Checklist for apartment buyers
Buying an apartment is more complicated than purchasing a standalone house. Here are some questions to ask before you sign any agreement.
Is it leasehold?
When you are apartment shopping, it is common to stumble across a property that seems too good to be true. It’s big, it’s right on the water, and at a great price. The catch is usually that it is leasehold. This means that while you own the apartment, you don’t own the land the building sits on. At regular intervals, the rent you pay for the land will increase. Almost all the apartments on Auckland’s city waterfront fit into this category.
How much are the fees?
After your mortgage, your body corporate fees are likely to be your biggest expense. The body corporate is a committee made up of the owners of the apartments in the building. They pay levies, which cover the building’s insurance and maintenance. Body corporate fees vary a lot – expensive properties usually pay more. You can expect to pay about $100 a week for a middle-of-the-road property. That will increase with inflation but can rise more sharply if there is an unexpected expense to cover. Find out whether the body corporate has any rules around how it increases levies.
Can I see the body corporate meeting minutes?
You and your lawyer should go through the minutes of meetings over the past three years, at least. This will help you determine whether there are any problems with the building, particularly weathertightness issues. Request your own building report to check for any other issues.
Who looks after communal areas?
Usually the body corporate will have responsibility for taking care of all common areas. But you should find out which they consider those to be, how often they are cleaned, what the procedure is for requesting maintenance and whether there are any rules about their use. Find out whether there is an on-site manager.
What is the long-term maintenance plan for the building, and how will that be paid for?
Apartment building body corporates have to have a long-term maintenance plan but they do not have to have the money set aside to fund it. Find out what will need to be done to the building and whether you are going to have to fork out for it down the track. Replacing lifts, for example, can be very expensive.
What work has been done? Does the building need earthquake strengthening?
Find out whether the body corporate has kept on top of the maintenance that has been needed. Is any work required to bring the building up to acceptable seismic strength standards? In Wellington, apartment owners are worried about how they will pay for work to get their properties to 34 per cent of the code, when banks are reluctant to fund it.
What about water meters?
Some apartment buildings do not have individual water meters for each apartment, and instead apportion the total bill according to the size of the unit. If you know you use less water than most, you might find this unfair.
Are there any other rules?
Some buildings have bans on pets, noise, or even washing on balconies. Find out what you are agreeing to before you buy.