New Zealand housing market (particularly Auckland)

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#2212494 7-Apr-2019 23:22

quickymart: Note that I'm looking at buying an existing property (an apartment) - not a new build.

There is your problem. Look for standalone houses instead. Apartments tend to drop in value more than houses if a downturn occurs. Non bank lenders can still lend over 80 percent on existing houses as well. Whether they will in the current market is another matter though.

You have to pay body corp fees, which in itself is risky. As some Wellington buildings have had massive increases to their BC fees. Due to needing very expensive earthquake insurance. There is a risk that earthquake insurance would also become extremely expensive for apartments in Auckland as well. And that is before you consider leaky building and fire risks.

And a landlord can claim a tax deduction for paying the body corp fees. Owner occupiers cant.

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#2212499 8-Apr-2019 04:44

Christchurch is in a good slump for now, do you have to buy in Auckland?

quickymart

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#2212500 8-Apr-2019 04:58

Aredwood:
quickymart: Note that I'm looking at buying an existing property (an apartment) - not a new build.

There is your problem. Look for standalone houses instead. Apartments tend to drop in value more than houses if a downturn occurs. Non bank lenders can still lend over 80 percent on existing houses as well. Whether they will in the current market is another matter though.

You have to pay body corp fees, which in itself is risky. As some Wellington buildings have had massive increases to their BC fees. Due to needing very expensive earthquake insurance. There is a risk that earthquake insurance would also become extremely expensive for apartments in Auckland as well. And that is before you consider leaky building and fire risks.

And a landlord can claim a tax deduction for paying the body corp fees. Owner occupiers cant.

Houses in this area cost an extra $200000 - the apartments I'm looking at have Body Corporate fees of around $3000 a year. I'm just trying to find somewhere affordable to make my start.

quickymart

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#2212501 8-Apr-2019 04:59

Batman: Christchurch is in a good slump for now, do you have to buy in Auckland?

Unfortunately yes, at this stage - one of my boys (who is autistic) attends a special needs school where he's doing quite well. Wife and I both have jobs here too - moving there (while I'm not adverse to the idea) would mean uprooting everything to move there. If my boys were older it would be a bit easier.

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#2286854 31-Jul-2019 22:02

Update:

A couple of relatives have said they would be happy to chip in the deposit for a place for me and be my property investors. I was planning on using a portion of the amount to clear my debts (so I can afford the mortgage) - but I'm a bit worried that if they just transfer the money to me, there would be taxes to pay. Would it be better to set it up in something like a trust, and they would own 20% of my property - with the option (one day) for me to buy them out?

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#2286931 1-Aug-2019 08:49

quickymart:

Update:

A couple of relatives have said they would be happy to chip in the deposit for a place for me and be my property investors. I was planning on using a portion of the amount to clear my debts (so I can afford the mortgage) - but I'm a bit worried that if they just transfer the money to me, there would be taxes to pay. Would it be better to set it up in something like a trust, and they would own 20% of my property - with the option (one day) for me to buy them out?

There's no tax on gifts, but you would be best to speak with a solicitor and the giftor for the exact plan (specifically for buyout/payback plans). There are both pros and cons to using trusts, or not.

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mudguard

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#2286941 1-Aug-2019 09:10

quickymart:

Update:

A couple of relatives have said they would be happy to chip in the deposit for a place for me and be my property investors. I was planning on using a portion of the amount to clear my debts (so I can afford the mortgage) - but I'm a bit worried that if they just transfer the money to me, there would be taxes to pay. Would it be better to set it up in something like a trust, and they would own 20% of my property - with the option (one day) for me to buy them out?

Also bear in mind that the bank will still expect you to come up with 20% yourself. There was a discussion on here a little while back regarding gifts or inheritance. So check with the bank first as they will want to see a savings record.

Or they may not. But check nonetheless.

quickymart

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#2360197 24-Nov-2019 20:52

Update: my bank have said that as long as I have enough for a deposit (and it may not necessarily need to be 20% - although it would be easier) they would talk to me. Will post an update when I know more.

Saw this listing tonight:

https://www.barfoot.co.nz/property/residential/north-shore-city/northcote/unit/773021

What is a "Licence to Occupy"? Do you only own the house (not the land) and is it only for a limited time or something?

