Mitre 10 Mega coming to Masterton.
Filed under: Cost of living, Property & General Investing
We were invited today to the Open Day for the sparkly new Mitre 10 Mega in Masterton. Friends of mum and dad want to know how come we got an invite. Basically because I have a business account with them for the rental business. Currently we have 2 stores in the area – one on the main high street in Masterton, and one on the bypass. The site next to that one is where they are building the Mega Store.
Currently – if we want the selection of good available at at Mega store rather than a normal Mitre 10 – we have to travel to Petone near Wellington. Now the small stores we have in Masterton are good – the staff are really top notch – and they the service they provide is excellent. I found them invaluable when I was renovating my trashed rental – many of the staff have also been through the mill with bad tenants and problem property managers – so they know the feelings well. The main difference we are going to see is in choice – and easy availability. Previously they could get me stuff they don’t have in stock – but now we will actually be able to browse a massive warehouse of DIY goodies.
I think there could be some budget blowouts coming up if I’m not careful.
Now the place isn’t stocked yet – though they have started. It has taken a few weeks just to get the racking and shelving in place to put the stock on – with the help of some short term contractors they took on just for the job. Apparently it normally takes 10 weeks full time work to stock up a Mega Store – and they reckon they have 6-8 weeks to get it done before they open – though they will not yet commit to an opening day.
Smart move!
Some people have complained about the effect that opening a big store like this will have on the area – now I don’t know what I am missing here – but I have always thought this was bloody good thing for the Wairapapa. For the owners to have the guts to build a massive megastore in a small town says they think the area is growing. Which is what I reckon is happening. There’s actually a lot of money in the Wairarapa – the problem is there’s not so many places here to spend it – so the money ends up being spent in the cities: Wellington or Palmy for instance. Really – we wont be spending any more money on DIY – but we will be spending it in Masterton rather than in Petone. Surely that’s a good thing?
I cannot wait till it is really open for business. And just in time for Christmas it looks like. So good luck to the team – and from my family at least – thank you for (if nothing else) the lighting section! And thank you for inviting us today!
Who exactly writes new laws in NZ?
Filed under: Life in New Zealand, Property & General Investing
Oh , that’s right – my waste of space local MP John Hayes.
Well, I have come across another new law that was written by a total imbecile – so if that is what Mr Hayes does when he can’t be bothered to talk to his constituents – he needs to go back to school.
It is however refreshing to know that it isn’ just the Immigration Advisers Licencing Act that screws the very people it attempts to help.
In this case – it’s the Unit Titles Act 2010, which replaces a 1972 act and is supposed to improve the lot of apartment owners. When you own an apartment here – the owners usually make up what is called a Body Corporate, and they pay into a central fun to cover the costs of running an maintaining the common areas of the property. Well, that’s the theory as long as people pay up.
Now, every year, the Body Corporate has an Annual General Meeting. Usually not many people turn up – but our next AGM – a lot of people want to turn up because there is a rather big issue in the building with one person owing a lot of money in fees to the Body Corporate. The issue is that not everyone can get to an AGM. Many owners live out of town, or cannot get time off work to attend a midday meeting. So they assign a proxy to someone else to vote on their behalf.
Under the 1972 law, this required that they do no more than send an email to the person they wish to assign as their proxy stating their name, the name of the person they are assigning, and the number of the unit.
Under the new “improved” 2010 law they have to give all this clobber:
Form 11
Proxy appointment formSection 102(3), Unit Titles Act 2010
To [name of person authorised to receive proxy appointment forms]
Unit plan: [reference number]
Body Corporate Number: [number]
Proxy appointmentWe/I*, [full name, address], being the owner/owners* of [principal unit] and therefore an eligible voter within the meaning of section 96(1) of the Unit Titles Act 2010, appoint [full name] as my/our* proxy for the purposes of the general meeting of the body corporate to be held on [date].
*Select one.If the general meeting is adjourned and reconvened, this proxy appointment is valid for the purposes of the reconvened meeting.
MotionsComplete the following table.
Motion
Type of resolution[Summarise the motion.]
