Purchasing from a developer who isn’t a builder – what are the pitfalls?

One of the increasingly popular options for purchasing a new house is to buy from a property developer who may not have actually built the house. Contract builders are brought in to construct new homes in subdivisions; the developer then sells on. This can result in a nice new house at a reasonable price.

However, there are risks associated with this type of purchase about which many people are not aware. Some of these risks can be mitigated with sensible contractual protection built in, others are simply risks that you can’t reduce.

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Pre-purchase inspections – what you can object to and what you can’t

The final step before you settle your property purchase is to undertake a ‘pre-purchase inspection’. This gives you the right (under the contract you signed) to inspect the property one last time and raise any last-minute issues about the property with the real estate agent and with us before settlement.

Having a pre-purchase inspection is not, however, the right time to try to negotiate a price reduction, or to attempt to raise new issues about the property.

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Bright-line test period extended

Property investors will be familiar with the bright-line test where there are potential tax issues if a residential rental property is owned for less than two years before it is sold. In addition to rental properties, the sale of a holiday home can be subject to a tax liability, as it is not a primary residence which is exempt.

In the current buoyant property market, many property investors have been considering selling other properties that form part of their rental portfolios.

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Is your rental safe and healthy?

Penalties for landlords dragging the chain

New laws came into effect on 1 July 2016 that require landlords to make their properties safe and healthy for tenants. These new laws provide some lead time for properties to be brought up to standard; they will apply to all rented properties from 1 July 2019. Will your rental property meet the new standard?

A recent Tenancy Tribunal decision shows that the Ministry of Business, Innovation and Employment (MBIE) is not shy of showing its teeth to ensure that tenants have safe and healthy homes by complying with the health and safety amendments to the Residential Tenancies Act 1986. The Residential Tenancies (Smoke Alarms and Insulation) Regulations 2016 outline requirements for rental properties, including underfloor and ceiling insulation, and requiring smoke alarms within three metres of each bedroom.

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Postscript

Food Act 2014 – rolling deadlines to register your food business

The legislation has introduced a sliding scale where businesses that are at a higher risk, from a food safety viewpoint, are required to operate under stricter requirements than lower risk outlets. The Ministry of Primary Industries (MPI) points out that a corner dairy operator who reheats meat pies is treated differently from a meat pie manufacturer.

New food businesses must register when they start to trade. Existing businesses are required to register with a set of rolling deadlines.

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Easements – get them right first time

In the Autumn 2015 issue of Rural eSpeaking we pointed out some aspects of rights of way and water easements, and the rights attached to them.

Expanding on this topic, we discuss another feature of easements that is important and, in many cases, is not properly understood – the permanence of an easement and issues that might arise from that over time. Virtually all easements are granted ‘in perpetuity’ which means they last forever.

When granting an easement over your property, or you’re purchasing a property that is subject to easements, you need to consider not only the situation as it is now but also potential issues that might arise over time.

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Loan Documents: Read the fine print, there could be some surprises

Whether you like it or not, you will probably need to fund your farming operations with borrowing from one of New Zealand’s main trading banks.

The main terms that borrowers look at when signing loan facility documentation relate to the cost of the borrowing: interest rate, the amount of the repayment sums and the term of the lending. The security required is usually a mortgage over the farm land and, more often than not, a general security agreement which is effectively a mortgage over all of the farming entity’s assets that are not land such as stock, crops, machinery, receivables and so on.

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Property Briefs

Current tenants selling their business – what it means for a landlord

If you are a commercial building owner, you will at some point come across a situation where your current tenant wants to sell their business. Tenants often forget to talk to their landlord about them consenting to the new business owner.

When a business is sold, the current tenant is obliged to seek the landlord’s consent to assign the lease to the incoming business owner. The landlord usually has 10 days to approve the new tenant.

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Being an Airbnb Host

You have significant obligations to a number of parties

In our Autumn/Winter edition (No 24) we discussed the tax aspects of being a host with Airbnb or other online accommodation platforms. We thought a reminder would be useful if you’re an existing host (or you’re thinking of letting your house/room) about obligations to your lender, insurer and local authority.

Before becoming the host-with-the-most with phenomenal reviews, it is important that not only do you understand the IRD’s requirements, but also that you are aware of your obligations to other ‘parties’ involved in what is your accommodation business.

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Speak With Us Before you Sign the Agreement

Don’t be like John

Buying a house is known to be one of the most stressful times in your life, and competing with other would-be purchasers in a heated property market doesn’t help the stress levels.

Often the pressure can be on to make a snap decision and put an offer on a property that you’ve only had a quick look around. As the Agreement for Sale and Purchase of Real Estate is likely to be one of the most important documents you ever sign, make sure you talk with us first just so you know what you’re getting yourself in for.

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