NZQA Expiring unit standard
26287 version 2
Page 1 of 6
Title
Demonstrate understanding of the residential property market and
residential property lending as a financial adviser
Level
5
Credits
8
Purpose
People credited with this unit standard are able to demonstrate:
–
understanding of the effect of economic, demographic and
geographic factors on the residential property market;
–
understanding of the legal implications of residential
property lending;
–
understanding of the taxation implications of residential
property lending;
–
understanding of the factors involved in the use of
residential property as security for a business loan and
their relevance to work as a financial adviser;
–
quantitative analysis techniques relevant to residential
property lending; and
–
understanding of and develop financial solutions for
residential property lending.
Classification
Financial Services > Mortgage Broking
Available grade
Achieved
Entry information
Critical health and
safety prerequisites
Unit 26286, Demonstrate knowledge of the mortgage industry,
lending principles, home loan products and apply the
application process, or demonstrate equivalent knowledge and
skills.
Explanatory notes
1
This unit standard may be assessed on job in the workplace using naturally occurring
evidence or in off job simulated work situations designed to draw upon similar
performance to that required in work in a financial services context, or a combination
of these.
2
References
Commerce Act 1986;
Companies Act 1993;
Consumer Guarantees Act 1993;
Credit Contracts and Consumer Finance Act 2003;
Electronic Transactions Act 2002;
Fair Trading Act 1986;
The Skills Organisation
SSB Code 100401
 New Zealand Qualifications Authority 2016
NZQA Expiring unit standard
26287 version 2
Page 2 of 6
Financial Advisers Act 1993;
Financial Reporting Act 1993;
Financial Service Providers (Registration and Dispute Resolution) Act 2008;
Financial Transactions Reporting Act 1996;
Health and Safety in Employment Act 1992;
Human Rights Act 1993;
Income Tax Act 2007;
KiwiSaver Act 2006;
NZ IFRS (New Zealand Equivalent to International Financial Reporting Standards)
available from http://www.nzica.com;
Privacy Act 1993;
Reserve Bank of New Zealand Act 1989;
Residential Tenancies Act 1986;
Securities Act 1978;
Securities Markets Act 1988;
Superannuation Schemes Act 1989;
Trustee Act 1956;
industry codes of practice;
and all subsequent amendments and replacements.
3
All activities must comply with any policies, procedures, and requirements of the
organisations involved; the standards of relevant professional bodies including codes
of ethics; and any relevant legislative and/or regulatory requirements.
4
This unit standard does not cover repackaging of home loan products for investment
purposes. There are two unit standards which deal with investment; Unit 25648,
Demonstrate understanding of investment concepts used by financial advisers and
Unit 25649, Apply principles of investment advice.
5
Definitions
Effectiveness – gives an optimal result in balancing investment risk and return.
Features of location – features such as zoning, town plan, suburb type, employment
opportunities, real estate statistics.
Financial situation – incorporates variables such as a client’s balance of assets,
liabilities, incomes, risks, needs and expectations.
Financial strategy – broad plan that accords with client’s stated goals, needs,
priorities, financial situation and risk profile, in a particular situation.
LAQC – loss attributing qualifying company.
Personal situation – incorporates variables such as a client’s personal relationships
and obligations, lifecycle stage, overall objectives, level of financial literacy.
PEST analysis – is a process of analysis for the purpose of determining the political,
economic, social, and technological factors which may impact on an organisation at a
particular and projected point in time.
SWOT analysis is a process of data collection and analysis for the purpose of
determining the opportunities, threats, strengths, and weaknesses of an organisation
at a particular and projected point in time.
Types of property – which include but are not limited to the following types: houses,
townhouses, apartments, multi-flat properties, vacant land.
Outcomes and evidence requirements
Outcome 1
The Skills Organisation
SSB Code 100401
 New Zealand Qualifications Authority 2016
NZQA Expiring unit standard
26287 version 2
Page 3 of 6
Demonstrate understanding of the effect of economic, demographic and geographic
factors on the residential property market.
Evidence requirements
1.1
Impacts of the economic environment on the residential property market are
explained in terms of rental yield and change in capital value.
Range
1.2
economic environment includes but is not limited to – interest
rates, monetary and fiscal policy, inflation, supply and demand, net
migration, employment trends.
Effects of demographic and geographic factors on the residential property
market are described in terms of rental yield and change in capital value.
Range
demographic and geographic factors include but are not limited to
– features of location, tenant types, types of property.
Outcome 2
Demonstrate understanding of the legal implications of residential property lending.
Evidence requirements
2.1
Debt structures are explained in terms of the legal entities of residential
properties.
Range
2.2
legal entities include but are not limited to – sole ownership,
partnerships, trusts, companies.
The Residential Tenancies Act 1986 is described in terms of the purpose, key
elements and key exclusions in relation to residential rental property.
Range
key exclusions may include but are not limited to – commercial
property, holiday homes;
evidence of two exclusions is required.
Outcome 3
Demonstrate understanding of the taxation implications of residential property lending.
