Category Archives: Pro Experts

Hawke’s Bay’s leading professional service advisers & leaders

NOW Co-Founder Embraces Study at EIT

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Widely known in the business community as the co-founder of NOW, Ben Deller delights these days in telling people he is a student.

Having left the successful telecommunications company early last year, the 38-year-old is now dovetailing business consultancy work with part- time postgraduate studies at EIT.

Ben enjoyed his 14 years heading NOW’s sales and marketing team, but over time, he says, the focus became less about innovation and more about management and scale.

Having broadened its customer base, the company was continuing to expand beyond Hawke’s Bay. It needed an injection of capital to achieve further growth. In 2015 Spark bought a stake and, over a period of 12 months, Ben started looking at what else he might do.

“I was working with some really smart people,” he says, “and one in particular – she has a master’s degree – suggested I study, as she had, purely for the enjoyment.”

Learning by chance about EIT’s suite of postgraduate programmes, he worked through his study options with School of Business Associate Professor Jonathan Sibley.

Ben had good reason for feeling tentative – his first experience of tertiary study hadn’t gone well. After leaving Lindisfarne College, he abandoned Bachelor of Medical Laboratory Science studies after just a fewweeks.

“It really wasn’t my thing, but it’s taken a long time to pay back that student loan,” he ruefully reflects. The move to Palmerston North wasn’t a total write-off, however. He reopened a disused nightclub and attracted DJs from around the country in staging “a lot of parties”.

Jonathan suggested Ben attempt a course that took his interest to determine how he felt about study aligned to his passion for business. He enrolled for a leadership course taught by applied management Robbie Field and “absolutely, thoroughly, utterly enjoyed it”.

Tackling one course each semester, he is now on the way towards gaining a Master of Applied Management.

Ben says he wouldn’t keep coming back to EIT if he didn’t see the value in study – “I’m learning skills beyond those I already had.” His wider skill set comes into play in advising clients of Workshop X, the specialist consultancy he established to grow business ventures here in Hawke’s Bay.

And EIT is also gaining from Ben’s enthusiasm for study. He has agreed to feature in a light box advertisement to be prominently displayed in the Hawke’s Bay Airport.

“It’s going to be odd seeing myself on a poster board,” he says with a grin.

Goals-based Investing – A New Approach to an old Question

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When discussing a client’s financial planning needs, and specifically what portfolio to establish, an adviser is required to navigate through the client’s specific needs and goals. This is with an ultimate view to provide a portfolio from within the specific discipline and processes that will meet the client’s expectations, while importantly avoiding as much risk as possible.

While focusing on the growth of a portfolio is primarily what an adviser is often engaged to do, especially with historic low bank rates as we face now, a better and more client centric approach is to ensure the clients goals (fiscal or not) are incorporated into their financial plan.

Traditionally, this has been done by aligning these clients’ needs and goals to a risk profile. In turn, this risk profile is aligned with a Strategic Asset Allocation (SAA) where a mix of asset class sectors been applied.

For example, a balanced portfolio has 60% growth assets (shares etc) and 40% income assets (bonds and cash etc). Another layer on this is where fund managers see the market as it sits and apply tilts that underweight or overweight certain assets; this is called the Dynamic Asset Allocation (DAA). Again, for example, a Model Portfolio, for a Balanced Investor, has 57% growth assets and 43% income assets; in effect, a 3% variance.

This process has allowed financial planners and investment advisers to construct a portfolio that sits within their allowed variances of the SAA, while still trying to construct a portfolio with sub-asset classes to meet their goals. This also requires the adviser to be in tune with their client.

While many of these features can be achieved via the portfolio construction and the review / rebalance process, there is a ground swell of movement where such funds can build in the rebalancing function for the client. While these solutions may not make up the entire client portfolio, they certainly may be incorporated into the wider asset management structure.

