turnover exceeding $8 billion. Dr Ganesh Nana of BERL gave delegates an update on the economy. He is a modelling, data and forecasting specialist.

Bruce Whillans and Carey Smith of Ray White Commercial spoke to delegates on real estate trends. Bruce has made over a billion dollars in sales, and is recognised as an industry leader in the property market. His well-recognised negotiation skills have resulted in some of New Zealand’s largest property transactions. Carey has been the Chief Executive of Ray White’s New Zealand operations since 1997. He has recently take responsibility for the growth of the company’s Asian operations.

The closing speaker for first day of conference was Patrick Fontein, who was the owner and managing director of the Kensington Group of companies. He has completed 20 commercial and residential property developments across the country.

Conference dinner and awardsThe conference dinner was a formal occasion incorporating the Property Institute Awards.

Professor Robert Hargreaves Life Membership, Property Institute and NZIVIn 1967 Bob was the top student in the NZIV professional’s examinations and in the same year was awarded the Wheeler Scholarship from the University of California. He graduated with honours in 1970 with a Bachelor of Science in Agricultural Economics & Business, and then returned to his previous job as a field

officer with the Lands & Survey Department. He became a Registered Valuer in 1971 and in 1972 embarked on his academic career, when appointed lecturer in agricultural economics and farm management.

Bob became Senior Lecturer in 1978 and in 1991 was appointed Associate Professor in the Department of Property Studies at Massey University and in 1995 was made Head of the Property Studies Department. Up until his retirement in 2010 he was the Head of the Property Group under the School of Economics and Finance.

The John M Harcourt Memorial AwardThe winner of the John M Harcourt Memorial award is Earl Gordon. Earl has been in the profession since 1965, and a fellow since 1994. He has been a tireless supporter of the Property Institute, serving on the Professional Practice Committee since 1988, and chairing it since 1995. He has held a wide variety of roles across the private and public sectors while working in the valuation profession, including practicing on his own account as Gordon Valuations.

Bryan Paul, Fellowship, Property Institute and NZIVBryan began his property career as an Urban Field Cadet with the Valuation Department in 1978, and gained registration in 1983. Bryan joined McPherson & Associates, becoming a Director of McPherson Valuation in 1997. Bryan served on the Valuers Institute Otago Branch Committee for five years from 1992. He also served on the National Education Committee for the introduction of continuing professional development and served as a director of Val group in 1996 and 1997. In 1998, Bryan moved to Nelson and in 2004 joined Telfer Young Nelson as a Valuer.

John Schellekens, Fellowship, Property Institute and NZIVJohn started his valuation career with Valuation New Zealand in 1989 before gaining some overseas experience in London with Swiss Banking Corporation. Returning to Auckland he joined Hardie Shalders Restall and specialised in valuation of aged care facilities, private hospitals and retirement villages. In 1997 John became a director at Telfer Young Northland and was appointed a senior member of the Property Institute in 2000. He joined Ernst & Young Transaction Advisory Services in 2003 managing its real estate group. In 2005, he joined CB Richard Ellis as the head of Valuations and Advisory, but returned to Ernst & Young as a Director in 2007. In July 2011, John moved back to CBRE as National Director of Professional Services.

Peter Wright, Fellowship, Property Institute and NZIVPeter gained a Diploma in Valuation and Farm Management in 1968 from Lincoln. After graduating from Lincoln, Peter worked for the Rural Bank in Rotorua,

Conference 2012Conference 2012


Conference 2012

Invercargill and Gisborne from 1969 to 1975. In 1976, Peter formed Lewis Wright with local farm management consultant Tim Lewis, and he remains a director and shareholder in Lewis Wright Valuation and Consultancy. Peter specialises in rural valuations with a particular interest in forestry and horticulture. As well as his work within the profession, he is also a director of a large horticultural enterprise within the region.

Evan Bowis, Fellowship, Property Institute and NZIV

Evan graduated Lincoln in 1964 with diplomas in Agriculture, Valuation and Farm Management, and began work as a field officer with the Lands and Survey Department in Gisborne. In 1967, Evan became a registered valuer and began working with Manawatu Farm Consultants. From 1972 to 1994, Evan farmed his own arable block as well as working with the valuation department of Gisborne on rating and special valuations. From 1990 Evan was also the valuer representative on the Gisborne land valuation tribunal. From 1994, he has been a sole practitioner, offering a broad range of valuation services including residential, lifestyle, horticultural, rural, forestry and Maori land.

