What is the difference between freehold and leasehold apartments?

With a freehold apartment, you own your unit and a share of the land it stands on. With a leasehold apartment, you only own the building (not the land) and pay annual ground rent to the landowner. Leasehold properties are generally cheaper upfront but have ongoing costs.

Can I use KiwiSaver to buy an apartment off the plans?

Yes, you can use your KiwiSaver first home withdrawal for an apartment off the plans, provided you meet the eligibility criteria. This includes being a first home buyer, having been a KiwiSaver member for at least 3 years, and intending to live in the property.

What are the risks of buying off the plans?

Key risks include construction delays, the final product differing from plans, developer insolvency, and market value changes before settlement. Mitigate these by researching the developer's track record, getting independent legal advice, and ensuring your deposit is held in a solicitor's trust account.

Buying An Apartment Off The Plans – 6 Things To Look For

Q: What is a body corporate and what do they do?

A body corporate is the collective group of all unit owners in an apartment complex. They manage insurance, maintenance, landscaping, cleaning of common areas, and ensure the building complies with regulations. As an owner, you pay body corporate fees and can vote on decisions.

In New Zealand, particularly Auckland, the growing population and rising house prices have resulted in apartment living becoming an appealing and more realistic option for many first home buyers. Any property purchase is a big decision but buying an apartment off the plans doesn't need to be a stressful process.

Today's need for an urban lifestyle close to amenities and public transport links makes apartment living a popular choice. Generally, apartments bought off the plans provide an easier entry onto the property ladder through KiwiSaver first home withdrawal and lower deposit requirements with the First Home Loan scheme. Buying off the plans can also prove to be a high performing investment through the capital gains achieved from purchasing prior to construction completion.

6 Things To Look For When Buying An Apartment Off The Plans

1. Is Your Apartment Freehold or Leasehold?

It is important to find this information out as it directly affects your ownership. Freehold means you own your apartment and a share of the land it stands on. With a leasehold, you are renting the land on a fixed term and need to factor in annual ground rent on top of your mortgage repayments.

2. What Do The Body Corporate Do?

Each Body Corporate is different so it is important you get an idea of what the ongoing costs and maintenance of your apartment will be. As an owner, you are a member of the Body Corporate and have the opportunity to get involved and take responsibility for the future of your living space. The Body Corporate looks after the insurance, maintenance, landscaping, cleaning of common areas, and ensures the property complies with all regulatory requirements.

3. Location, Location, Location

Location really is the key, so research what suburbs are on the rise. As the population grows, the city fringe expands and it's good to know what areas are up and coming. Are there plans to gentrify the suburb? Has council notified plans for development of the area or surrounding suburbs? Where investment infrastructure happens, property prices tend to rise.

4. Reputation of Developers

Check out the developer's experience. Is this their first build or do they have a history in property development? Is this their primary business activity? Do they have a good record of build quality and completion?

5. Plans & Specifications

Another key aspect to look out for is the floor plan and specifications. Does the floor plan show a layout that makes the most of the space that is functional and liveable? Is there adequate storage? Review the specifications which informs you on the build materials, appliances, finishes, services that are part of the apartment and overall building.

6. Amenities

Is what you enjoy and need in life near you? This can include anything from shops, schools, cafes, gyms, parks and good public transport links. It is a good idea to check out what is close by.

Keeping in mind these 6 things when buying an apartment off the plans will help to reduce the stress factor from the process of purchasing your first home.