What is also appealing for some investors, in some cases, are Absolute Return funds. Absolute Return is the return that an asset achieves over a certain period, expressed as a percentage that an asset achieves over a given period. Absolute Return differs from Relative Return because it is concerned with the return of an asset and does not compare it to any other measure or benchmark. Therefore, the saying “you can’t eat relative returns” rings true.

In practice, an Absolute Return fund invests into asset classes its sees appropriate for the time. While it may have an SAA, its DAA may vary totally and as such, it may be a highly traded fund.

Therefore Goals-based funds tend to have a lot more focus on protecting downside risk. This is particularly important for retirees because we all saw what happened in the Global Financial Crisis with more traditional balanced funds. They followed the market straight down . With the growth of KiwiSaver account balances to a point where they provide meaningful income levels for their clients, I see that Goal-based products will provide a natural transition out of the multi-sector funds once income is started to be drawn. This will form a part of the advice process and KiwiSaver Scheme and fund selection process.

While there has been a trend to low cost passive funds in what has been an extended bull market, we see clients now looking to better downside protection in an uncertain market.

In AMP Capital’s article – An Introduction to Goals Based Investing, they say that “The goals-based approach to investing is different as it represents a real shift in the way financial advice is given and the way investment solutions are designed. You could say it’s about turning financial advice and investment products on their head. However, it is important to note that the principles of diversification and risk management are still an important part of the portfolio construction process”.

Investing for sustainable, long-term wealth creation in a changing investment environment requires a different way of thinking. Success in today’s market calls for a more flexible approach and the ability to respond swiftly to change. This means a more dynamic approach to asset allocation and a focus on specific outcomes so investors can achieve their investment goals.

A good adviser will seek the appropriate mix for their client based on their goals. A Goals-based approach is built around helping people accomplish their goals, rather than focusing solely on investment management and performance. Therefore, you can assume that a goal-based fund may indeed be part of the appropriate mix for clients moving forward.

Addressing partner misalignment

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Whether you want to grow, to retain market share or even explore exit options, it’s important that you have a good idea of what’s going on in your business now.

Sometimes this can be difficult when you have more than one stakeholder, as is the case with many small to medium sized businesses with multiple owners.

Certainly, it is important to have different skills and ideas in business – but these need to eventually come together if you want to move forward. If your business is suffering from misalignment, it’s going to be difficult to achieve the goals you’ve set.

Over the years, we’ve seen a lot of businesses striving to move forward. Generally we have found that the business owners acknowledge that they will need a plan. They have all the information available, but they don’t have time to look at where their business is currently sitting, let alone react to it.

A lot of issues with the business are generally known issues but remain unresolved because one of the most important things they don’t find time to do is come together to strategise.

At a more fundamental level this is about a misalignment of core values, the elements that form the foundation of a business’ vision, identity, culture and brand, and underpin all decision-making.

One of the first steps to moving forward is gauging the degree of alignment amongst your different partners on key issues. The idea is that once these have been laid out on the table, you’ll be able to have a real discussion and eventually come to resolutions on how to move forward.

So how to measure alignment when you’re already challenged in finding time to come together?

And, for those business that don’t have their own existing board structure, getting access to independent expert advice to facilitate that process can be very difficult.

Which is where a simple diagnostic questionnaire can be useful. We’ve developed such a questionnaire based on our many years’ experience working alongside owner-managed Small Businesses and have put it into a Business Review package.

There’s a short diagnostic questionnaire and a longer one that takes around an hour which really drills down into the nitty-gritty of your business. The questionnaire will work best if each stakeholder does it independently, and from there, the key issues currently facing your business become evident – and the degree of alignment on each one.

That feeds into a diagnostic report. The areas of pressure could be anything from tax, wanting to sell, not making enough money, not getting on with your fellow partners, having no succession plan, disagreement over investments in new technology – the list goes on.

The important thing about this process isn’t just getting a report, but working on a very targeted solution.