[State whether the motion requires an ordinary or special resolution and whether, if passed, the resolution would be a designated resolution.]Date: [day, month, year]
Signature of eligible voter:
So now, we cannot sort out the proxies until the AGM has been called and we know all the motions that people want to vote on. It also means that if you as a unit holder which to propose a motion to be voted on – then that has to be in the proxy forms that go out to the members, so that people who are unable to attend can still vote on those issues.
I can categorically say that this screws over a number of people who find themselves in a crappy situation. And it has just made my life a whole lot harder personally. Once again – the brains behind a new law have not thought things through and are being utterly idiotic.
But hey – that’s just my opinion
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Where on earth have I been?
Just in case anyone was wondering – I have been away from blogging for a few weeks because I have been having to sort out one of our rental properties, and unfortunately – everything else had to get dropped because well – I need the rent.
So what happened.
Well, I can’t say too much because I will be taking legal action or going to the Disputes Tribunal against my Property Manager for not actually managing the property. But essentially, the tenant in one of our properties was allowed to move in without paying a bond for 6 months, or paying rent in advance, owes us about $3500 in rent, and wrecked our house as well. (Turns out they owe an awful lot of people a lot of money!)
We have had to repair holes in the walls, replace a door that was kicked in, replace a bath that had a hole kicked in it, replace the carpets that dogs had peed all over (we still have to get decorators in to repaint the outside because the dogs have clawed the weatherboard), and generally fix and tidy up.
It has cost us over $10,000 to repair the damage – that’s on top of the lost rent and the 9% + GST I was paying for the property manager. We have also had to do some repairs for our other property as a previous tenant also did a fair amount of damage, and we were not told about it before the current tenant moved in. They were left with the impression that we were little more than slumlords. So at least now we have repaired some of the damage to our reputation and they now understand that we will indeed maintain the property if we are told that work needs to be done.
So for the last 3 weeks we have cleaned, painted, weeded, and paid large sums of money for contractors to re-carpet, put a new bath in, clean some more, change the locks (the PM hasn’t even bothered to give us the keys back – let alone get them off the tenant.) fix holes in the walls, replace doors, and generally turn our rental from a shit-hole back into a home.
The results
The property is now available on TradeMe, via our new Property Managers, Lambton Property Management, who have gone above and beyond the call of duty and friendship to help me deal with this nightmare.
So if you are looking at starting your new life in New Zealand in the Wairarapa – take a look:
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Are house prices in New Zealand really too high?
Filed under: Cost of living, Economics, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ
Or are people just wanting a Rolls Royce on a Mini Cooper budget?
Auckland first-home buyers Chelsea and David Yandell ended up paying more for their Onehunga place than they initially expected when they started out as house-hunters.
Now, they have a three-decade mortgage. “We realised that paying $350,000 in Auckland, you’d get something that was pretty crappy,” recalls Chelsea of the buying experience. So they changed their expectations and borrowed more.
“The house we bought has been finished to a high standard. It’s perfect. When we were looking, we realised we’d have to spend more. We had a look around for a few months and we had our hearts set on a couple of houses. But the places we were looking at would not have gone up in value. It wasn’t what we wanted.
“House prices are definitely too high and wages are too low for first-home buyers. We’ll be 55 by the time we pay off the 30-year mortgage. But we didn’t want to keep renting. That’s dead money. … We are now more careful with our money and set goals. If we pay a certain amount off the mortgage, we can get new blinds. We’re with KiwiSaver so we know in retirement, we will have something more than the house.”
Sorry – but there is absolutley sod all in this article that suggests that house prices are too high. Now they may in fact be too high – but not because you want a house that’s finished to a high standard. That’s just you wanting a better house than you can afford. What annoys me about this is the amount of times we get blamed for this because we are property investors, and thus automatically we are greedy. But surely the greed is in wanting something you cannot afford?
It is not the fault of high prices that these people have a 30 year mortgage – it’s that the houses they were prepared to buy could only be theirs if they took on more debt than they could manage in less than that time. That is entirely down to them, and thus their own fault.