Roger Soulsby, Fellowship, Property InstituteRoger managed his family’s dairy interests in Canterbury until graduating from Lincoln with a diploma in valuation and farm management and becoming a registered valuer in 1973. From then until 1984, Roger worked for State Advances and the Rural Bank, and in 1985 played a part in the restructuring of the Rural Bank into an autonomous farming bank, becoming Auckland branch manager. In 1997 he moved on to Dominion Funds, where he held a senior role maintaining a portfolio of over 60 buildings. In 2010, Dominion Funds became DNZ Property Fund, an NZX listed company, and Roger remains there as a senior asset manager.

Graham Bayley, Fellowship, Property InstituteGraham’s professional career began in 1956 as an apprentice automotive diesel engineer at International Harvester, eventually becoming sales engineer throughout New Zealand and Australia.

In 1972, he returned to New Zealand to concentrate on the forestry industry in the Central Plateau, based at Kaingaroa forest and in 1987 began working in appraisal for the New Zealand forest service. He also worked for Works & Development Services Corporation where he was involved in valuing the total motor vehicle and machinery holdings at the department.

In 1990 Graham entered private practice, valuing plant and service facilities and specialising in heavy machinery. He was admitted as a member of the Plant and Machinery Valuers Institute in 1998, and became a senior member of the Property Institute in 2010.

Bryce Barnett, Fellowship, Property InstituteBryce is a Chartered Accountant and attended the Taranaki Polytechnic. Throughout the 1980s Bryce held management roles with the Moller Corporation, becoming a member of the Institute in 1986, and was CEO of General Properties and MacDow Properties in Auckland. Before coming back to New Plymouth he worked for McCahill Property in Auckland.

In 1993, he founded KCL Property, which now has offices in Auckland and New Plymouth with over 25 staff managing approximately $500 million worth of property. The company is involved in all aspects of property, investment, management and development. Bryce is involved with the Taranaki Branch of the Property Institute and has presented papers at several national property company forums, regional and national property conferences.

Tim Truebridge, Fellowship, NZIVTim graduated from Massey University in 1983 with a Bachelor of Agriculture degree and joined Harcourt Valuations in Wellington. In 1990 he joined Darroch & Co, becoming a partner in the mid 1990s, and working on suburban residential and commercial work. Tim remained with Darroch & Co, leaving in 2006 to form Truebridge Partners. Tim is involved in a wide variety of work, but still with emphasis on compensation, land development and litigation. Tim joined the NZIV in in 1986, and became an associate in 1998. He has served on the Wellington branch committee from 1986 to 1990, and more recently on the Valuers Council and as Chair of the Wellington NZIV branch.

John Greenwood, Honorary Fellowship, Property InstituteJohn graduated from Victoria University with an LLB, and began his professional career at Chapman Tripp in 1976. He worked at a variety of law firms before returning to Chapman Tripp in 1981, where he remained as a Partner until 2005 when he became a founding partner in Greenwood Roche Chisnall.

John was an integral part of the establishment of the Property Institute, and served as an independent director on the Institute board from its inception through till 2005. In 2005, he was made an honorary member of the Institute, and today he is being made our first honorary fellow for his service to the institute and his work around within the field.

Young Property Professional AwardJamie Ellis is the recipient of this year’s Young Property Professional Award for excellence in the field of property by a young professional. Joining Seagars and Partners in 2008, Jamie has been involved in a number of substantial valuation projects, including work on airport land and

Conference 2012


investment properties at Christchurch International Airport as well as Queenstown and Hamilton Airports.

Property Innovation Award

The Christchurch City Council Property Team won for their innovative approach required to adapt their existing asset management system, adopt a raft of new information management tools, and rework their property-based business processes following the Christchurch earthquakes.

Property Journalist AwardElizabeth McDonald won the award for her articles on diverse issues such as the post-quake rental market, the people who will be involved in the rebuild, and on how computer valuations compare to on-site valuations.

