There are plenty of ups to apartment living if you do your homework.
As our biggest cities grow, they are increasingly creeping upwards, instead of outwards, and more people are making apartments their homes. Building consents are at record highs: 2,725 every month for the past seven months. In Auckland, new consents are the highest they’ve been for 23 years, and are being driven in no small part by a boom in apartments.
The benefits of living in a city apartment are clear: you’re closer to work, transport and the fun stuff associated with entertainment on your doorstep. However, whether you’re a downsizer wanting an easy-care home, or a first home buyer looking for affordable accommodation, when buying an apartment you need to look for more than just a spectacular view.
Fix your finances
Before purchasing any property it’s important to crunch the numbers to make sure you can afford to buy. It’s especially important when purchasing a unit or apartment, which have hidden costs.
Banks are often more wary of lending on very small, lower-priced apartments. So if you’re looking for a budget buy, get your funding in place first. You must also factor in whether car parks are extra and, most importantly, if the apartment is freehold or leasehold, which can make a huge difference to its overall cost.
A leasehold apartment will be more affordable to buy than an equivalent freehold apartment. But you will need to pay ongoing ground rent, which is set on the value of the land underneath, and be prepared for future rent rises as the land increases in value.
As you don’t own the land the apartment is built on, you’ll also not benefit from any rise in the land’s capital value.
Comprising a building’s unit owners, the body corporate sets the rules for living in the building, and oversees the maintenance and operation of the building’s facilities and grounds. This costs, and body corp fees in Auckland typically range between about $80 and $100 per week, but it depends on the number of flats in a building and the quality of its facilities.
When purchasing an apartment, investigate the building’s body corporate and the issues facing tenants. Talk to the building manager and committee members, and read the body corporate’s minutes from its meetings for the past three years. If there are any issues, you’ll be able to spot them before buying.
Check the body corporate’s maintenance plan too. It should cover the next 15 years of the building’s life. Watertightness and earthquake resilience are major issues, so investigate any possible problems before you sign on the dotted line.
Enquire about the little things too. What’s covered by the building’s insurance policy? Are pets allowed? Is there easy access for furniture, and what’s the security system like? Water is another important issue. Do you pay for individual use, and how reliable is the hot water supply?
Off the plans
As consents for new apartments increase, more people are buying off the plan. This enables you to get a new home customised to your requirements. In an upward property market, it’s also a chance to save money by buying early. But do your homework.
You’re entrusting your money to a developer, so investigate their reputation and make sure your lawyer goes over the contract with a fine-toothed comb. You need to know the exact size of your apartment and whether changes can be made during construction. Also look at the implications of any sunset clause. While they can protect buyers from building delays, they could also be used by unscrupulous developers to annul contracts to seek a better price elsewhere.
For many, the lifestyle dream is no longer lawns to mow and big properties to maintain. Instead, it’s easy city living with lifestyle options a stroll away. It’s why urbanites are increasingly opting for apartment living, and new buildings across our cities’ skylines are on the up and up.