I can cite two cases of businesses that have been through this process. One was a medium-sized business operating in the IT space. They had two shareholders, one minority and the other majority, but there was serious misalignment on who their target market actually was. The Business Review program was used to agree on a target market (in this case they decided there were more than enough consumers in New Zealand and so stopped chasing deals in Australia) and since then they’ve gone from strength to strength.

The other case involved a husband and wife partnership. The program helped them realise that they wanted to leave the business, so had to make sure it could still run without them. We helped them to clarify which parts of the business needed work and so their exit strategy was successful.

Ultimately, it comes down to the age-old issue of too much working in the business not enough on the business – a self-replicating cycle that’s magnified when multiple partners are involved.

The reality is that the solutions can be easy once the issues are diagnosed. Particularly with the wealth of digital tools we have that facilitate real- time business information and communication.

Where there’s a will, there’s a way

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On death a person’s assets form their “estate” which is subject to the wishes or intentions of the deceased’s Will or if they do not have a Will by the “rules on intestacy.”

While many would acknowledge that they should have an up-to-date Will, it is surprising how many people do not have a current Will or one at all.

Regularly reviewing your Will is as important as initially making one to ensure that your Will reflects your current circumstances and any changes in your life such as the death of a close family member, the creation of a trust or establishment or entry into your own business.

Some matters to consider when creating or reviewing a Will are:

1. Identity of your Executors and Trustees. Who would you like to administer your estate or are those currently selected still appropriate?

2. Funeral directions. Do you wish to make such directions or change any existing directions?

3. Changes in your personal circumstances. Unless your Will was made in contemplation of marriage then any Will you have will be automatically revoked when you marry.

You also need to consider your Will if your relationship ends. If you separate with the intention of ending the marriage, provisions in your Will relating to your spouse will remain valid until the marriage is legally dissolved (that is, you are divorced), only then the gifts are null and void.

4. Changes in assets and liabilities. For example, if you have acquired a new asset, such as a business, then you may wish to give the business (or the shares) to a specific person. If you don’t make a specific direction then (if you have a Will) it will simply form part of your estate and go to the beneficiaries.

5. Changes to your family. If you have had children then you may wish to appoint a testamentary guardian.

6. Death of a family member or beneficiary. For obvious reasons this may necessitate a change to your Will.

7. Setting up a family trust. If you have or have set up a family trust you will need to ensure that your Will reflects this and (if appropriate) refers to it.

8. Gifts to charities or organisations. You may wish to leave money to a favourite charity or organisation.

9. Specific gifts. If you want to leave an important item such as jewellery or a family heirloom to a particular person then this should be specified in your Will.

If you die “intestate”, i.e. without a Will, then your estate is subject to the “rules on intestacy” which prescribes to whom, and in what proportions, your estate will be distributed, which may not reflect your wishes.

To help illustrate the point, let’s consider an example:

John and Jane are married, with a son and two daughters. John and Jane have a jointly owned home and a joint bank account. John also has his own construction company. John’s son, James, operates the business with him and it is John’s wish for James to take over the business from him when he retires.

John dies unexpectedly and he does not have a Will.

The home and bank account will pass to Jane by survivorship, however the business will fall into John’s estate and be governed by the “rules on intestacy”.

The business is valued at $515,000.00.

Jane will receive all of John’s personal possessions (basically everything other than land, buildings and money) and shares valued to $275,000.00, which is made up of:

• The legally prescribed set amount of $155,000.00; and

• A 1/3 of the balance of the estate of $120,000.00.

James and his two sisters will each receive shares valued to $80,000.00 (being the other two thirds of the balance of the estate).

This does not reflect John’s wish to pass the business to James and in addition leaves control of the business to Jane (53.39%) while James (and his two sisters) would only have 15.53% each. Significantly James would only be a minority shareholder and would not be able to prevent the business being sold by his mother and sisters.

Finally, another advantage to having a Will is that it usually costs more and takes longer to administer an intestate person’s estate.

If you do not have a Will or have not reviewed your Will for several years then I advise that you discuss this with your lawyer sooner rather than later.