Breakfast sessionsFriday morning began with two breakfast sessions. Kerri Thompson, ANZ Managing Director Retail spoke at the Women in Property breakfast and Jason Humphrey, ANZ Head of Retail Risk, at the Fellows breakfast.

The opening session for all delegates was a presentation by John Hart, a name known in connection with rugby and the All Blacks. However, his professional life also includes expertise in business leadership, management and human resources. John’s experience in business and sport, both the highs and lows, means he has a real perspective on the essentials of success.

WorkshopsA further eight workshops were offered to delegates during the morning with presentations given by Blue Hancock and John Sheehan. Blue is a member of the Crighton Anderson Property and Infrastructure team. His recent focus has been undertaking valuation and consultancy work in respect of Crown Forest Licence land for Treaty settlement purposes and valuations for forest land and horticultural land rental assessments.

John Sheehan is the chair of the Carbon Rights Committee based in New South Wales. He has been increasingly sought after by major Australian mining and infrastructure companies to advise on carbon trading and offsets, especially in the context of native title. Neill Sullivan gave an overview of risks to valuers. He holds the position of Valuer-General within Land Information New Zealand. His role includes responsibilities for occupational regulation of the valuation profession under the Valuers Act and regulation of the rating valuations industry under the Rating Valuations Act.

Michael Theelen of the Christchurch City Council spoke about the implications of the Christchurch central city plan. He is general manager of the strategy and planning group, is responsible for its long-term planning and policy development, and ensures that

this is aligned to the strategic directions. The Council has been a an important part of the development of and implementation of the greater Christchurch urban development strategy and the city’s central city revitalisation strategy.

Jason Clarke, Senior Analyst for Te Puni Kokiri, made a presentation on the valuation of Maori freehold land. His work portfolio included both Maori land issues and legislative review of the Te Ture Whenua Maori Act.

Field tripThe conference field trip consisted of a site tour through the historic Victoria Park market in downtown Auckland which is going through a $20 million renovation. Tenants are now moving into the completed first stage development of the park, and work has started on stage two to create nine new premises fronting on to Victoria Street West.

The renovation of this historic site involves 80 new shops and restaurants, with construction expected to be completed later this year. Sales before Christmas totalled $15 million. The old brick buildings and chimney were opened in 1905 as Auckland City’s first refuse disposal incinerator and the site has been a popular inner city market since the 1970s.

Final sessionsFurther sessions were presented by Tim Lamont who heads the Property Mezzanine Finance team for BNZ. This team provides subordinated debt for property developments and projects, in conjunction with BNZ Property Partners across New Zealand.

Greg O’Sullivan of Prendos spoke on building regulations. He is a registered and chartered building surveyor, a Fellow of AMINZ, and a panelist for arbitration, mediation and adjudication. Both Phillip Merfield and Greg Allen of Simpson Grierson gave advice on selling land. A presentation was also given on standards, with John Darroch, Brian Stafford-Bush and Graham Barton all speaking in this session. The final two sessions of the conference were presented by Adam Feeley of the Serious Fraud Office and Michael Bennetts, the CEO of Z Energy.

A copy of the conference presentations is now available for downloading from the Property Institute’s website Mark your diaries for the 2013 joint New Zealand and Australian Property Institute conference to be held in Queenstown on 11 and 12 July 2013.

Jenny Houdalakis is the Events Manager for the Property Institute of New Zealand

Conference 2012Conference 2012



Profile

ProfileKelly BeckettSeagar & Partners

Profile

Kelly has been based at Seagar & Partners, an independent valuation and property consultancy practice, in their Auckland city office since 2004. The firm was founded in 1981 and since that time has grown into one of the largest private valuation practices in Auckland. In 2007, she gained registration having completed three years of work experience.

In her role Kelly values a wide variety of property, mainly commercial and situated in the CBD and its fringe suburbs. Most commonly she is involved in the valuation of retail and office properties, but also has extensive involvement with development work including large-scale residential apartment developments. These valuations are often undertaken on an ‘as if complete’ basis. She also values student accommodation, and has prepared evidence for various court cases.