My first house cost £84,000. I imagine that these two would have turned thier noses up at it instantly. It was old (1700′s – and 1960′s) tiny (two beds) a crappy kitchen, a coal fired stove as the only heating and it didnt work properly, and had the most disgusting wall coverings you have seen in your life, and carpets that wouldn’t have looked out of place in a crap pub. And an avocado bathroom suite! Almost all our furniture was handed down to us from other family.
But it was a great home – and when we got it done up it was a lot better than when we started. It was ours, and we could afford the mortgage on it. Im sure we could have borrowed more and got a “nicer” house – and then bleated about how much that perfect house was and how awful it was that we had to pay so much for it. And when I was going through a divorce, I could still afford the mortgage on it becuase I had not been greedy and bought a house that we could not afford becuase I wanted something “perfect” for my first home at the age of 25!
Doing that means that at the age of 35(ish) when we came to NZ we COULD afford the nice house in the country, with stunning views and a swimming pool. I would love to have had this at their age – I just wasn’t that daft – and I sure as hell didnt expect house prices to stay low just so I wouldnt have to bother climbing the property ladder.
I also always wonder what these people will do when they come to sell? Because at the end of the day, house prices are actually determined by two things: what the buyer will pay, and what the seller will accept. Human nature dictates that we complain that prices are too high when we are trying to buy – but refuse to accept “insulting” offers when we sell. We become the problem we just complained about.
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Migrants buying up houses in New Zealand!!!
Filed under: NZIS & Immigration issues, Property & General Investing
I came across this article on google news with the headline Chinese buyers chase easier housing market. It seems that China has brought in rules to stop people buying multiple houses, so they are buying here instead. Basically this is because, news and political expediance aside – investing in property is a bloody smart idea. Now the article is a bit confusing in places (not entirely unusual in New Zealand to be honest) because it keeps talking about a/ different types of migrants and b/ different properties.
Upshot 1
Chinese parents want to buy property for thier children who are studying here (presumably for them to live in as students) with a view to upgrading as and when they get residencey.
Upshot 2
Chinese migrants coming in on the Investor Category two are bringing in $1.5m each and want to invest most of that in property.
Upshot 3
One of those chinese investors has expressed an interest in spending $2m on a commercial property.
Now, theres a few problems with articles like this – not least because at the moment there is a concerted effort to drum up a bit of “Asians are buying up our country” hysteria. Not helped by the fact that Chinese dairy companies are currently trying to buy a load of dairy farms which are in recievership.
To be honest in general I don’t have an issue with most of this being shown in the article. If we are taking in foreign students – we are generally charging them an arm and a leg to be here, so I dont see why thier parents can’t invest in a propery rather than having to pay rent all the time. Clearly it will highten the housing market – but really – any more than I have by buying three investment properties on top of our home?
The other thing is that people coming in via the investor category cannot invest the $1.5m in residential housing. There are actually fairly strict rules about where that money can go as it happens:
BJ5.50 Definition of ‘acceptable investment’
An acceptable investment means an investment that:
- is capable of a commercial return under normal circumstances; and
- is not for the personal use of the applicant(s) (see BJ5.50.1 below); and
- is invested in New Zealand in New Zealand currency; and
- is invested in lawful enterprises or managed funds (see BJ5.50.5) that comply with all relevant laws in force in New Zealand; and
- has the potential to contribute to New Zealand’s economy; and
- is invested in either one or more of the following:
- bonds issued by the New Zealand government or local authorities; or
- bonds issued by New Zealand firms traded on the New Zealand Debt Securities Market (NZDX); or
- bonds issued by New Zealand firms with at least a BBB- or equivalent rating from internationally recognised credit rating agencies (for example, Standard and Poor’s); or
- equity in New Zealand firms (public or private including managed funds); and
- is not (directly or indirectly) invested in residential property development (see BJ5.50.10 below) or deposit taking financial institutions (e.g. banks or finance companies) (see BJ5.50.15 below).