Are You a Good Leader?

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If you are a business owner or manager you are responsible for leading others in pursuit of the organisation’s success. Whether it’s a small business with a few employees or a large entity with multiple divisions, if you are the leader of a team you are having an impact on a daily basis by what you do, or don’t do. I rather like this quote; “All leaders lead by example…. whether they intend to or not.” (Source Unknown)

It’s important for leaders to take time out occasionally to reflect on how well they are doing at being the boss. In a large organisation there is generally data and processes available to help with this. There are likely to be higher levels of management or a board of directors that will go through a structured performance review process with you that also requires some personal reflection.

This may also include some 360 degree feedback from peers and staff that provide you with insights about your leadership. There may be periodic staff engagement surveys that provide feedback about aspects of leadership. You may have access to turnover data, exit interviews and other useful indicators of the effectiveness of your people management and it is paramount that you use these information sources to mould your leadership approach.

Contrastingly, in a small business you probably won’t have the types of processes in place that a large entity typically would and it’s likely you will have less opportunity for reflection as small business owners are often busy with operations, marketing, finance, HR and all the things small business owners need to do. So how can you get some insights to develop your leadership skills?

  • If you have performance reviews for your staff use the opportunity for 2-way feedback and ask about what you can do more of or less of to help them in their work.
  • Consider using a business mentor as a sounding board about your leadership style and to provide suggestions for

    improvement and contribute ideas to help you through challenging situations. Just having these conversations makes you reflect on how you are doing.

  • Try to fit in some learning opportunities for yourself to get inspired, be exposed to new ideas, keep up to date with emerging trends, or learn from the experience of others. Training and ongoing development is just as important for leaders as for your staff. This could be a seminar, conference, academic course, on-line learning, or speakers at local business events.
  • Endeavour to set aside time for personal reflection. What is it that your staff have been telling you? What tasks do you need to follow up on in order to provide your team with sound leadership and ensure they feel valued and listened to?

When you are able to set aside some time for personal reflection regarding your leadership and the productivity of your team try some of the tips above of some of the things a good leader provides, adapted from an article by Jeff Haden, entrepreneur and author. Consider how you are performing in these areas – there may be one or more aspects that you could consciously plan to do more of, changes you could easily implement, or even ‘big picture’ elements you may want to think further on to have a positive impact on the people working for you.

Android or Apple?

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For the un-initiated Android and Apple are both operating systems that are leaders in mobile phone, tablet and PC operating Systems.

Android is now owned by Google and has been the market leader in the mobile phone space for a long time and continues to rise. Its market leadership is larger due to range and price of devices rather than being better or worse than Apple.

Apple is well known and its founder Steve Jobs has been called revolutionary. He has brought to market some outstanding innovations, none more revolutionary than the Ipod. But Apple has struggled to push the envelope since his death and some have seen this as the end of Apple… I’m not so sure.

From an individual user’s perspective does it really matter what OS you use?

I must confess at this point I am un-ashamedly an Android user with Apple always following behind the flagship Samsung models. But things have changed, the phones really can’t do much more than they do now. The iPhone 8 does look like its caught up to the Samsung 8 (excluding face recognition) in feature and design.

Looking at the best option, Apple has always touted its security and application development as a serious point of difference. Android has always had the freedom to push the envelope in phone features and design particularly with its open source environment. I think we are at the point, certainly in mobile phone features, of being at the peak and only incremental changes are likely going forward.

What is really the best OS?

For me this means considering true mobility. Mobility is ultimately the freedom to do what we want to do anywhere we want without the constraints of traditional desktop.

If we take a step back, Android was created to be open source and that meant it grew faster than any other OS, it meant it could be rolled out and deployed on multiple device manufacturers free of charge. This is where Android for some was a free spirit and a symbol of all that was right and true about the internet. Many manufacturers jumped on board and offered options across all mobility devices.