Wider involvementKelly is an example of a younger valuer taking an active role in the wider property industry. She has been involved with the Auckland branch of the Property Institute and the New Zealand Institute of Valuers since 2005. She originally joined the branch as newsletter and web editor and continued in that role until becoming deputy chair. After a brief break from them, she was re-elected as the secretary of both branches in February 2011.

In 2010, Kelly was also part of the valuers super summit committee, and this year was the co-chair of the Property Institute conference committee. Her involvement in the industry was recognised in 2008 being presented with the Young Property Professional of the Year Award at the national conference in Christchurch.

A career in valuationKelly entered her career straight from university where she had completed

a Bachelor of Commerce majoring in international business and a Bachelor of Property joint degree. She had originally started university only enrolled in commerce, but was enticed by a friend to pick up property as a conjoint after her first year.

She says, ‘I had always thought that I would lean towards my commerce degree for a career, but a valuation job was advertised at university in my third year valuation paper. I had not really considered a career in this field, and in fact knew very little about it. But I had enjoyed my property papers at university and was interested in finding out more. I approached my lecturer, sent my CV and an interview was arranged. Things went from there. A week later I was employed.’

Kelly believes that valuation offers a good base, that it gives a solid grounding in property with opportunities to move outside the valuation industry into other property professions if you so choose. She especially enjoys the interaction with clients, and has found that valuers are increasingly being exposed to other industries in the course of normal business.

One of the benefits she finds of being a valuer is undertaking inspections, which means that valuation is not just another desk job. There are some amazing buildings within the CBD and its fringe. She loves the character buildings with the sand-blasted brick walls, the open truss ceilings and the timber flooring and beams.

Encouraging young valuersIt has been well publicised that valuation is an ageing profession. ‘At the 2012 Property Institute national conference we were told that 60 per cent of valuers are over the age of 58. This means there will be opportunities for younger people. Valuation is a high-pressure job. A valuer is always under pressure whether it is because of deadlines, finance dates and settlement dates.

She notes that only two people from her year of university graduates have pursued careers in valuation. This is because many were put off by the three years required to become registered, having just completed a three to four year degree at university.

Kelly feels valuation has a lot to offer as a career, but it requires hard work and good communication skills. Report writing and financial modelling are day-to-day activities, as is interacting with clients and working to deadlines.

Get involved and networkingHer approach and advice to new entrants would be to get involved, and that there are lots of ways to do this. Through her time serving on the various Property Institute branches and committees she has made new friends and met senior people in the industry. At meetings they often discuss issues currently facing the property profession and this helps keep them up-to-date.

The Auckland branch also holds regular Young Guns events. This is a networking event for Auckland property professionals who have been involved in the property industry for 10 years or less. It is a good opportunity for younger members working in property or associated with property, such as bankers and lawyers, to get together and put names to faces. Kelly strongly encourages people to go along.

Larger industry concernsKelly says there are a number of issues currently affecting the valuation industry. First, the standards contained in IVS 2011 were brought into effect in New Zealand in January 2012. The most significant change relates to IVS101 where a scope of work is to be prepared and issued to the client in writing before the report is finalised. The scope of work sets out the agreed purpose of the valuation, extent of investigation, procedures to be adopted, assumptions and limitations.

Secondly, the Christchurch earthquake and the effects on the industry were covered at the national conference held in June. The Canterbury Earthquake Recovery Authority provided an overview of the rebuild process. She was particularly interested to hear Chris Stanley who discussed insurance and recovery problems that have wider implications for valuers.

Finally, Auckland Council released their ‘Earthquake prone dangerous and insanitary buildings policy (2011-2016)’ and have been reviewing their earthquake prone building register following concerns around the structural integrity and safety of buildings. Earthquake prone buildings are defined in the Building Act 2004 as those whose capacity will be exceeded in a moderate earthquake and would be likely to collapse causing injury or death or damage to any other property. Special attention will be given to the intact survival of essential emergency egress routes, for example, stairs and ramps.