- Notwithstanding (a) above, where an investment fails to meet one of the acceptable investment requirements, a business immigration specialist may consider, on a case by case basis, whether the failure was beyond the control of the principal applicant and if satisfied that this was the case, may consider the investment acceptable.
So – this begs the question to me: are the investors planning on buying up houses, or commercial property? Because the legislation doesn’t actually preclude commercial property – but it also doesn’t list it as a suitable investment either.
It is of no surprise to me whatsoever that a licenced agent is quoted in the article and does not seem to be too clear on this issue:
Ming Tiang, director of Chiwi Immigration Services, says he has 10 potential investor migrant clients from China, willing to invest upwards of $1.5 million each to qualify for the investor migrant category, and most of them are keen to pump a large portion of the sum into real estate.
“They are businessmen, and are quite realistic about how much to invest in business here and what the returns would be,” said Mr Tiang. “As with most Asians, the Chinese feel investing in real estate is usually a safer option.”
Does Immigration know that this is where the funds are going? Becuase one of the things you have to do under this scheme is actually show where you invested the money. INZ say they will want to see proof. It offends me that this is going on – with an agent seemingly fully aware of the fact that his clients are not going to be following the rules.
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Why the hell should I pay other people’s bank fees???
Filed under: Banks, Cost of living, General Budgeting, Property & General Investing
I’m having a slightly irritating day to be honest. I’m off to Sydney – which is going to stretch my budget to within an inch of it’s poor life, and I’m trying to change the buildings insurance on my rentals. Currently its done via ASB, but I have been looking to take the business from them on account of their refusal to give me any discounts on my bank fees or interest rates.
So I got a quote from a broker – it doesn’t save me a huge amount – only about $50 a year for 2 properties – but it has the advantage of not being via the bank. I reviewed the policy documents, filled out the paperwork, and just needed to confirm the amount of the premiums in order to fill in the Credit Card Payment option with details.
At which point, I am advised that there is a 2% extra charge to pay my Credit Card!
So I double check – no where, but no where does it mention this. Not a scooby.
And even if it did – why the hell do I have to pay someone else’s bank fees?
I pay my own. It is beyond outrageous to expect me to pay someone else’s as well.
When I think about this – it is in much the same vein as the whole MAF Fees scam that some shipping companies try and pull. Where immigrants get charged spurious “extras” which are basically business costs for the NZ subcontractors. I wonder why they don’t go the whole hog and charge us extra for the staff loo roll.
Anyway – they have decided that I don’t have to pay it – but to be honest I’m considering not going ahead anyway. It’s the principle of the thing.
But always remember – in almost ALL cases – these “charges” can be argued against. At the very least – if anyone tries it one without telling you up front – at the start of the transaction (not whacked on at the end hoping you won’t notice) you have every right to refuse to pay it. There’s about $3500 worth of insurance premiums involved here – possibly lost because of a desire to wring another 2% out of me.
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What is happening to LAQC’s?
Well, what it looks like is happening is that they are going to be crushed into a billion little pieces and those pieces consigned to the depths of hell where us greedy property investors should also be consigned for daring to be slightly wealthy. That’s the headline, and that’s what most people will read and understand about what the government has done. And I’m pretty sure that most people (who don’t have an LAQC) will be rather happy about that.
However….
Actually – that isn’t happening at all, so if you were thinking of going into Property Investing in New Zealand – don’t panic.
Gilligan Rowe & Associates – the people we used to tell us how to set up our companies and trusts – have written an article about the new setup – it’s actually quite clear and easy to read. Maybe I’ve just got used to hearing Matt Gilligan speak about tax issues – and now I understand him!
Basically it consists of us having to contact the IRD and file a document that says our LAQC will now become an LTC – or Look Through Company. (Who the hell comes up with these names???)
And despite what many people assume is going to happen, other than that – it’s business as usual for us. We appear to still be able to claim losses against our personal income, as long as that does not exceed the amount of money we have either personally put into the company by way of capital or loans, or the amount of mortgage we have personally guaranteed. As that happens to be an unlimited amount (the banks don’t miss an opportunity to get your signature guaranteeing the moon if they can help it) essentially it means that we can can still claim a tax refund every month.
