Urgent need for apartment law reform, lawyers tell parliamentary committee
Apartment law reform is urgently needed, the NZ Law Society says.
The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill addresses long-standing concerns about body corporates, which manage multiple title dwellings like apartments, and the rules surrounding them.
Sponsored by National Party MP and housing spokeswoman Nicola Willis, the bill improves the way information is disclosed to prospective buyers, strengthens body corporate governance arrangements and changes rules around the funding of long-term infrastructure projects.
The Law Society told the finance and expenditure select committee there was widespread consensus that apartment law reform was urgently needed as there had been criticism about the gaps and errors in the legislation since 2010. Given the length of time it had taken for the bill to get to the select committee, the momentum could not be lost, the Law Society said. The bill improved several aspects of the existing legislation and, subject to amendments, should be enacted as soon as possible, the society said. There needed to be a balance in terms of protection for people investing in what would often be their largest asset, their home, Law Society spokesman Thomas Gibbons said. ‘‘But too much regulation can cause higher compliance costs which may disincentivise unit ownership and discourage lay people from becoming involved in body corporate governance. ‘‘The bill seeks to ensure that balance is maintained.’’
The Law Society, along with other stakeholders, had also highlighted the need for further and wider reform of apartment law, he said.
Further reform would encompass other areas, including the cancellation of plans, body corporate ownership of units, lending to body corporates and operational rules.
‘‘We recommend the Government undertake an immediate review to follow enactment of the bill, so that other less-pressing but important issues can be considered and further legislation introduced,’’ Gibbons said.
But the Law Society did not want to see the enactment of the bill deferred while the outstanding issues were considered.
A flood of horror stories about expensive apartment repairs and a recent documentary, A Living Hell: Apartment Disasters, highlighted why apartment law reform was urgently required.
The stories and the documentary prompted the Real Estate Institute to call for the immediate introduction of better information disclosure requirements for apartment buyers.
Real Estate Institute spokesperson Dee Crooks said that while the Government was addressing some of the disclosure inadequacies, there was an urgent need for greater access to key information for prospective purchasers.
Currently, potential apartment purchasers were not always given specific details in the precontract disclosure statement about an array of issues, Crooks said.
These included weathertightness issues, where there had been remediation without a claim through a court or tribunal, earthquake prone issues, the long-term maintenance plan, and proceedings pending against the body corporate.
Crooks said that given the history of leaky buildings, it was staggering potential purchasers of apartments were only able to find out if an apartment building had weathertightness issues if there was a current court or tribunal case.
‘‘Prospective purchasers need to be able to buy apartments with confidence – particularly as apartments are seen as a ‘more affordable option’ for first home buyers and councils are being encouraged to build up and not out.’’
If information disclosure was improved, this might encourage major banks to reassess their position on lending for apartments for first-time buyers, she said.
‘‘Currently a number of the banks are refusing to lend to firsttime buyers for unit title properties, despite them being in a more ‘affordable’ price bracket.’’