COVID-19 STRATEGIES FOR PROPERTY INVESTORS AND BUSINESSES
WHAT CAN YOU DO?
We examine some Covid-19 strategies for property investors and businesses that are available at the time of writing:
Please see this detailed page with info about mortgage holidays, including links for all the major banks to apply for one. See also our blog post with 4 options for your mortgage to improve cash-flow right now
2. INTEREST RATES: Check with your bank re break fees on your loans, and look at whether the math adds up to break and renegotiate one or some loans at lower interest rates.
3. RENTS: Rent increases are worth considering, as you can now only increase the rent once a year.
4. PAYMENTS: Of course, cash-flow is king, and in this environment, we suggest asking your suppliers if you can start paying in smaller regular installments, rather than bigger sums. This will help reduce the impact of having less cash coming in. EpsomTax.com group offer interest-free time payment plans to all customers as a matter of course; please contact us to arrange this now.
5. INVESTING: This might also be the time to look out for housing bargains – see this article about timing and buying. If you can get a good deal on a cash-flow positive rental, that’s going to introduce some $ into your portfolio. Heads-up: Banks are deluged with lending applications, so getting mortgage approval is slow. Check out 9 investment strategies here
6. OTHER RESOURCES: Xero.com have provided a page with links to educational content. You don’t have to be a Xero user to access all of it. Webinars include managing stress, resilience, business continuity and so on.
What good news is there for the coming weeks and months, in view of the COVID-19 pandemic and its effects on the economy?
Government policy changes include:
- Increasing the small asset depreciation threshold to $5,000 for the period 17/03/20 to 16/03/21. It will return to $1,000 for 2021/22 onwards
- Giving Inland Revenue the discretion to remit use-of-money interest (UOMI) for customers significantly adversely affected by COVID-19. Affects all tax payments due on or after 14 February 2020. (There are some conditions, see here for more info. For those who don’t qualify; tax pooling is still a cost-effective option.)
- Increasing the provisional tax threshold from $2,500 to $5,000 i.e. if your 2019/2020 income tax was under $5,000, you are not a provisional tax payer for 2021 year
- Allowing 2% depreciation on commercial and industrial buildings from 2020/21.
- Giving wage subsidies or leave payments in some situations.*
- Business Finance Guarantee: loans for businesses with annual revenue up to $80 million can apply for loans up to $500,000, for up to three years.
- COVID-19 small business cashflow loans: 10k minimum loan, 1 year interest-free, no repayments till year 3, then 3% interest p.a. There are some fishhooks if you miss a payment, so be aware of your responsibilities if you apply and are accepted. Apply via the IRD website
^ How it works is that the principal payments temporarily stop and the interest is added to the mortgage