Apple on the other hand was slow to keep pace and that was due to the control Apple put in place to be part of the Apple eco-system. But this meant that as a rule, things sort of worked first time with Apple as opposed to Android. One example might be Apple TV.

I have Chromecast on a couple of devices and if used frequently it works really well. It is wireless, discreet (hide in a USB port behind the TV) and I see this as a big advantage over Apple. But I have found that the less it is used the more I have to reset and reconfigure. My experience with Apple TV though has been seamless. Plug it in and away you go, also it works really well when doing presentations. Android does run on a number of plug and play devices but you need to know what your doing. Don’t get me wrong, Android can do what Apple can do except it just isn’t as easy for your average user.

So I think Apple win, this in part because they do everything for you. It is easier for them because they don’t have the multiple devices and systems that Android have so they can deploy so much easier than Android. They have a good robust Device Management System for deploying devices throughout a workforce and updates can be pushed out across the workforce.

They also invest significantly in partner programs upskilling their partners on the key benefits of Apple. This isn’t something Android hasn’t done and probably never will due to its open source architecture.

So the advantage is a much better informed partner channel and support networks. This is very important to business as it directly reduces downtime and associated costs. It also means the applications recommended do tend to work well and are relevant to your industry.

A final point to consider is Google and Android probably know more about you than anyone through the data they collect. They use this to further enhance customer experience and while I don’t get concerned with this for some it really is an issue. Apple on the other hand don’t share your information and they don’t capture the same amount of data like Google because they use their own browser and maps.

The main advantage though for Android is its cost to deploy because you have a huge range of devices to choose from at all price points and this can be hard to beat. If you have a larger workforce it becomes difficult to argue for Apple particularly if your deployment is in a harsh working environment (due to the frequent replacement of devices).

So my call at the moment as I sit here with an iPad and Samsung S8 is that Apple appears better.

Of course, this is only my view and yours may differ but I’m going to try and go completely mobile with Apple over the next little while to test this hypothesis, see if I can really drive my business from the Apple ecosystem through mobility devices and applications.

I will keep you posted.

Working together is a better solution

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Water Conservation Orders (WCO’s) are mechanisms under the Resource Management Act designed to recognise and protect outstanding values of particular bodies of water. Commonly associated with movements in the 1980’s to protect the country’s most wild and scenic rivers from hydroelectric dam initiatives, they are legal instruments that can be used to set rules that Councils must abide by.

A WCO is the highest level of protection that can be afforded to any water body, and are focused purely around preserving outstanding natural values for all freshwater fish, wildlife and outdoor recreation. There are a number of WCO’s around the country applying to different water bodies in different ways.

With such a pure focus a WCO can have significant influence on the content of Regional Policy Statements and Regional and District Plans, as well as resource consent processes. Criticised in some circles for being too narrowly focused and lacking the ability to weigh and balance competing interests, this is essentially their purpose as a tool to identify the water bodies or stretches of water bodies that warrant the highest level of protection without compromise.

The WCO for the Ngaruroro and Clive rivers lodged by the New Zealand Fish and Game Council, Ngāti Hori ki Kohupatiki, Whitewater New Zealand, Jet Boating New Zealand and the Royal Forest and Bird Protection Society of New Zealand, seeks the protection of the entire length of the Ngaruroro River and its tributaries, together with groundwater that is hydraulically connected to the lower Ngaruroro River. A total of 7km of the Clive River is also included.

The application states that the water bodies have certain outstanding values including:

  • Significance in accordance with tikanga Maori;
  • Cultural and spiritual purposes;
  • Habitat for rainbow trout;
  • Angling, amenity and recreation;
  • Habitat for avifauna;
  • Habitat for native fish;
  • Boating amenity and recreation;
  • Wild, scenic and natural characteristics; and
  • Scientific and ecological values.

Protection of these values is sought through a number of conditions applying to different stretches of the water bodies, including minimum flows and allocation limits for existing and new water takes.

