Posts Tagged ‘insurance’
New Zealand’s Building and Construction Minister Maurice Williamson, this afternoon announced that the Government will introduce amendments to the Building Act 2004 that will help cut red-tape and bureaucracy and make builders more accountable.
The planned changes to the Act will be phased in over time. Some of the incentives to build it right first time to be introduced to Parliament this year include:
- explicitly stating that builders and designers are accountable for meeting Building Code requirements;
- mandatory written contracts for building work above $20,000 that set out expectations, warranties and remedies, and how any disputes will be resolved;
- requiring those doing the work to explain what, if any, financial back-up or insurance they have to remedy any faults.
The planned amendments will also see some minor, low-risk work, exempted from the need for a building consent. Examples of such exempted work will include:
- Replacement or alteration of internal wall and floor linings and finishes in a dwelling.
- Adding lightweight stalls (eg, used at fairs and exhibitions) to the current exemption for tents and marquees.
- Fabric shade sails and associated structural supports that do not exceed 50 square metres in area (with limitations on matters such as the level on which the sails are installed and distance from a legal boundary).
- Installation, replacement or alteration of thermal insulation in existing buildings (excluding exterior walls and fire walls). This clarifies that retrofitting ceiling and underfloor insulation will not need a consent.
- Penetrations with a maximum diameter of 300mm (including associated weatherproofing, fireproofing and any other finishings) to enable the passage of pipes, cables, ducts, wires, hoses and the like through any existing building. This clarifies that for example a heat pump can be installed without needing a consent, although the wiring must be done by a registered electrician.
- Signs and associated structural supports where the sign is no more than 3 metres high and the face area of the sign does not exceed 6 square metres.
- Height restriction gantries (e.g. a vehicle height warning in a car park).
- Private playground equipment used in association with a single household where no part of the equipment extends more than 3 metres above the ground.
Mr Williamson says the Government can only make changes to the building consent process to reduce costs once it has confidence in the quality of what is being built.
The Government is proposing to introduce a ‘stepped’ approach to building consents and inspections after mid-2012 once the other improvements are in place to drive quality, including the licensing of building practitioners.
You can read the Minister’s media release and find out more on the Department of Building and Housing’s website at: www.dbh.govt.nz/buildingactreview
Today has been an Interesting day. Seen a house burning down. Had a fantastic feast of a lunch whilst sharing ideas with property investor & developer and former mortgage broker Ammon Acarapi, and Lease Options guru and and property investment superstar Steve McMenemy.
Steve’s been busy buying property – making himself a few more hundred dollars a week positive cashflow from Lease Options, doing some super do ups and quick flicks, and basically anything he can to maximise his lifestyle and quality time with his lovely life wife Kelly and their two kids. Steve’s an inspiration to me as well as a long time friend of mine. It is just so fantastic to see his and Kelly’s continued personal and portfolio growth. Keep it up mate.
He is a fine example to many younger New Zealanders that you don’t have to join what seems like the majority and do an OE. When we live in the most beautiful country in the world, have plenty of financial opportunties to make for ourselves, own Businesses to grow – there is not such a need.
The burning house of Kemp Road & insurance protection
In the same street as our Fuzo showoffice today I saw and smelt a house burning down. Not very pleasant at all. The firefighters were super and got there very quickly – sadly the house inside was gutted. The second house within the past 9 days on the street to be gutted by fire. Suspected electrical fault again at this early stage – guys old wiring is dodgy. No one was injured or hurt fortunately. However this got me thinking. For properties you are keeping you can lose a substantial asset if a current insurance policy is not in place and income from not having a rental house in place. My suggestion is to get insurance policy extensions to cover loss of rental income from fires too. It happens far too often.
A Fuzo client has even had their house burn down (the older one not the new house we built for them). Fortunately they had insurance to cover the rental income whilst the assessors did their work, demolished the old home, got building consent to erect a new building, insurance company approval to built it and then getting it built. This takes many months, possibly a year – can you survive without that cashflow? If not get insurance to cover it. I know some successful investors don’t insure all their properties, but until you achieve massive success and have 40 plus properties in your conservatively geared portfolio – you are not ready to do the same.
Asset protection
I often get asked about what structures I use. Today I helped guide a couple of trading and development clients re just what is the best structure for their property investment activities today. So for those that I have promised this information to and to be useful to others here’s what I do and recommend.
Because I am a Business owner, property developer, trader, investor and own home owner trusts are the best structure to have. I value asset protection extremely highly, more highly than total tax optimisation so I have 3 core trusts:
1) A trading trust – for all properties I buy with an intention for resale
2) A buy/hold trust – for all properties I hold and buy for the long term (with no plans to resell at the time I buy it)
3) A family trust – for my own home in central Auckland, my wife and my life insurance policies, some ungeared passive investment (shares, managed funds, bonds, mutual funds and term deposits).
I have 3 other trusts, but these are for my business interests, joint venture entities, and I am a trustee of some of my family members and a couple of close friends trusts too.
I highly recommend the use of professional trustees in your trusts (not so for trading trusts). So I am not a trustee of my buy/hold trust, nor my family trust. Rather leave my lawyers to run it and let me focus on my core activities.
A structure like this gives me true asset protection in the sense that I get creditor protection, a clear and simple ownership structure, smart savings structure, in built succession plan, flexible structure, tax effective for me, no need to enter into gifting programmes, option to get around means testing (eg for medical, pharmaceutical and nursing costs).
In my opinion everyone should own their own home in a family trust. And also every property trader (that I define similarly to the Income Tax Act 2004 – as a person that purchases a property with a purpose of resale at the time of acquisition) should buy that property in a trading trust. However for some salaried people it may be better to purchase long term buy/holds in a Loss Attributing Qualifying Company where they get massive tax advantages for doing so. In my opinion business owners should be using the tri-trust structure I have recommended.