Buying guide

Why Kiwi home buyers should be taking building inspections seriously

Are we too reliant on low quality and unregulated inspectors?

2 August 2023

New Zealand home buyers should be taking their pre-purchase building inspections more seriously, say the co-founders of the startup due diligence tech platform, Inzpec.

According to research by the Real Estate Authority (REA) published in November 2022, only 46% of home buyers said they had their homes inspected by certified (accredited or registered) building inspectors, with 20% saying they had their building inspection done by someone who wasn’t a certified building inspector.

Using a certified building inspector was too expensive or they didn’t have the time, they explained. Those consumers who got their building report from a non-certified building inspector believed they could spot any problems themselves and 41% said that the person they used was just as good as a certified inspector. Interestingly 25% of those getting building inspections by non-certified building inspectors felt that they didn’t want to jeopardise the offer with a certified inspection.

Rather than ask a qualified building inspector who’s insured to do the job, many Kiwi will still ask a friend or family member who’s a builder or a tradesperson, to have a look and give them a recommendation. And some will make their bid to buy based on their assessment, says Inzpec CEO Andre Leibovici.

Inzpec, which automates the property inspection process by connecting vetted inspectors with home buyers, would like to see these standards rise.

“People probably spend more money on inspection reports for vehicles than houses if you look at the value of the asset proportionally,” says Inzpec director Jamie Kruger.

“And yet for most people, their property is not just their home but it’s their retirement fund. You have to make sure you know what you’re getting into,” he says.

For such a large investment, it's important to have a professional check the property before you buy.

This slapdash approach by Kiwi home buyers is partly about inexperience, if the REA figures are anything to go by. Fifteen percent of those homebuyers getting building inspections from non-qualified or certified people didn’t know how to get a building inspection while, of those who didn’t have an inspection done at all, 14% didn’t know how to get one.

Inzpec has recently formed a partnership with Trade Me Property, which makes organising a building inspection on a home of interest very straightforward. You just click a button at the bottom of the Trade Me Property listing requesting a building inspection through Inzpec.

The due diligence tech platform has a database of qualified, vetted and insured building inspectors all around the country who it will direct homebuyers to so they don’t have to find a building inspector from scratch.

They’ll typically be members of a relevant building association in New Zealand, they’ll have insurance as verified by Inzpec, and their post-home purchase customer reviews will be checked by the platform.

Qualified building inspectors will be accredited to the Building Officials Institute of NZ (BOINZ) or the New Zealand Institute of Building Surveyors (NZIBS). An inspector could also have their qualifications from the Master Inspector Association of New Zealand (MIANZ). Internationally, they might be recognised by the International Association of Certified Home Inspectors and the Royal Institution of Chartered Surveyors.

The Inzpec founders stress that not all building inspectors are the same. A Licensed Building Practitioner (LBP) will often have a specific area of knowledge but they won’t have the expertise to go through an entire house and make a thorough assessment.

“They may be strong on carpentry but not familiar with electrical systems, for instance,” says Andre.

“Your average builder used to be a jack of all trades, but builders these days tend to be more specialised, so they’re less likely to be able to look over a whole house and evaluate its condition,” says Jamie.

How does NZ compare with other countries in its building inspection standards?

For a relatively mature real estate market Aotearoa New Zealand homebuyers should be doing better on their use of pre-purchase building inspections by qualified experts, says Jamie, who founded in 2015.

He believes we should emulate the United Kingdom. There, building inspections are done by chartered surveyors, members of the Royal Institution of Chartered Surveyors (RICS) and the price for an inspection ranges from around £800 ($1668).

In Aotearoa New Zealand, on average, a building inspection will cost around $650 per property depending on the size of the house, he says.

Australia isn’t much better, apart from Queensland, says the Inzpec director. “It’s got the same issues, anyone can do inspections, with a mixture of uninsured players and, again, the industry is unregulated.”

You can use the results of the building inspection to your advantage.

A thorough inspection gives buyers negotiating power

If peace of mind isn’t enough incentive for commissioning a certified building inspector to go through your home of interest with a fine tooth comb, a thorough building inspection will also give you excellent negotiating power when putting a bid in on the home, says Andre. You’ll know whether the roof needs replacing, if there’s borer that’s bringing a wall down, for instance.

“A report by a qualified building inspector will let you understand if anything needs to be done, and gives you the opportunity to use the contents of the report as leverage,” says the Inzpec CEO. It will help you to craft conditional offers, he adds.

An inadequate building inspection can cost you in the years ahead too. One insurance industry insider points out that if a home has a pre-existing problem that isn’t found during the building inspection, and the insurer can prove it’s old, they won’t cover it.

Moves afoot for standardisation

There’s a lack of standardisation in pre-purchase property inspection reports, says Andre. At the moment, these vary dramatically in scope, depth and detail, depending on who you’re using.

Lenders and insurers, who also rely heavily on these reports, find themselves walking a tightrope due to these inconsistencies, he warns.

The push for a nationwide standard is gaining momentum but its implementation will require cooperation across multiple sectors, including property inspectors, lenders, insurers and governmental bodies, he says.

The Real Estate Authority (REA) strongly supports careful due diligence on a property before home purchasers buy.

REA Chief Executive, Belinda Moffatt says: “This includes obtaining a Land Information Memorandum (LIM), the council file, and a property inspection report from an inspector that is accredited and conforms to Residential Property Inspection Standards, and who holds public liability insurance.”

While reports provided by the vendor or another third party may be an indication of the quality of the property, REA doesn’t recommend buyers rely on reports obtained from third parties or the vendor, as the buyer can’t take action if the report has inaccuracies, says the CEO.

According to the 2022 REA Consumer Perceptions report, of those who didn’t get any kind of building inspection, 19% trusted the one the vendor had commissioned.

“Buyers need to have a contractual relationship with the building inspector whose report they are relying on,” warns Belinda. Details of organisations that have processes for registering and accrediting members are available on REA’s website.

Banks would like to see registered building inspectors used

Some say banks are beginning to want more reassurance that a property they’re lending on has passed a building inspection with flying colours. Anecdotally, one homeowner was told by their bank to get a proper building inspection done if they wanted their loan to go through on a particular property.

As the bank is, in effect, the owner of the home they’re lending on, they should want to know that it’s not going to have any problems down the track, one industry insider reasons.

Asked for their approach to building inspections, neither ANZ or Westpac were putting any undue pressure yet on home buyers. They did stress however that they would encourage building reports from licensed or registered building practitioners.

A Westpac NZ spokesperson says: “We strongly encourage customers to undertake due diligence when considering buying a property, and obtaining a building report from a licensed building practitioner as part of that process.”

ANZ meanwhile says there are a range of inspections and reports that home buyers can pay for to help them research a property they’re interested in.

“A registered building inspector can inspect the house and check whether it is structurally sound, the condition of the wiring and if there are any water tightness issues,” says a spokesperson.


Gill South
Gill South