In principal, the WCO does not seek to change the existing 2,400l/s minimum flow at Fernhill as it applies to existing resource consents to take water, but does seek to introduce a new minimum flow of 4,200l/s for any new takes.

Potential implications of the various conditions are complex to understand though, and there is concern among some parties that many groundwater takes in the region will have restrictions placed upon them in a similar manner as direct river takes, and that this may really affect the water security and resilience of many operations.

Consideration of the WCO is very different territory to the type of processes we have become familiar with over the last few years. Essentially all the same parties are involved, but in this case the parties who are often the submitters are the proponents.

The manner in which the proposal is to be considered is also different. While collaborative policy development initiates such as TANK, plan change processes and resource consent application processes entertain the weighing of competing environmental, cultural, economic and social interests, WCO’s are much more focused around environmental outcomes.

There is certainly a place for this, but one can’t help being a little concerned about how far reaching potential outcomes maybe from both a geographic and regional productivity perspective.

If one was to strategically limit the potential of the region, for whatever bizarre reason, we would unreasonably limit access to water, set overly conservative instream water quality standards, force unsustainable change at an unreasonable rate, introduce poorly conceived land use controls, fuel the urban and rural divide and assume prescriptive regulation rather than partnerships will better achieve environmental performance.

Clearly no one who is passionate about our region would set out to achieve this, but in determining what we want, perhaps we should be very aware of what we don’t want.

 

Real-time accounting software helps streamline businesses

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Real time accounting software and other business applications can help run your business and make your life a whole lot easier. The overwhelming increase in industry specific add on applications which integrate with accounting software enables business owners to create their own customised accounting platform.

Here are some key apps to consider in order to streamline your entire hospitality operation;

Labour costs

Staff rostering can be a nightmare. Dealing with casual employees and ensuring permanent staff have enough hours can be time consuming. Cloud based payroll software that also deals with staff management allows rosters to be created quickly. Viewing your weekly roster in real time as well as dollars enables you to accurately forecast for the week ahead.

Many apps even allow you to view your labour cost at any point during the day from your smart device via timesheets. Having staff clock in and out ensures that you pay them for the hours they are actually working and allows managers to make judgement calls at any given time on whether there are too many or too little staff on the floor.

FlexiTime does all of the above. The ‘Shift’ functionality allows staff to clock in and out by taking a ‘selfie’ on a tablet. Not only does this create a fun collection of snaps but ensures staff are paid accurately. The timesheets then create the payruns which sync with the likes of Xero and MYOB – reducing time consuming and error- prone data entry. Reports can be viewed to show actual vs rostered labour costs as well as graphs to identify trends.

Reporting

Reporting add-ons can present your KPIs in a visual and easy to understand way.

metrics to help your business thrive. Financial data is automatically pulled into the app from accounting software allowing you to view your business financials in beautiful and easy to understand real time graphs and tables. Furtrli also allows you to create your own KPIs, benchmarks and forecasts. You can break down revenue streams, calculate food and beverage gross profit percentages, wages to sales ratios and average spend per head and more.

This kind of visibility can help you plan for the future and reduce risk in order to grow your business. Giving staff members access to certain reports can incentivise them in setting and achieving their targets both for themselves and the company.

POS

A Reliable point of sale (POS) system is vital for operations in the hospitality industry. You will want an easy to use system that ensures minimal downtime. A good system can do more than just process transactions. Being able to track sales, manage inventory, automate ordering, and get the pricing right are just some of the benefits of a good POS system. Again, integration with your accounting software is key so that you can identify where you are making a profit and where you may need to re-evaluate.

The Vend app provides powerful back-office tools that will provide you with new insights into every aspect of your business, allowing you to streamline your processes and align your staff and product supplies with demand. The front end is easy to use and works on any device and if your business needs to operate off site, you can process sales from a tablet offline which then automatically syncs this data when you are back online.

