The increasing demand for housing in Auckland has fueled a return of residential apartment developments. The availability of affordable apartments could be seen as a welcome relief to those struggling to get their foot in the rising Auckland property market.
There are a number of issues that any party buying an apartment off the plans should consider in addition to ensuring they have a proper understanding as to how unit titles work. We introduce some of these below.
- Buyers should be clear on the size of the unit they are purchasing and make sure a plan or some other reference to the size is included in the agreement for sale and purchase. Plans and size references will be shown in the marketing material, but it is important that it is referred to in the agreement for sale and purchase.
- Determining how the size of the unit is ascertained is equally important. For example, buyers should understand whether the size includes a balcony.
- Buyers should consider the sunset date. This is the long stop date by which the vendor has to complete the development. Sometimes sunset dates can be a few years. Buyers should be clear on whether the vendor has an ability to extend the sunset date without their consent. It may come as a shock if a buyer is expecting a unit to be completed by a specific date only to realise the vendor has the right to extend it by a year.
- Some developments require a cash deposit, whilst others might offer a deposit bond arrangement. Be clear though that a bond provider will be obliged to pay the deposit across on the terms set out in the bond contract.
- It is important to get a sense of the whole development proposed. Some examples – What is being built with the apartments? What might come later? Is there a body corporate? Will there be a building manager? Are there mixed uses? What do the proposed body corporate rules say?
The issues mentioned above are only a few of the factors to be considered before buying an apartment off the plans. It is important for all potential buyers to do their due diligence prior to signing on the dotted line.