Buying property in New Zealand is a big investment. While the process itself isn’t much more or less complicated than elsewhere, there are a handful of unique considerations to be made. Here are explanations of leaky liability, cross-leases, and common terms used in reference to housing and real estate.
Generally speaking, the newer a house is, the less likely it is to need major repairs. However, this generality doesn’t always apply to houses and apartments built in New Zealand between 1990 and 2005. During this time, a combination of factors allowed faulty building materials to be approved without proper testing. Poorly treated timber was used in framing; it subsequently allowed moisture to penetrate the wood, which has caused rotting frames and leaky buildings.
During this time, a combination of factors allowed faulty building materials to be approved without proper testing.This was a widespread problem—some estimates put the number of affected homes at over 15,000. The government introduced a resolution service for people affected by the problem, through the Ministry of Business, Innovation and Employment.
If you are considering buying or renting a house that may have been built during the affected period, check carefully for signs of moisture damage on the walls, ceilings, and floors. Ask the agent or landlord whether there have been any leaks, and if you are buying, check the land information memorandum (LIM) to see whether any claims have been lodged or repairs have been done. If you are buying an apartment, check with the body corporate to see if there have been reports of leaks, and if they have been repaired. Ask what the repairs cost and how owners were charged. If new problems arise, does everyone pay an equal share, or does the affected owner pay his or her own costs?
Not only are leaky homes expensive to fix, they can also ruin your possessions and make the house unlivable. The faulty materials have since been taken off the market, so anything built now shouldn’t have these issues. Anything built before 1990 or after 2005 should also be fine, although many older homes suffer structural damage eventually. With so many homes affected, however, owners are keen to dump these problem properties, so buyer beware.
Half a Property?
Traditionally, New Zealand houses were built on quarter-acre lots so that everyone had a large garden to enjoy. But as cities have become more densely populated, the demand for housing has inspired many homeowners to subdivide their lots into two sections using a cross-lease (or X-lease), so that a second house can be built on what was once the backyard.
These subdivided properties create “infill housing.” This means that although an area has been completely developed, new properties are built in the leftover spaces, increasing the population. Living in one of these homes means sacrificing a backyard, and often living very close to your neighbor.
If you are buying a larger property, it is a good idea to find out whether you would be allowed to create two sections from it, as this can raise the value of your purchase. The local council determines where it will allow these divisions, and on which sections.
If you are buying a property on a section that has already been subdivided, apply to the local council for a land information memorandum (LIM), which will tell you whether the division was legally done. If not, you could run into a legal ownership nightmare later on. If you are buying the cross-leased portion of the section, you are actually buying a 100-year leasehold on the land, rather than a freehold title.
The closer to a major city you live, the more likely you are to find sections that have been split this way. If every section on the street has been subdivided, you might find that traffic is heavier than the street was designed for, or that there are a lot of cars parked on the road. These factors will all affect the value of your home in the long run.
Housing Terms in New Zealand
Reading a real estate listing can sometimes seem like trying to crack a secret code. Here are some common terms and abbreviations you’re likely to come across.
- cottage—small house with 1-3 bedrooms, usually older
- villa—old Victorian house, more spacious than a cottage
- bach—holiday home (sometimes also called a “crib” on the South Island)
- apartment—condominium unit in a multiunit building, usually a high-rise
- unit—part of a multiunit dwelling, usually low-rise or semidetached
- carport—a covered parking spot for a car, not a garage
Real Estate Abbreviations
- ac—air conditioning
- BBO/BEO—buyer’s budget over/buyer enquiry over (minimum asking price)
- bir—built-in closet (the “r” here stands for “robe,” short for wardrobe)
- bv—brick veneer
- elhws—electric hot water service
- ens—ensuite bathroom
- f/furn—fully furnished
- ghws—gas hot water service
- GV/QV—government valuation/quotable valuation
- ldr—lounge/dining room
- osp—off-street parking
- pa—per annum
- pmth—per month
- pw—per week
- s’out—sleepout cabin
- tf—timber frame
- ww crpt—wall-to-wall carpet
Excerpted from the Third Edition of Moon Living Abroad New Zealand.