What type of property?

From the Kiwi quarter-acre dream to the inner-city loft, properties come in all different shapes and sizes. Finding what’s right for you is all part of the fun.

Leasehold

With leasehold you own the building but you don’t own the land. Banks will generally only lend up to 65% on leasehold property.

There are typically two types of leasehold. Church and Maori leasehold tends to be lower risk and better quality because they’ve been around longer and are more consistently priced. Commercial leasehold is riskier. Many of the inner city apartments that have developed recently have used low “honeymoon” lease costs that jump up as much as 100% at the next ground rent review date.

Your key considerations are how long it is until the next review and how much will they increase?

Leasehold can be really useful in some cases. It allows people to live in areas and in a quality of building they otherwise could not afford. The most important thing is making sure that it’s priced properly.

Freehold

This is where you own the whole lot. Long-term, the value of your property will be in the land.

Cross-lease

This was popular in the 70s and 80s as a cost effective way of subdividing properties. Essentially you own a share of the freehold title. The only thing to be aware of with cross-lease is that it may need sign-off from other owners before you can change the footprint of your house. Although uncommon, there could be other restrictions on the title that need to be checked out by your lawyer.

Strata or unit title

This form of ownership is common for apartments, townhouses and units. It is used to ascribe ownership within a development. You will have ownership of your unit and an undivided share in the ownership of common areas.

There will be Body Corporate fees associated with unit titles that pay for the upkeep of the common areas and services.

 

Types of building

House

Usually has a roof, windows and a door. Like Playschool, only real life.

Townhouse/units

These are semi-attached and usually on a cross-lease or strata title. Banks are a little more nervous about town houses in larger developments so may restrict lending to 70%. They tend to be more favourable towards properties built in the 70s and less favourable towards anything built after 1985. Clearly, they don’t make them like they used to.

Apartments

Apartments are increasingly popular with buyers because of the low entry prices, though they’re not viewed positively by lenders. This can make it much more difficult to get a mortgage on an apartment, but has also seen the price of apartments drop. Some banks are not lending on apartments at all, so it is worth talking to us first if you’re thinking of grabbing an inner city pad.

Apartments are a bit of a weird beast. Often banks won’t lend on the cheapest places at all because they’re too difficult to rent. For apartment like these, which tend to be less than 50sqm or leasehold, you’ll probably need a 40% deposit. Larger apartments with two or more bedrooms that are freehold will need 20%-30% deposit as long as you have a good stable income.

To really educate yourself on apartments, spend a night at a tired, old, cheap hotel (just take your own pillow). You’ll notice what happens to apartments that are cheaply made and not well maintained – it feels really run down, shared areas will be scruffy, views blocked by newer buildings and street noise will be very noticeable. Apartments with potential will be soundly built and mostly owner-occupied, with safe entry and exit from the building at night and great proximity to supermarkets, parks and transport.

 

Building era

Pre 1940

Built with native timbers these were built pretty solid so last fairly well. Things you should watch out for:

  • Some insurers will need old wiring to be completely replaced before they’ll sign off on a replacement-cost policy. You’ll generally need this kind of policy to get your home loan so make sure you check this out before going unconditional.
  • These houses often need to be re-roofed, costing around $10k and re-piled, around $15k.

1940-1960

This period tended to have small windows and cramped living spaces to trap in heat. You’ll often find the layout in these places are at odds with modern living, so you’ll need to move to walls around. That makes them expensive do ups.

1960-1985

Not only are houses in this era pretty fashionable at the moment, they’re made from enduring materials and are often positioned well for sun with great indoor-outdoor flow. Asbestos was widely used in the 1960s and 70s. Asbestos is safe if you just leave it alone (kind of like a pimple). Check whether or not internal ceilings are asbestos because some lenders will restrict lending to 80%. Asbestos ceiling can be removed by specialists for around $5k.

Insulation only became compulsory in 1979, so houses built before then might not have any. Brick and tile houses will be particularly cold and have issues with mould – look for it on south-facing walls.

1985-2003

This is the era of dodgy building practices and the infamous “leaky building”, so it pays to be careful.

Things to look out for:

  • Monolithic cladding systems (“plaster houses” and panelling)
  • Lack of eaves (roof overhangs)
  • No window flashings (integrated metal trim above a window that deflects water)
  • Balconies integrated into the cladding system (“solid”)
  • Cladding or framing touching the ground

2003+

New building codes fixed the dodgy practices of the previous decade. Enough said.