Answers to Frequently Asked Questions about how you can plan for a rich and rewarding retirement with the gilt-edged security of a Housing New Zealand Home Lease

A Housing New Zealand Home Lease is a contractual arrangement whereby HNZ "leases" your property from you and then "sub-leases" it out to their own tenants.

HNZ "guarantee" you full market rent, regardless of the amount of rent being paid to them by their tenants.

You or your nominated entity i.e. an LAQC, retain full ownership rights to your property..

Housing New Zealand Home Lease terms can be either: 10 years + 5 years "right of renewal", or 5 years + 5 years "right of renewal". Which lease option applies is at the sole discretion of HNZ.

A "Right of Renewal" is where you grant Housing New Zealand the right to "renew" the HNZ home lease contract for a specified period i.e. usually an additional 5 years. Although HNZ has no obligation to take up such a "right", it is highly unusual for them not to do so.

You may "sell" your property at any time during the HNZ lease period, provided a) you give the tenants "first right of refusal" to purchase the property from you, and/or b) you sell the property with the lease intact i.e. the property is on-sold as an "investment property" to the new purchaser.

In the latter instance the new purchaser would still benefit from however many years were remaining on the lease.

Under certain circumstances HNZ will continue to lease the property from AFTER the initial lease term and "right of renewal" periods have expired. HNZ would subsequently lease your property from you on a "month-by-month" basis.

Once HNZ have vacated their tenant/s from your property it is entirely up to you what you do with the property. You could choose to enlist the services of an independent, local property management company. Or you could request Compass Property Management to take over the role.

Depending on market conditions at the time you could also consider "selling" the property.

There is no need or obligation for you to make contact with and/or meet with HNZ with respect to the setting up and implementation of the HNZ Home Lease contract. Compass Property Investments handles all of that for you.

You are under no obligation to meet with or make contact with the tenants. However, if you wish to do so, permission must be sought through HNZ first.

HNZ has the contractual responsibility to manage your property for the entire term of the lease.

You can inspect the property at any time within reason, provided you make prior arrangements through HNZ to do so.

The "rental guarantee" is, in effect, a NZ Government-backed rental guarantee. By default, that would make it the most secure agreement of its type in New Zealand.

The rent is paid into your account on the first day of each month, monthly in arrears. The first rent payment would most likely be a "proportionate" payment determined by the commencement date of the HNZ Home Lease.

No. You are guaranteed full market rent on the first day of each month, regardless of when HNZ's tenants actually pay their rent.

Currently the rent is reviewed annually and is determined by an independent rental appraiser. However, it is possible that future rent reviews could be based on the Consumer Price Index.

You are guaranteed to receive all rent at the market rate applicable at the time. Whatever the rental amount is for a given year - as a result of that year's rent review - will be the amount that is guaranteed to you for the full 12 months of that year.

There's no obligation for HNZ tenants to pay full market rent - the HNZ Home Lease contract is not between you and the tenants, it's between you and HNZ.

Under the terms of the HNZ Home Lease contract it is HNZ who guarantees YOU will be paid full market rent irrespective of any subsequent rental arrangement between themselves and the tenants.

Yes. You are guaranteed full market rent regardless of whether the property is untenanted or tenanted at any time during the lease period.

During the term of the lease you have access rights to your property at any time provided you seek permission from HNZ first.

Any repairs resulting from tenant damage - intentional or otherwise - are covered in full by HNZ.

Typically, it is YOU - or someone nominated by you - who carries out non-urgent maintenance. This is at your cost. If, however, it's deemed to be more practical to have HNZ carry out such work, they will do so.

The resultant cost of any non-urgent maintenance undertaken by HNZ would be deducted from the monthly rent payable to you.

Urgent maintenance is carried out by HNZ or contracted out to appropriate parties. The cost is then deducted from the monthly rent payable to you.

You would be notified by HNZ of any such urgent maintenance work being undertaken.

You are obligated to pay the Water Rates up to but no more than a cap of $320 in any one rate period.

A Body Corporate only exists where the property is classified under "Unit Title" e.g. In Hamilton, the "aged care" town houses being marketed by CPI and managed by HNZ command a Body Corporate fee of approximately $700 per year.

NB: The "$700" includes $400 towards the building insurance.

The risk of a property being "trashed" is closely correlated to the calibre of the tenants and the physical location of the property i.e. whether or not it is in a known "high-risk" area.

For your peace of mind - and CPI's - all known "high-risk" areas are avoided as far as housing construction is concerned.

It's also worth noting that all HNZ-managed properties are fully insured by HNZ against any form of tenant damage.

The HNZ Home Lease contract is a legally enforceable contract - no change of government alone can or will affect it..