So at the end of the day – all we lose is the tax refund on the depreciation of the buildings we own. That amounts to about $3000 a year extra we have to find charge our tenants.
Personally, it bugs the hell out of me that I have had to worry about how to cope with suddenly losing the ability the claim tax losses, and being forced to sell three properties (cos I’m damn sure my tenants won’t feel like paying twice as much rent). Because thats what the media have been feeding to everyone. It just turns out not to have been the case. But if it keeps people happy, and means I’m personally not going to have to bankrupt myself for having had the audacity to try and not be poor – I’m actually OK with that.
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Are you emigrating to Christchurch?
Filed under: Getting to New Zealand, NZIS & Immigration issues
Ok – I have no idea how this earthquake situation is going to pan out – no-one does right now. But it occurs to me that if you were planning on emigrating to New Zealand, and in particular Christchurch (which is the 2nd most popular destination) then you need to be thinking about certain things. So I’m going to run through the things I think you might need to be aware of, and any info that I can find which is more specific to migrants.
Most of the travel info in here is sourced from the Canterbury Tourist Info site – which seems to be updating regularly – and providing a lot of useful info.
Airport
The international airport is open, and flights are still arriving – including from Australia and Singapore – so there don’t appear to be any issues there.
Christchurch International Airport is fully operational. Runways, car park building and terminals have been fully assessed. Runways are undamaged. Terminals are structurally sound, but there is some superficial damage.
Hotels
Currently, Hotels in the city and surrounding areas have rooms available. Some in the CBD cannot be accessed as the center is cordoned off and no one can get in. This is while the work crews go in and assess the damage and make sure the buildings are safe.
The advice is to check with your planned hotel BEFORE you leave to go to Christchurch, and make sure they still have room, and are still OK to take guests.
Immigration
Earthquake? What Earthquake? You mean there’s been a major disastrous earthquake in one of the major destinations for immigrants to New Zealand??? Oh.
So basically – bugger all information on what to do if you say – have a work visa for a job in Christchurch that no longer exists. Not a peep in the latest news section, and all they say on the home page is that the Christchurch office is closed and ring the contact centre. Helpful. Unless you need to retrieve a passport from the Christchurch office. They have a q&a for that.
Rentals
Well – this is the bit that could get messy. A lot of houses have significant damage, and at this stage its hard to tell from the news thats coming out what the long tern or even short term effects on rentals is going to be. Property Talk has a thread about the earthquakes – with some input from Landlords and Property managers in the area and whats going on. Theres also a fascinating comment on this post on Interest.co.nz from a landlord (1st Comment) who went out to inspect his properties on Saturday. I think this illustrates really well the problems that will be faced by all property owners in the areas affected.
The Herald has a map of the worst affected areas showing where all the aftershocks are, and you can zoom in to see if where you were thinking of moving too is affected.
Buying Houses
Way too early to say what the hell is going to happen here, but a lot of houses will be demolished, and I would hazard a guess that it may be tricky to get insurance on any houses you do buy in certain areas. But thats going to take a while to work through the system. I don’t think its going to be great news for house values in the area though.
This though is when you get your head around understanding why New Zealand houses look so lightweight and flimsy compared to UK 2ft-thick-stone-walls style homes.
Areas in Trouble
The Central city was really badly affected – it seems because of the sheer number of heritage buildings which were not earthquake strengthened. (I bet Wellington City Building owners will now not complain so loudly that the council is insisting on improved Earthquake Strengthening). As of now about 79% of buildings in the CBD have been given a green sticker – which means they are safe. 5% of the buildings have a Red Sticker – which means they are to be demolished.
The news today was focusing on a area north of the city called Kaiapoi, which has been really badly effected by Liquefaction and damage to water and sewer lines. New Brighton is also particularly badly effected by liquefaction from what I can tell.
The absolute best website Ive found so far for information an specific areas is canterburyearthquake.org, particularly the Incident Map which shows an amazing amount of detailed info about the kind of damage in an area.
