Buying a home

While buying a home can be an exciting time, it can also be a daunting experience without the correct knowledge and expertise. The purchase of a home is likely to be the biggest investment you will make and so you need to get it right. We have compiled relevant and important information regarding buying a home to help you make the best decision possible.

When purchasing a home, understanding every aspect of what you are buying is important.

We have created the HOBANZ Guide to Buying a Home with this in mind. It will help you to be informed about the need to obtain title searches, LIM reports (covering potential hazards, zones, storm and sewer services, rates, and consents), a meth test, a valuation and a building survey. Other items to investigate are your local District Plans and Unitary Plans.

If you are looking to purchase property, it is essential you understand what type of property you are purchasing as some are more restrictive than others.

Fee Simple

This is also known as freehold and is the most common way to own property in New Zealand. This means you own the land, any buildings on it and have the right to live there as long as you choose.

Leasehold

You own the home and improvements on the property, but you do not own the land. A ‘lease’ gives you the right to occupy the land (also called ground rent). Your lease might also include an option to purchase. Lease hold property may appear attractive as the property is cheaper to buy because land is not included in the sale. Instead there will be an additional payment to the landlord to use the land. A potential downside is that lease costs need to be renewed and current owners have no control over the cost of renewal. Recent examples have seen lease costs increase significantly.

It is very important that you check the terms and conditions of the lease with reference to the ability for the land owner to raise the ground rental charges and in what time frames these increases will occur. If the property is leasehold, check the remaining lease term.

Cross-lease

This is where there is more than one dwelling on a fee simple title. All owners jointly own the fee simple title and lease the exclusive right to occupy their own property from all the owners. This often means you may need to get permission from the other owners on the title to conduct a range of activities, including renovations to existing structures.

Unit Title

Also known as Stratum Estate or Strata Title, and used when referring to apartments and multi-units. Each owner has freehold title to an apartment or unit and any additional areas, such as car parking or storage units attached to it. A unit plan shows their locality. Owners of units and apartments share common areas, such as driveways and lifts, and the cost of looking after them.

Multi–Unit

This section covers information specific to purchasing in a body corporate whether it is an apartment, terrace or stand alone house. Remember, when you buy into a body corporate, you become part of the body corporate. See guidance specific to buying into a body corporate. 

It is more than likely you will deal with a real estate agent when looking at purchasing a new home. Under the 2008 Real Estate Agents Act, real estate agents and salespeople are governed by a strict code of conduct. The Real Estate Authority (REA) has a comprehensive website which contains a public register of all licensed real estate agents, branch managers and salespeople. Visiting open homes gives you the opportunity to ask the real estate agent questions regarding the property and the seller’s expectations; however any advice should always be verified in writing. Questions you may like to ask include:

  • How long has the property been on the market?
  • Has there been much interest in the property?
  • What are the seller’s expectations of price?
  • Have any offers been presented to the seller?
  • If so, what was the price and conditions?
  • Why is the seller selling?
  • How motivated is the seller to sell?
  • Does the property require any urgent repairs?
  • Are there any weathertightness issues?

They are responsible for presenting any offers and assisting with any negotiations around the sale of the property.  While they are required to treat the buyer fairly, it is important to remember that the real estate agent is accountable to, and paid by, the seller.

Resources:

With the exception of residential property managers (handling rental properties) all professionals working within the real estate industry are covered by the 2008 Real Estate Agents Act. This act sets the legal processes and principals by which real estate professionals must operate. All real estate professionals must be licensed by the REAA and hold the necessary qualifications and/or experience as set out in the 2008 Real Estate Agents Act. They are also required to abide by the Code of Professional Conduct and Client Care.

There are three classes of licence:

  • Real Estate Agent Licence: a licence holder or licensed company can be in business as an agent.
  • Branch Manager’s Licence: a branch manager can carry out real estate agency work for an agent - but cannot be in business in his or her own right – and can supervise the work of a salesperson.
  • Salesperson’s Licence: a licensed salesperson can carry out real estate agency work for an agent but must be properly supervised by an agent or branch manager.

As part of the marketing process, a real estate agent will take you through a property for viewing. Many properties are listed with more than one agency; therefore it is important to advise the real estate agent if you have already seen a property with another real estate agent. It is the real estate agent that first shows you a property that is due the commission (paid by the seller) should a sale eventuate.

When an offer is made on a property, it is the real estate agent’s responsibility to present that offer to the seller – irrespective of price or conditions. Any negotiations in respect of the offer (called counter-offers) are then handled through the real estate agent until such point as an agreement is reached (or not) between the seller and buyer. An offer can be presented in the form of a Sale and Purchase Agreement although some real estate agents prefer to wait until a price has been agreed before drawing up the agreement. Other real estate agents are happy to take the offer to the seller in writing. It is far better to put the offer in writing right at the start as it eliminates any confusion as to the price being offered, any special conditions attached to the offer and deposit required.

While there is no legal requirement, if you are the successful buyer in the process it is advisable to ask the real estate agent to arrange a pre-settlement inspection. A pre-settlement inspection is carried out shortly before the property purchase is finalised and enables the buyer to check that it is in the same condition as it was when the Sale and Purchase Agreement was signed. Most real estate agents are happy to co-ordinate this. 

If you have any concerns regarding a real estate agent you should contact the Real Estate Agents Authority (www.reaa.govt.nz(link is external) or 0800 367 7322). Their website contains a public register of all licence holders and allows you to check whether the individual you are dealing with is a licensed real estate person as well as detailing any disciplinary history the licence holder may have.

A building inspection, also known as a pre-purchase building inspection, is a non-invasive visual inspection of a property with the aim of assessing the condition the building is in. It is worth noting that there are no formal or legal restrictions to become a building inspector, nor is there any formal code of practice or standard. 

A building inspection is invaluable prior to purchasing a property as it will help determine firstly whether you are happy to proceed with the purchase given the condition the building is in and also how much you are prepared to pay for the property. 

Find out more about Property Inspections. 

Resources

Need help?

We provide independent information and support on all matters related to homes and housing. If you are experiencing a challenge — whether with a defective building, trouble with a contractor/service provider, or issues within your body corporate, our team can help you.  

Phone: 0800 462 269