Evidence requirements
3.1
Implications of tax considerations are described as they apply to tax
deductibility and tax payments.
Range
The Skills Organisation
SSB Code 100401
includes but is not limited to – mortgage interest, depreciation,
depreciation clawback, operating expenses, maintenance/capital
improvements, tax status changes including change from an
LAQC.
 New Zealand Qualifications Authority 2016
NZQA Expiring unit standard
3.2
26287 version 2
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Situations where clients require specialist accountancy advice are explained in
terms of the comparative roles of the accountant and the financial adviser.
Range
may include but is not limited to – disposal of investment
properties, depreciation claw back, enactment of tax status
changes;
evidence relating to two different client situations is required.
Outcome 4
Demonstrate understanding of the factors involved in the use of residential property as
security for a business loan and their relevance to work as a financial adviser.
Evidence requirements
4.1
Client background is explained in terms of its relevance to the business and the
use of residential security for business lending.
Range
4.2
Legal factors are explained in terms of their relevance to the use of residential
security for business lending.
Range
4.3
financial projections include – cashflow including volatility of
cashflow, profit and loss, costs and expenditure;
business strategic plans include – SWOT analysis, assumptions
and risks;
may include – PEST analysis.
Debt structures for long and short term borrowing needs are explained for
situations where residential security is used for business lending.
Range
4.5
legal agreements, payment arrangements, legal relationships
between different entities and parties involved in the transaction,
guarantee responsibilities and obligations, legislative
requirements.
Analysis of financial projections and business strategic plans are explained in
terms of their relevance to use of residential security for business lending.
Range
4.4
business experience, knowledge of relevant industry, knowledge
of risks and mitigation techniques.
borrowing needs may include but are not limited to – plant and
equipment, business capital, purchasing a business.
Stages of the legal and financial process which require specialist accountancy,
valuation, and legal advice are identified where residential property is used as
security for business lending.
Outcome 5
Demonstrate quantitative analysis techniques relevant to residential property lending.
The Skills Organisation
SSB Code 100401
 New Zealand Qualifications Authority 2016
NZQA Expiring unit standard
26287 version 2
Page 5 of 6
Evidence requirements
5.1
Quantitative analysis techniques are explained and demonstrated to measure
property investment return.
Range
includes but is not limited to – gross yield, net yield, debt coverage
ratio, debt/equity ratio, common valuation methodologies.
Outcome 6
Demonstrate understanding of and develop financial solutions for residential property
lending.
Range
evidence relating to a minimum of three clients is required.
Evidence requirements
6.1
Client financial situation is analysed and compared to personal situation and
risk profile.
Range
risk profile includes – risk factors and return expectations,
tolerance to risk, appetite for risk and return, volatility of income,
access restriction on product.
6.2
Residential portfolio management approaches are described in terms of
methodology and compared with client financial situation and personal situation.
6.3
A residential property strategy is developed in accordance with client financial
situation, personal situation and risk profile.
6.4
Legal implications are compared to the residential property strategy and any
need for specialist advice is explained in accordance with industry legislation
and codes of practice.
6.5
Tax implications are compared to the residential property strategy and any need
for specialist advice is explained in accordance with industry legislation and
codes of practice.
6.6
Debt structures are evaluated in relation to the legal entity, risk factors and
meeting the residential property strategy.
Range
risk factors include but are not limited to – lender risk, interest rate
risk, cash flow management, market risk.
6.7
Financial products and/or services are matched with the needs of the residential
property strategy and the match is optimised by the application of quantitative
analysis techniques.
6.8
A financial solution is developed in accordance with the residential property
strategy, client's personal situation, financial situation, risk factors, cash flow
requirements, and optimised by the application of quantitative analysis
techniques.
The Skills Organisation
SSB Code 100401
 New Zealand Qualifications Authority 2016
NZQA Expiring unit standard
26287 version 2
Page 6 of 6
This unit standard is expiring. Assessment against the standard must take place by
the last date for assessment set out below.
Status information and last date for assessment for superseded versions
Process
Version Date
Last Date for Assessment
Registration
1
12 February 2010
31 December 2017
Review
2
19 February 2015
31 December 2017
Consent and Moderation Requirements (CMR) reference
0003
This CMR can be accessed at http://www.nzqa.govt.nz/framework/search/index.do.
Please note
Providers must be granted consent to assess against standards (accredited) by NZQA,
before they can report credits from assessment against unit standards or deliver courses
of study leading to that assessment.
Industry Training Organisations must be granted consent to assess against standards by
NZQA before they can register credits from assessment against unit standards.
Providers and Industry Training Organisations, which have been granted consent and
which are assessing against unit standards must engage with the moderation system that
applies to those standards.
Requirements for consent to assess and an outline of the moderation system that applies
to this standard are outlined in the Consent and Moderation Requirements (CMR). The
CMR also includes useful information about special requirements for organisations wishing
to develop education and training programmes, such as minimum qualifications for tutors
and assessors, and special resource requirements.
The Skills Organisation
SSB Code 100401
 New Zealand Qualifications Authority 2016