Jobs
Well, the economy in the area is going to take a hit – so if you have a job lined up in Christchurch – you will obviously need to be in contact with your potential employer to find out what is happening. Just be aware that some areas are still without power or phones, and it may take some time to get through or for people to get back to you.
If the news reports are anything to go by – there is still a feeling of shock in the area – and they are still getting frequent aftershocks – so don’t panic if you don’t hear anything. I do however think it’s important to be prepared for the fact that the job situation may change drastically, and if Immigration New Zealand aren’t being flexible, this could cause all sorts of issues. Be especially careful if you are in possession of Work Visas, or you have a residence visa with a Section 18a Clause on it – as these do not allow for flexibility. Only INZ can say what to do in this situation I’m afraid, so you need to be in contact with your case officer as a matter of priority.
On the plus side – any tradespeople may be seen as absolute godsends right now. Assuming that Immigration New Zealand actually notices theres been an earthquake.
OK, thats all for now. As I said, I’m not really sure how useful that will be in the long run, or even for people arriving in the short term, but I guess if it gives even one person a bit of info they didn’t have before and were worrying about then thats all good.
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The problem with buying Leasehold properties
Leasehold properties are cheaper than Freehold properties – which makes them look like a bargain. (Well sometimes – you can see leasehold properties for sale at freehold prices!) But theres a reason for that – you don’t own the land – you just own the building on it. Someone else owns the land, and charges you rent for the privilege of owning the house on it.
Like Hawkes Bay Regional Council, whose leases are coming up for renewal, and so they have hiked the prices up.
One week Niki Willis was paying $27 a week ground rent on her leasehold home in Napier, the next she was paying $172.
Now that’s one helluva hike in your weekly budget. And bear in mind this is on top of any mortgage your may have to pay.
The council, which owns about 1000 residential leasehold properties in Napier with a total book value of $85 million, realises many leaseholders are finding themselves in impossible situations when their ground rent is reviewed at the end of the 21-year term
Thats the bit to be aware of: how long is your lease for, and when are the rent reviews allowed. 999 years with no rent review till the end – possibly worth thinking about, but a rent review every four or five years and you could be in serious trouble.
And the worst thing is: not many people are willing to buy leasehold land. I know I wont touch it with a bargepole – so straight away you cot your chances of selling for a good price. Hey – thats why its cheap if you want to buy it yourself.
Many of the new apartments going up in Wellington along the waterfront are Leasehold.
Added to this in New Zealand is that some of the leases are owned by Maori Iwi and you could possibly have issues with any claims under the Waitangi Agreement. SO if you are thinking of buying Leasehold, especially in New Zealand – please take care. Make sure a lawyer goes through all the ups and downs with a fine toothed comb – then at least you fully know what you are taking on.
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Avalon’s Money Thread: Buying Houses in New Zealand.
Filed under: Avalon's Money Thread, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
Many people find the whole process of buying and selling houses here a lot easier than at home (especially in the UK). In many ways it is but you still need to be very careful. Agents here are not angels and they are just as likely to try pulling a fast one as an agent in the UK. Especially once they know you are a “filthy rich migrant”.
Neil Jenman’s book “Don’t Sign Anything” is a really good book explains a lot of the nasty tricks that agents can pull. It’s a bit of a scary read but I figure forewarned is forearmed and it’s good to know when you are about to be sold a lemon! It’s especially good at talking you through the auction process and what to watch for.
My main advice is literally “Don’t sign anything” not without a solicitor looking it over.
You wouldn’t do it in the UK so don’t do it here. Always get your solicitor to check the sale & purchase agreement (s&P) before you sign it. The seller’s agent often draws up the contract and a lot of them are less than trustworthy most of the time. Always remember: they work for the seller, not for you. If you don’t understand something ask your lawyer and not the agent. The lawyer works for you, and will give you the advice that works in your interest.
Be extremely wary of anyone that the agents recommend to you. Whether its solicitors, mortgage brokers, valuers, builders, chief cook and bottle washers or Uncle Tom Cobbley. You can never be sure that they are not paying “commissions” to the agent, so they are not truly independent. If you are not the only one paying then they are not working for you. If you wish to use people the agent recommends – ask the agent upfront if they get a commision. They do not have to volunteer the information, but they do have to tell you if you ask.
