Presumably the current rent for the building was set after GST was introduced and therefore the effect of GST could have been taken into account in setting the rent.
As the landlord is liable for the GST on the rent, the landlord usually passes the GST cost on to the tenant by setting the rent "plus GST".
As commercial tenants usually carry on a taxable activity, they are normally registered for GST and claim it back from the IRD. The landlord and commercial tenant therefore generally remain neutral in respect of GST.
In your case, it may be that the rent from the commercial building was set "inclusive of GST", which means one-ninth of the total rent collected has to be accounted for to the IRD as GST. Normally when that happens the total rent is set at a price that allows for the fact that one-ninth must be accounted for to the IRD.
You say that you are not GST-registered but are still liable for GST. This is not possible, and it may be that you and your co-owner are jointly registered for GST in respect of the building and that your co-owner is accounting for GST on the total rent.
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Q. The owner of the office building next door to my investment property has mentioned that he is considering constructing a building that will significantly impede the view from my premises.
Is there anything I can do to prevent my neighbour from constructing the building in this manner?
A. Your question needs to be dealt with in two parts. First, there is no New Zealand law that protects a person's view as of right. You can get around this by having your neighbour agree to a restrictive covenant preventing him from building over a certain height on certain areas of his property. Unfortunately, your neighbour is unlikely to agree to this. So the second issue to consider is whether your council places any restrictions on your neighbour's ability to construct his building.
The District Plan generally provides for limitations on buildings depending on the zoning of the property. Among other things it may impose restrictions on the positioning of buildings in relation to boundaries and building heights. It will also state whether the proposed building will be allowed as of right or whether the local authority will have a discretion to publicly notify the application for consent.
If the application is publicly notified you will be able to make submissions on the proposed development. Contact your local authority to inquire as to the requirements of the District Plan and see if these will offer you any protection.
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Q. Your column on August 2 mentioned "net leases". Can you explain the difference between a net lease and a gross lease?
I understand gross leases are common in Wellington but that net leases are the norm in Auckland. Why the difference?
A. Basically, the difference is that in a "net lease" the tenant pays all the expenses (maintenance, rates, insurance etc) in addition to rental, so the return on the lease is net to the property owner.
The situation is reversed in a "gross lease" (ie the tenant pays only the rental, and the landlord meets all expenses).
As for the difference between Auckland and Wellington, it must be borne in mind that market forces come into play, including regional practices.
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