The changes in mortgage deductibility for rental properties had led to a jump in demand for ‘new build’ properties from investors due to the favourable tax treatment. These changes are now being wound back under the new National-led government, but won't be fully phased out until the 2025/26 tax year.
But regardless of the tax rules, older suburban sites are increasingly being redeveloped as multi-units, and these make up a good proportion of properties for sale in Auckland. And many landlords prefer the low maintenance aspect of a modern home on a small section. If you’re looking at buying a new build, here are some tips on what to look for:
High on the list would be an experienced developer and builder. The developer (or seller) may also be the builder, or they may contract this out to another company or individual. Know who is responsible for what, then find out how long they have been around and what they have built before. If possible, take a look from outside at any of their previous projects to see how they are faring – quality always lasts.
Also recommended is a building inspection before making your purchase unconditional. A new dwelling requires a CCC before it can settle, so the property will certainly have passed a final inspection and meet the New Zealand Building Code. However, a building inspection can identify smaller issues that are not part of a final inspection, like paint splashes on the cladding, scratched window joinery or a missing letterbox. It’s always easier to get these identified and fixed before your purchase rather than afterwards. And surprisingly, a new home built to the Building Code will not automatically meet the Healthy Homes requirements for rentals, so check if further upgrades are needed.
The Building Act provides automatic warranties for all residential building work, including a 12-month defect repair period. Some buyers choose to add an additional maintenance warranty to their sale contract as well. Make sure you find out who will be the contact person for any issues after settlement, whether the developer themselves or a site manager. If you purchase through a real estate agency, note the salesperson is not involved in managing issues after settlement.
If you are in the market for a new rental property, my team and I are always happy to give you feedback on anything you are looking at. Don’t be afraid to pick up the phone and give us a call!
Louise Benson, Head of Property Management
Barfoot & Thompson Milford
027 431 9536