Buying an apartment involves more hurdles to jump than the purchase of a standalone home. Andrew Murray knows first-hand the extra questions apartment buyers need to ask over and above their peers who are buying freehold homes. Murray lives in an apartment, owns multiple investment apartments, and his business, Apartment Specialists, sells apartments. What's more, he made a never-to-be repeated mistake that cost him almost $100,000 when he bought his first apartment that he later found out was in a leaky building.
The first thing to know about an apartment building is that it is run by a body corporate that manages the building as a whole. In effect, a body corporate is a collective of all the apartment owners. It's responsible for maintaining and repairing the building and common areas, organising insurance, enforcing the rules, collecting levies and other administrative tasks.
Finding out about the building's culture is a good place to start when deciding if the apartment you're looking at is suitable for you. Is it full of owner occupiers at one end of the scale, or young language students and Housing New Zealand tenants at the other? Or, as Alison Parker of Premium Real Estate asks, does it have the sea view you've always dreamed of?
Even apartment buildings are subject to the adage: "location, location, location", says real estate agent Martin Dunn of City Sales. Think about the "precinct" that it's in. What type of owner/tenants do neighbouring buildings - and those still to be built - attract?
Think twice about apartment blocks out of the CBD, says Murray.
"For example, if you are going to buy an apartment out in Otahuhu, ask yourself why. Houses out there are cheap enough anyway."
If you are going to buy out of the CBD, make sure there are at least some advantages to the location such as proximity to transport.
"Otherwise you are playing into the developers' hands."
Some exceptions to that rule are buying into upmarket suburbs, such as Grey Lynn, that you may not otherwise be able to afford, or buying into a good school zone.
Traditional advice to buyers, says Murray, is to read the minutes from the body corporate's annual general meeting (AGM) to check for potential costly problems such as leaky building issues. The apartment owners who run bodies corporate are aware, however, that their AGM minutes are marketing documents for the building and will sometimes downplay issues in them or discuss the real issues at other meetings.
What's more, an issue such as one leaky deck might be an unknown quantity at meeting time and not be discussed, even though it will lead to the discovery of widespread weathertight issues.
Therefore, says Murray, it's essential, to ask for the minutes of any extraordinary general meeting (EGM) and other committee meetings where emerging issues may be discussed. He always advises clients to speak to the chairperson of the body corporate. (But few do).
Make sure you read the body corporate rules, as well. These rules cover what you can and can't do - such as keeping pets. There are a few buildings such as the Urba Residences, which do allow pets, says Dunn. But most don't. The rules may also cover what you can and can't do in terms of alterations within your apartment, or the hours when you're allowed to get contractors in.
The big issue when it comes to apartments is leaky building issues. Even sometimes older buildings that have been renovated with extra floors and decks added can be affected, says Murray.
Look into this carefully, he says. Where leaky building repairs have been done properly, it is a bonus because you have 10-year warranties on the work and the building will now meet current Building Code.
It's not unusual, however, that one side of the building has been remediated because it leaked, but the entire job hasn't been done, says Murray. If the north side leaked, he says, the reality is that the south side will also leak eventually, or vice versa, because the entire building was built using the same method. What's more, repairs to decks don't guarantee the cladding and roof are watertight or vice versa.
You can't make assumptions, says Murray, that a concrete building or one with aluminium cladding won't leak and that a monolithically clad building with a cavity and treated timber will. Just because a building looks new and fancy, don't jump to conclusions.
Make sure you look into the long-term maintenance plan (LTMP). Bodies corporate must have one by law but, oddly, they don't have to execute the plan.
"Find out if they are following it," says Murray.
And find out if the body corporate is putting aside savings for expensive works such as replacing the roof and lifts.
Murray says to be wary of building inspection reports for apartments. While an inspection report on a house will tell you of structural problems, an apartment report is simply looking at the interior, not the exterior.
If you want to buy off the plan, meaning before the building is erected, there is another long list of things to think about, says real estate agent Alison Parker of Premium - and a purchase should never be done without having your solicitor look over the contract.
Off-the-plan apartments aren't always the money spinner they're advertised as, says Murray. They can be a decent investment in the upward phase of the cycle when prices are rising rapidly, but aren't such a good investment towards the end of a cycle, he says.