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#2360227 24-Nov-2019 22:27

quickymart:

Update: my bank have said that as long as I have enough for a deposit (and it may not necessarily need to be 20% - although it would be easier) they would talk to me. Will post an update when I know more.

Saw this listing tonight:

https://www.barfoot.co.nz/property/residential/north-shore-city/northcote/unit/773021

What is a "Licence to Occupy"? Do you only own the house (not the land) and is it only for a limited time or something?

In NZ it means you dont own the house , just think of it like its a retirement village

Common sense is not as common as you think.

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#2360232 24-Nov-2019 22:52

So...you basically rent it but pay that amount for it? Sorry, I don't get it...

elpenguino

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#2360236 24-Nov-2019 23:11

quickymart:

So...you basically rent it but pay that amount for it? Sorry, I don't get it...

Youre allowed to pay for it and use it but it doesnt belong to you and you cant sell it

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#2360239 24-Nov-2019 23:20

that is crazy weird. maybe just crazy.

mattwnz

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#2360244 25-Nov-2019 00:16

I have not seen a house that was not in a retirement complex, that is license to occupy. How common are they in NZ?

dejadeadnz

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#2360249 25-Nov-2019 01:52

quickymart:

So...you basically rent it but pay that amount for it? Sorry, I don't get it...

Save your time. If you read the main ad, these units are for mature age groups only. The chances of you being eligible to buy one, especially with children, is zero. As for the question by @mattwnz on why this unit is being sold this way, it's dead simple. The sellers want to get around the consumer protection and mandatory requirements of the Retirement Villages Act. Now there are scenarios where there might be moral and legal justifications for this but anyone who is remotely thinking of buying in should take serious legal advice.

@quickymart - I haven't followed this thread closely but from my quick skim of this thread, you seem to be going about things entirely the wrong way from a risk and financial management perspective. I've seen you asking about rent-to-own, talking about property sharing/co-ownership with a for-profit scheme, and going into a property co-ownership arrangement with relatives. All of these are potentially high risk and complicated structures that no one should go into without taking considerable advice and this is going to cost (I am talking about the potential of at least 5K of lawyers' fees). If you are struggling to save a deposit, I don't think taking of the risk of throwing significant money into taking such advice when you might ultimately discover that such schemes do not suit you is remotely a good idea unless you have exhausted all other reasonable alternatives.

And I hate to be blunt, given that you are having such difficulties understanding the relatively simple concept of a licence to occupy, you're going to need lots of advice.

Have you researched what used to be called a Wellcome Home Loan (now a First Home Loan) or looked at Kāinga Ora's website? If not, click here. Basically, if you meet the income restrictions, have the ability to service the loan, and are buying a first home (which you are), you may only need 5% deposit. But the operative word is "may". Lots of people have it in their heads that the moment they have saved the 5% deposit for the house that they want, they've made it and will be able to buy. But if you are a marginal candidate, you may well find that you will struggle to meet the banks' loan servicing criteria. If you need even more of a hand, have you approached any Community Housing Providers (link) that may offer more generous/community oriented rent-to-buy arrangements? And I notice that you repeatedly raised your special needs child's requirement to stay in Auckland -- have you actually discussed with the child's health care professionals on whether the child's needs can be met at another main centre? I am definitely not advocating that you move to Kaitaia or Greymouth (using these as random examples) as resources in the sticks are likely to be lacking for your kid but at least consider other major centres.

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#2360681 25-Nov-2019 22:43

Oh well that that rules out that idea - but thanks for explaining it to me. What a weird setup, even if you meet the age criteria - pay this price for this place but you don't own it or anything; may as well rent!

I don't have a deposit, sadly, otherwise I would not be asking all these questions. My family are probably my best bet, as property investors. One of my relatives has over 30 years experience as a chartered accountant, so I trust her judgement and she knows what she's talking about. I will have a look at the Welcome Home Loan as I may qualify for that one.

As to moving, yes, my boy's needs could possibly be met elsewhere. But my wife and I both have jobs here, so we'd be starting over, and my other boy is making friends at school and settling in. I'm not too fussed with Auckland - I'm not from here anyway, but I'm stuck here for a while now, at least.

I would love to move to Wellington but I don't think their mother would want to move...and I hear that housing in Wellington these days isn't exactly much cheaper than Auckland anyway.

Thanks for the tips though, some food for thought there.

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