The hidden costs of buying a house in NZ
What are the hidden costs to buying a home? The building report, LIM, lawyers fees, and more
Buying a home in New Zealand involves spending money – we reckon you know that. However, a common mistake that home buyers make is to only see a property's price tag without looking ahead to the additional expenses they’re going to incur.
This is problematic because having a solid budget in place is one of the first steps in buying a house, and you can only do this if you have the full picture of what you’re likely to spend.
To help ensure you’re not going to be caught out further down the line, here are a few extra considerations to factor in.
1. The costs of finding a home
1. Hiring a lawyer
We highly recommend getting a lawyer on board to help you through your property buying journey. Buying a house in New Zealand is a complex process, involving legal documents like Sale and Purchase agreements, so having an expert on hand will give you confidence that everything happening is above board.
If you don’t already have a lawyer, the New Zealand Law Society is a great place to start.
Bonus tip: It pays to shop around, lawyers fees can vary significantly.
Lawyers can help you navigate the legal side of buying a property in New Zealand.
2. Property reports
You’ll get a first impression of properties through attending open homes. However, we advise you seek professional guidance to flag any major issues you may have missed. This guidance can include:
- Builder’s reports: these reports assess the condition of the house in depth, and point out any repairs or renovations that may be required. While they come at a cost, you’ll likely save yourself a greater sum (and a lot of stress) down the track if there are hidden problems with the property.
- Land Information Memorandum (LIM) reports: LIM reports are produced by your local council, and contain a summary of the information they have about the home. This includes information on zoning, rates and building consents, as well as risks posed by natural features, like erosion, contamination, or flooding. They can also tell you if any alteration work to the property has been signed off by the council, or if there are features that might cause issues in the future.
- Property valuations: A property valuation is a useful tool that shows you exactly what a property is worth. It’s an independent assessment, taking into account a number of different elements, like the current market, council information, the condition of the property, and the valuer’s local knowledge. In New Zealand, valuations must be done by a registered property valuer. It's worth getting an independent valuation before putting in an offer on a property - any issues can then be addressed in the negotiation process, and it can help with the negotiation of the purchase price.
Professional values are one thing you might spend money on as part of purchasing a property.
2. Repairs and renovations
Even if your professional reports show the home needs some work, you might decide you’re happy to make the necessary repairs and renovations and go ahead with the sale.
This is fine – plenty of New Zealanders buy ‘dooer uppers’, and many enjoy the process of putting their personal stamp on a property.
However, it’s essential that you’re realistic with what you can afford to do in terms of renovations given that you’ll also be paying off a mortgage and the other expenses mentioned in this article.
Dreaming big is great, but only if you’ve got the budget and time to make these dreams happen. You’ll probably need to create a separate renovation budget as part of your overall home buying budget if this is the route you’re going to take.
Bonus tip: when making repairs and renovations to the property, it’s good to prioritise. Firstly, of course, you’ll need to fix any urgent problems like leaking roofs or faulty electrics. After that, it’s always good to think about what changes will add value to your property in the future.
3. Moving and furnishing costs
Unless you’re lucky enough to have friends or family with large enough vehicles, you’ll probably need to hire a van, or even use a removal company to help you move.
On the subject of belongings – are you bringing all your furniture and appliances with you? Or will you need to fork out some extra cash to furnish your new pad? This is another expense to consider. If the property comes with some items included, these should be listed as chattels in the Sale and Purchase agreement.
You may need to hire a van, or removal company, to help you move to your new home.
4. Ongoing costs of owning a house in New Zealand
Congrats, you’re into your new home! However, just because the keys are in your pocket doesn’t mean there won’t be any ongoing costs to think about. Among the most important are:
1. Home insurance:
This should be among your first priorities once the sale is confirmed. You need to know that your home is protected from the unexpected events like earthquakes or fires.
Again, we advise shopping around when looking for home insurance in NZ, to make sure you’re getting cover that gives you all the protection you need, at the best possible price.
3. Ongoing repairs
Even after your initial do up is complete, life will continue to happen, so it’s a good idea to have some money set up to deal with unexpected repairs and replacements as they come up.
4. Body corp fees
If you’re looking at an apartment in a block of flats, there will also be body corp fees to factor into your budget. These cover stuff like the building manager’s fees, water, insurance, and general maintenance of the building and any common facilities.
*We hope this article has provided some helpful information. It's based on our experience and is not intended as a complete guide. Of course, it doesn’t consider your individual needs or situation. If you're thinking about buying or selling a property, you should always get specific advice.
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