Always also get a full builders report and valuation done. I want to know of any problems before I buy just to make sure I’m really not buying a lemon.
You can get a lot of useful info from websites such as QV (Quotable Value) and Terranet on local values. However it’s also worth paying for a proper valuation done especially if you are buying fairly quickly after arriving in the country. It will cost you probably around $300 – $700 depending on the property and where it is, but bear in mind the property is gonna cost over $300,000, so its worth knowing you are not going to pay too much. QV and Terranet do not do proper valuations - the reports that you get from them will not tell you if you are about to pay too much for the house.
Paying Deposits on houses.
Deposits are usually 10%, but you can organise a lesser one if you want. That would go in the S&P agreement as well. We gave a 5% deposit because this was a big house and 10% was a fair whack of money. If you and the seller arrange just a $5000 deposit thats fine – its between the two of you. Agents will probably tell you it has to be 10%, and its a load of rubbish. Bear in mind with deposits, which unlike in the UK the deposit is paid to the Agent, not to the lawyerss because they want to be sure they get paid their commission before anything else!
When you have the S&P drawn up, it’s fairly standard to have a condition in there that says “Subject to finance”. Basically it means if you can’t get a mortgage, you don’t have to go through with the purchase. But just be aware that it should actually read “Subject to finance satisfactory to the purchaser”. This can avoid you being forced to take a mortgage out that is going to cost you more than it should including sometimes being forced to borrow off the seller! This is one of the reasons your lawyer should check the agreement before you sign it.
My best advice is:
(A) Not to rush into anything and do LOTS of research. Talk to as many people as you can who know the areas you are looking at. It may look great but is it? You need to find out what the specific concerns are in each area, especially any sunlight issues, because if the sun doesn’t get onto your property for part of the day or even year, you are going to be VERY cold! (Big problem in Wellington for Eastbourne, Seatoun, and the Eastern Bays)
(B) Get a valuation on any property you are interested in. It will cost a couple hundred bucks – but it tells you what it’s really worth – from someone who works for you not the seller.
(C) Dont use any companies recommended by an estate agent. They may be paying “Commission” (aka Kickbacks) to the agent and are therefore NOT independent. If in doubt ask the agent – they have to ‘fess up.
(D) Check out some auctions and see what happens. Watch out for “Vendor bids” where the agent bids the price up on behalf of the Vendor. It’s totally legal to do that here. We went to one auction where we had been told the house was expected to go for “top 400′s”. The bidding started at 600. There was only one guy bidding (and lots of interested watchers). He bid against the agent only and ended up paying $780K. I cannot for the life of me work out why he didn’t just stop. But ho hum not my money.
(E) Use a Lawyer from the start of the process. Once you sign a Sale & Purchase agreement in New Zealand – it is a Binding Contract and exceedingly difficult to get out of if you change your mind. Be absolutley sure it is right before you sign. This is the biggest difference between the UK and NZ house buying systems.
Updates:
Obviously since writing this about 3 years ago, Ive had a lot more experience of buying houses and dealing with Real Estate Agents. Ive met a lot of agents who are spectacularly good at what they do, and just would not do anything dodgy. Ive unfortunately met one or two for who the word “Ethics” doesn’t mean a whole lot.
You should also be aware that there is a new Sale and Purchase agreement out, written “in plain English” by the Real Estate Institute. That’s a bit like the Immigration agent industry getting a law written that says only they can give immigration advice. If you want to use it – fair enough – but if your lawyer says its a bad idea – please listen to them. Also know that although some agents may claim it is their Company Policy to only accept the new S&P, they are not in a position to do this – they have to accept an offer written on the original S&P whether they like it or not. If you have any problems – speak to your lawyer. I think its worth noting that I don’t know of any Property Investors that will use the new agreement – and its their job to understand how these things work. I wouldn’t touch it with a bargepole!
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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