With council planning rules in many urban centres focussing strongly on increasing density of housing, and with many proposed new apartment developments in the pipeline for Tauranga, apartment living and buying an apartment is coming into sharp focus.
The excitement of living close to the CBD, bars, restaurants and shops or simply not having to mow lawns and attend to gardens is a big drawcard for many people. But before you purchase an apartment off the plans there are six things you should consider;
1. Who is responsible for the development?
Do some homework about the people behind the company that is undertaking the development and find out what other residential developments have they been involved in. Do they have a history of quality developments, do they stand behind what they are selling? Your lawyer can assist with local market information and can also conduct company and land title searches to establish who owns the development company and the underlying land.
2. Does the development have the necessary consents?
You should determine whether the development has necessary resource and building consents in place from Council. Often developments will be conditional upon the developer obtaining consents, but some progress should have been made towards obtaining these prior to entry into an Agreement for Sale and Purchase.
3. Sunset Clauses
Make sure that any Agreement includes a “sunset date” or a “sunset clause”, that allows you to cancel the Agreement by a certain date if the developer has not made sufficient progress towards completion of the development. Generally a sunset date is tied into the purchaser obtaining a refund of any deposit paid as well.
4. Make sure your deposit is safe
Your lawyer should ensure that the deposit is held by the developers’ solicitor (in a trust account) as stakeholder pending final settlement.
5. Work out what your costs will be
Apartments are unit titled developments, so all apartment owners are part of the body corporate which manages the day to day operation of the apartment complex, including arranging insurance for the whole complex, managing common areas, rubbish, recycling etc. You should ascertain by way of viewing a draft body corporate budget what your annual levies and costs will be. Apartments are still separately rated, so you will need to factor in rates on top of body corporate levies.
6. Understand the Body Corporate Rules
Make sure you obtain a copy of the draft Body Corporate Operational Rules for the development. Check that there are no unusual restrictions regarding the use of the apartment or common areas which would not suit your lifestyle.
The best advice is to contact your lawyer before signing an Agreement for Sale and Purchase. We can then advise you on additional conditions and on the finer detail of the Agreement so that your risk and position is covered adequately.
To find out more, get in touch with our property team.
Written by Matthew Billett