Apartments require special consideration before purchasing. We look at why and recommend steps to invest carefully.
Special issues with apartment living
The special concerns of apartment dwellers include:
- Who is responsible for maintenance of the common areas – is there an active body corporate? Do they have a fund for maintenance? Is there a permanent building manager on-site or on-call at all times? Find out what body corporate fees you would be expected to pay and ask about the body corporate rules. Find out also if you have to pay for maintenance of your own unit, or for major maintenance work, for example, painting.
- Living in close proximity with your neighbours. Find out about the neighbours and decide if noise could be a problem. Are most of the apartments rented - with a constantly changing parade of neighbours? The type of neighbours could lower the value of your apartment.
- How close is the building to shops, cafes, nightclubs and other amenities? Is this going to impact on noise, for example is the building in the main nightlife area of town? Invariably, the nature of apartment living means there will be some noise you have to contend with.
- Is there car parking and do you have to pay extra for it?
- What security measures are in place, for example, can anyone walk into the building? Are there any security cameras?
- Do you have a view and sunlight, or are you blocked by other buildings or facing the wrong way for the sun? Find out if there are any pending resource consents that will affect your apartment block, for example, plans to build a high-rise hotel next door.
- Does it have a balcony so you can enjoy the view or afternoon sunshine?
- What other facilities, such as a gym and swimming pool, are in the complex? This may or may not be important to you.
- Is the lift system reliable and are there enough lifts to cope with the flow of people at busy times? How easy will it be to get your furniture in and out of the building?
Research the market
Before you buy, research the market to make sure you are getting value for money. Talk to independent valuers and real estate agents, and check recent sales in the area. Don’t rely on advice from the developer or their agent. This is particularly important if you are buying off the plans. You want to know that the value of the finished apartment will reflect at least what you paid.
Buying off the plans
As most apartment complexes are built by developers, it is good practice to check the background of the developer, the architect or designer and the builders employed by the developer. Find out if there have been any problems with other developments these people have been involved in. Warning signs include bankruptcy or court action. Look into the financials of the developer for assurance they have the financial backing to complete the development. This is especially important if you are buying off the plans, because if the developer goes under and is unable to start or complete the building, you could lose any money you’ve paid.
A developer may be liable to prosecution for selling or allowing the purchaser to take possession of a unit prior to obtaining a Code Compliance Certificate (CCC). Check with your solicitor. Some developers may try to get around this by inserting a clause into the sale and purchase agreement that commits you to purchase or take possession of the unit prior to the developer obtaining the CCC. If this clause is contracted out of, it must be done using the prescribed form.
Have an independent person look at the plans and get an assurance from the developer that what is on the plans is what you are getting. And find out if the developer has the necessary resource and building consents before you pay anything. Apartment inspections
If you decide to go ahead with the purchase of an existing apartment have a property inspection done.
When you request a property inspection, ask for these issues to be especially noted:
- Noise (transfer between units).
- Minimum area.
- Quality of the building, and any areas that could be a weathertight risk.
These items, and a complete survey of other common property areas, would require a special-purpose property report.
You can also check the records of the body corporate or company records but these won’t necessarily disclose all defects, or major future expenditure.
You need to be confident there are no weathertightness problems either now or potentially in the future. Check with your local council, body corporate records or other owners. Ensure that the person inspecting the property for you is able to identify signs of repair or signs of future problems. See leaky buildings for more information.
Find out if you will be liable to contribute to defects in areas other than the actual unit you purchase. If so, it is a good idea to examine all those areas, even if this means examining all the individual apartments.