Trading in a car is one thing – but trading in a house?
That's the novel concept being introduced by Christchurch housing company Rosefern Homes with their Trade Up Programme. It's aimed at owner-occupiers looking to upgrade to new and landlords faced with large bills to upgrade rental properties to meet new government healthy homes standards.
Rosefern director Ant Patrickson says the programme, which is in an infancy of only a few weeks, is already producing strong interest, particularly among downsizers and investors.
Here's how it works: Rosefern say their new builds are attractive, warm, dry and secure homes built above New Zealand building code. If a buyer has an existing property to sell, Rosefern will assess that property and come to an agreement on the price of the old house and the price of the new one.
They offer, says Patrickson, a fair price on the old house – and competitive prices on the new homes: "We can do that because we do all the transacting in-house, private sales, so no real estate agent commission or marketing fees to pay. We just want to take the stress away from people who want to climb the property ladder."
Patrickson and his partners also operate a company called Arete Property in Christchurch – specialising in private purchasing of housing damaged by the earthquakes. They buy the houses, adding value and restoring houses to a fit and healthy state before selling them on. They have improved Christchurch's housing stock by more than 180 homes in this manner.
That experience has also given them a keen eye for the value of a house, he says, though if the gap between the vendor's hopes and Rosefern's assessment is too big, they are happy to get an independent valuation.
Patrickson also happily admits the idea wasn't his alone: "I was back in England a little while back and saw a big sign outside a housing development there, saying 'We'll be your buyer'.
"I was intrigued and looked into it and found there are three or four big firms doing it in England – but no one doing it here. So I basically pillaged the idea as there are plenty of New Zealand circumstances which play into this scenario."
One demographic with serious appetite for the Trade Up programme is downsizers, he says— for example, maybe an older couple with a 600-700sq m house showing signs of age and which needs ongoing maintenance.
"So far, the strong enquiries we've had have been from downsizers and investors. We're talking to plenty of people interested in making a seamless move from older homes, to new".
Longer term, however, it will likely be landlords keenest on the trade-in scenario – because of the government's healthy homes standards which became law in 2019. Add to that the tax benefits of buying new, such as deducting the interest component of their bank loan against their personal income tax, and only having to wait five years to pass the Brightline test and sell tax free.
"It can be extremely expensive to bring an existing home up to today's healthy homes standard," says Patrickson. "As landlords of existing, older properties realise that upgrading their older home can be expensive, time-consuming and disruptive, a lot of owners will cash in and sell their old investment in favour of a new build with all its financial benefits."
Most will be able to sell for solid capital gains if they've held property in the right areas for a few years, he says, and can upgrade to new homes – and potentially multiple new homes – increasing their streams of revenue while decreasing maintenance bills.
"Owning older property doesn't hold much financial appeal for investors right now. The government has actively dissuaded the purchase of older homes while incentivising the purchase of new homes to ease the current housing crisis and stimulate the construction sector.
"This has an added benefit to first home buyers who may be able to afford ex-rental homes and add their own 'sweat equity' to bring the home up to modern standards as they live in it. That's the first rung of the ladder they call the property ladder."
Upgrading to a new home, with the developer becoming the purchaser of an existing home makes the upgrade simple, Patrickson says, and he lists benefits that include:
- Buy and sell in the same market with confidence.
- Only move once. No belongings in storage.
- No renting between sales.
- No agents' fees, marketing, cleaning or staging.
- No open homes and agency signs on your fence.
"It's one transaction, one move, one way to get ahead," he says, "so people can simply contact us to see if their home qualifies for the Rosefern Trade In Programme."
For more information: rosefernhomes.co.nz/trade-in-homeowners