Data entry

Even though we live in a tech savvy world, there still seems to be an awful lot of paper. Bills can quicklypileup,whiledisgruntledsupplierswaitin the wings. A lot of business owners take care of this themselves, when in actual fact it is far more efficient and cost effective to pay someone else to take care of it. Being the face of your business will pay off far more than sitting in the back office mulling over accounts payable data.

An easy to way to get all your invoices processed quickly is by using the app Receipt Bank. Email, take a photo or scan in an invoice or receipt into the software and Receipt Bank does the rest. Its technology extracts all relevant data from the document and automatically enters the key components into your chosen accounting software along with the source document electronically attached.

All businesses today should be utilising the wide range of information systems business solutions available to them. The age old adage of ‘stick to what you know’ rings true in these situations. Apps such as FlexiTime, Futrli, Vend and Receipt Bank ensure that you work smarter, not harder in your business.

New legislation sets timeline for fixing earthquake prone buildings

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It’s an acknowledged fact that New Zealand is prone to seismic activity and ultimately ensuring the safety of people is our priority and our buildings need to be safe for occupants and users alike.

As from July 1, 2017 the Building (Earthquake-prone Buildings) Amendment Act 2016 came into effect and the legislation affects owners of earthquake-prone buildings, territorial authorities (TAs), engineers, other building professionals and building users.

The legislation comes as a response to the Canterbury Earthquakes Royal Commission and a comprehensive review undertaken by the Government, where problems were identified with the systems for managing earthquake-prone buildings (EPB) under the Building Act 2004, such as too much variability in local practice, poor information about the number and specific location of earthquake-prone buildings across the country, and a lack of central government guidance.

Identification of an EPB and what it means

The system avoids a “one-size-fits-all” approach by clarifying the definition of an earthquake-prone building by prioritising geographical areas, buildings and parts of buildings which have the greatest risk. As a result, New Zealand will be categorised into three areas of low, medium, and high seismic hazard areas – with Hawke’s Bay being categorised as ‘high’. National timeframes for territorial authorities to identify earthquake-prone buildings and deadlines for building owners to remediate earthquake-prone buildings will be set relative to their location and level of seismic risk. The seismic risk for an area will affect the deadline for identifying, reporting progress, and remediating. Of note, the threshold for defining an EPB remains largely unchanged at less than 34% of the new building standard.

Many structures, such as standard dwellings, farm buildings, wharves and bridges, are excluded because it would be impractical and costly to apply an EPB assessment to all buildings. Furthermore, hostels, boarding houses, specialised accommodation of two storeys or more, and residential buildings of two storeys or more that contain three or more household units, are subject to the EPB legislation. If an owner does not complete the seismic work within the deadline, or is not proceeding with reasonable speed considering the deadline, the territorial authority can apply for a court order to carry out the seismic work on the building. The costs will be recoverable from the owner of the building.

What is a Priority Building?

A specific definition of what a priority building is has been included. These will be buildings in areas of medium or high seismic risk such as hospitals and educational facilities (such as schools occupied by more than 20 people), or buildings where unreinforced masonry could fall on to busy thoroughfares in an earthquake, e.g. parapets. Priority buildings have shorter deadlines for completing seismic work.

For the purposes of identifying priority buildings where masonry may fall on to busy thoroughfares, territorial authorities will be required to consult with their local communities and go through the special consultative procedure.

Owners and TAs – who is responsible for what?

In Summary:

  • The system is consistent across the country and focuses on the most vulnerable buildings in terms of peoples’ safety.
  • It categorises New Zealand into three seismic risk areas and sets timeframes for identifying and acting to strengthen or remove earthquake-prone buildings.
  • It provides more information for people using buildings such as nationally consistent EPB notices with ratings for earthquake- prone buildings and a public earthquake-prone buildings register (the EPB register).Experience has shown that the failure of earthquake-prone buildings, or parts endangers lives. Thirty-nine people lost their lives when unreinforced masonry buildings failed during the Christchurch earthquake in 2011. Earthquake risk reduction is a priority in New Zealand and this legislation reflects the progressive approach to improving standards for new buildings and earthquake-resistant design since design standards for buildings were first introduced into New Zealand in 1935, following the Napier earthquake.

