Having a place to get away from it all is an attractive prospect at this time of year. It’s easy to fall in love with the thought of your own slice of paradise, particularly if it’s in a popular spot.
But buying a holiday property, whether it’s a bach at the beach or a rural idyll, is every bit as complex as buying a home that you live in full-time.
That means you need to do your homework first to avoid any hassles – and that you engage a lawyer to help you through the process.
Once you’ve found a property you like, it’s essential that you and your lawyer look at all the relevant documents, such as the legal title and any information that the council has about the property, as recorded on the LIM.
A title search will reveal any ‘invisible’ issues relating to the boundary or access.
You should also check with the council whether there are any proposed developments in the area that could have an impact on the property and the neighbourhood.
It’s a good idea to get the property thoroughly checked by someone who can identify significant defects, future or urgent maintenance issues and problems caused by gradual deterioration.
It’s not uncommon for a coastal holiday property to have a few more maintenance issues than you might expect from a city townhouse.
We recommend using a qualified and insured building inspector to do this work.
If you get a DIY guru friend in to have a look instead, ask them to look for structural problems, any evidence that the property is a leaky building, issues caused by deferred maintenance (such as weatherboards rotting due to peeling paint) and areas where there is damp or mould.
Simple things like aged electrical or water supply fixtures may also create headaches later on if not managed up front.
Don’t forget to factor in costs for fixing any identified problems that may be significantly more involved to manage than town repairs and maintenance, as well as plan for long-term upkeep.
Depending on where the property is, you also need to be hard-headed about the risk of natural hazards such as tsunami or coastal erosion.
Earlier this year, a report commissioned by the Deep South National Science Challenge pointed out that nearly 44,000 homes in New Zealand are less than 1.5 metres above the current average spring high tide mark.
With rising sea levels and increasing likelihood of storm surges and king tides predicted, many of these properties are at serious risk of frequent inundation.
Unsurprisingly, insurers are nervy about this, with some companies already raising premiums or excesses for properties that have been identified as high-risk, or putting restrictions on what they will cover.
It can be difficult to get finance approved if a property cannot be insured, so it pays to investigate this closely.
If you get through all those steps and the property still looks like a good bet, think about the long-term. Are you thinking about using it to earn an income when you’re not in residence, such as renting it out or putting it on AirBnB or a similar platform?
Be aware that some councils are tightening up restrictions on homeowners doing this, which could affect your plans and costs.
Take a moment to think about security as well. Getting settled in your new holiday home is one thing, but consider what happens when you’re not there.
Finally, if the property you are keen on is being sold privately, be aware that you may have fewer protections under the Consumer Guarantees Act and the Fair Trading Act if things go wrong.
While no one enters into a sale thinking that problems are going to arise, issues can often crop up. Nothing will dim your holiday glow like the lasting memory of a poorly researched property decision.
For independent advice on buying or selling property, check out www.reaa.govt.nz.
-Real Estate Agents Authority.