As Kelly notes, currently buildings or resource consent conditions can require buildings to be upgraded to 34 per cent of New Building Standard. All buildings designed to NZS 4203: 1976 and later have been deemed to be excluded from the requirements for assessment and upgrade. We are yet to see how this will play out. A number of character buildings have been marketed in Auckland over recent months. Owners of historic buildings are increasingly looking for independent assessments to accurately measure the percentage of new building standard, which supersedes any initial evaluation of seismic performance held on file with the council.

Banks are tightening their lending policies on earthquake prone buildings and there are implications relating to insurance cover. Although timelines of up to 30 years have been outlined in the policy, is it likely that economic pressure and demand will mean that earthquake strengthening will be completed in a shorter timeframe.

ProfileProfile


Adrian John Brady Past President of NZIV

Government Valuation Department in Wellington before moving to Nelson then Dunedin. Here he met his wife June before moving back to the capital.

After completing the NZIV professional examinations, and attaining both registration and NZIV Associate status in 1973, Adrian joined Gellatly Robertson & Co where he later became partner and director, and then moved to his own practice in Porirua in 1992. While there he completed an MBA from Massey University. He then returned to work in Wellington in the late 1990s, heading up the Wellington operation of TelferYoung with Martin Veale and Chris Barnsley. He was the first National Chairman of the TelferYoung group.

NZIV conferred a Fellowship on Adrian in 1996 in recognition of his service to the profession, which included many years of commitment to the Wellington Branch Committee in a variety of roles after first being elected in 1979, and was Chairman from 1983 to 1985. He has been described as the architect of the NZIV business plan in 1995, and was a member of the NZIV focus group, also serving on the publicity and public relations committee from 1989 until its disbandment in 1995. He wrote a number of articles for publication in the Valuers’ Journal.

Adrian served two terms as Wellington Branch Councillor, was a director of Headway Systems Limited from 1997, and had one term as President of the NZIV at the end of that decade and during the formation of the Property Institute. It was a stressful time as he strived, often virtually alone, to preserve the asset base, and status of the NZIV membership.

Apart from his professional activities, Adrian was a senior rugby referee in Wellington for many years, actively participated in Toastmasters and the Plimmerton Rotary club, and was a devout member and office bearer of the local Catholic parish.

He was a very active sportsman throughout his life,

Compiled by Graeme Kirkcaldie and Max Plested

Obituary

Adrian Brady suffered a heart attack while skiing with friends at Mt Hutt late in June this year, and died in Christchurch hospital. He was aged 65.

His formative years were centred around schooling at Tawa and St Patrick’s College Town where he excelled in sport, particularly rugby as a nuggety five-eighth. Adrian practised as a Registered Valuer for most of his working life in the Wellington region, but had started with the


having been a useful senior club rugby second five-eighth, an enthusiastic swimmer, competent runner and road cyclist, which led him into triathlons. Along with June and their four sons he loved the outdoors, and was a keen tramper and skier. He competed in triathlons and was well known for his cycling and running excursions during his lunch breaks and after work.

About eight years ago Adrian, with one of his two brothers, followed their father’s war time journey through north Africa, Crete, Italy and Germany where Mr Brady had been imprisoned. It was an emotive journey, planned with typical attention to detail.

Since retiring to West Melton, June and Adrian developed their lifestyle property with many new plantings, including three varieties of grape, renovated the house, added a woodworking shop, and quickly formed new friendships. They have also kept in close contact with their Wellington marathon group, which emanated out of lunchtime runs around the CBD, waterfront and testing

the hillsides.In a business context Adrian had a wide ranging

client base throughout Wellington, Porirua city, and the Kapiti Coast. He valued residential, lifestyle, retail and industrial properties, and participated in a number of significant determinations involving large scale service station and recreational activity occupations. He was a much respected member of the valuation profession, well known by the Wellington business fraternity, had a cheerful disposition, and a penchant for punctuality and neatness.

Adrian read widely, enjoyed good food, wine and classy vehicles, was a wine grower but not vintner, and had become an expert furniture maker. He followed many sports and would forcefully debate the merits, or otherwise, of the Canterbury and Wellington rugby squads with surrounding spectators at Jade Stadium.

Our sincere sympathy is extended to June and her sons Chris, Andrew, Tim and Danny, and their families.

Obituary