New Bill to manage Meth contamination

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On 23 May 2017, the Residential Tenancies Amendment Bill (No. 2) was introduced to Parliament. This Bill proposes amendments to the Residential Tenancies Act and is significant as it seeks to, as stated by Nick Smith MP who introduced the Bill, to “ensure our tenancy laws better manage methamphetamine contamination, liability for careless damage and the tenancy of unsuitable properties”.

We will have to wait to see if the Bill is passed into law in its current form, with amendments or not at all however despite its early stage the potential changes are worth discussing.

Methamphetamine

The Bill defines “methamphetamine- contamination” as “in relation to premises, means that methamphetamine is present in any part of the premises at a level above any prescribed maximum acceptable level”.

The Bill also allows the government to regulate, among other things, as to what will be the “maximum acceptable level of methamphetamine for premises”. Comments from Nick Smith, MP indicate that the new standard introduced in the past few weeks by Standards New Zealand, “Testing and decontamination of methamphetamine contaminated premises” will be where the prescribed “maximum acceptable level” will be found.

Significantly this Standard determines that a property will be considered contaminated if it has methamphetamine present at levels exceeding 1.5μg/100 cm2 – this is an increase from the previous limit of 0.5μg/100 cm2.

The Bill also provides that a Landlord:

  • must not rent a property if they know that the premises are “methamphetamine- contaminated” or has not been “decontaminated in accordance with the prescribed decontamination process”.
  • has a right to enter the premises to test for methamphetamine at any time between 8am and 7pm after giving the tenant at least 48 hours’ notice (but not more than 14 days’ notice) of the intended entry and the reason for it.
  • must give the tenant notice of the results of the testing for methamphetamine within 7 days of receiving the results.

Where tests for methamphetamine have been carried out and it has been established that the property is “methamphetamine- contaminated” then:

• If the tenant isn’t responsible rent ceases to be payable;

• The landlord can terminate the tenancy on “not less than 7 days” notice;

• The tenant can terminate the tenancy on “not less than 2 days’ notice”.

Tenant’s Liability for Damage

The Court of Appeal held, in Gikker & Rouse v Osaki & Anor {2016] NZCA 130, that a tenant is not financially liable for damage to a rental property caused accidentally or negligently and that a tenant will have the benefit of the Landlord’s insurance.

Osaki highlights the importance of insurance for Landlords and that the insurance cover is sufficient to ensure that it isn’t necessary to claim against a Tenant personally.

The Bill seeks to address the impact of Osaki. A general principle of the Bill is that the tenant is not liable for damage however a tenant will not be “excused from liability” if

• The damage was intentional;

• The damage was the result of an act or omission by the tenant and the act or omission “occurred on or about the premises and constitutes an imprisonable offence”;

• The damage would have been covered by insurance save for an act or omission by the tenant.

Notwithstanding this a tenant will also be liable for damage caused by “a careless act of omission” however any such liability will be limited to either the landlord’s insurance excess or four weeks rent, whichever is the lower.

Unlawful residential premises

The Bill defines “unlawful residential premises” as residential premises that are used for occupation as a residence but it “cannot lawfully be occupied for residential purposes by that person” and where the “landlord’s failure to comply” with its obligations “has caused the occupation by that person to be unlawful or has contributed to that unlawful occupation”.

If passed the Bill will give the Tenancy Tribunal full jurisdiction over “unlawful residential premises” thereby giving the Tenancy Tribunal specific enforcement powers for “unlawful residential premises” such as the power to order that the tenant be refunded for rent paid for the whole period that the property was unlawfully used as a residential premises.

The Bill must pass through a number of stages prior to receiving royal assent and passing into law so we will keep an eye on its progress, as the changes intended are potentially significant.