Here’s Our Tips On How to Avoid the Top 5 Most Expensive Mistakes We See Property Buyers Encounter
Make no ‘mistake’ – land in our beautiful district often seems to be like a hot potato – people are always coming and going!
We regularly provide advice to soon-to-be property owners seeking their dream home. Common questions include ‘what can I do on my property?’, ‘can I subdivide?’, and ‘what can my neighbour potentially do!!?’. These purchasers walk away with a better understanding on their target property and are therefore better informed to make the right decision.
Unfortunately throughout our years of professional practice we sometimes meet people who have purchased a property (without advice) and things haven’t gone so well. These troubles often come down to one of the following five mistakes:
Mistake 1 . Not obtaining a LIM
A LIM (Land Information Memorandum) is a document prepared by the Council in relation to a particular property. It essentially provides a current ‘snapshot’ of the information Council currently holds about the property. For example you could expect a LIM to contain information about the infrastructure to and on the site (stormwater etc), relevant resource and building consents, zoning and rating information, known natural hazards, and any other information the Council considers relevant.
Compared to the overall value of the property purchase, the nominal LIM fee is an absolute drop in the bucket.
Lesson: Make sure that you obtain a LIM (takes between 3 – 10 working days) prior to settling on a property.
Mistake 2. Lack of Due Diligence
That LIM you have just obtained will include a wealth of information. Unfortunately that information is often not in ‘plain English’, and will refer to permits/consents issued under other Acts of Parliament. We strongly recommend that you engage a lawyer to look over the details of the LIM and property from a legal standpoint.
For example, there may be a resource consent in place on the property that consented the existing house – with on-going technical monitoring requirements. You need to know exactly what these requirements will be to understand the true cost of owning the property. An experienced lawyer will be able undertake ‘due diligence’ and cut through the technical fluff for you.
Lesson: You wouldn’t buy a secondhand car without obtaining a pre-purchase inspection – make sure you do your due diligence before committing to the (likely) biggest purchase of your life.
Mistake 3. Assumptions..
Assumptions are killer. Too often we have seen people purchase a property with the assumption that everything will be in order.
One expensive example of an assumption relates to a building in Hawea. The property was purchased with a single cottage in a charming white colour. Due to the assumption that “if the owner is selling all must be ok with the Council“, the owner was in for a shock when the Council monitored the property – and asked why the house had yet to be re-painted in a dull brown colour. It turned out that resource consent was granted to locate the cottage onto the site, provided it was painted brown and the roof replaced.
Obtain a LIM, due your due diligence, understand all the conditions of any consents on the property, and check that any other buildings or structures on the property already have consent – or do not require consent.
Lesson: The seller is the seller – you as the buyer need to assure you are not blinded by assumptions.
Mistake 4. Believing that amazing view will be around forever
The majority of serious disputes between neighbours in relation to building and development occurs when a once-amazing view is restricted by your neighbours new _(insert- view blocking thing)_. View shafts of our lakes and mountains are a serious privilege of living here and there is nothing better than enjoying that privilege out of your own living room. However too often we see neighbours fall out when this amazing view becomes restricted.
You need to understand that often these views are dependent on your neighbour not building something they are completely entitled to build within the permitted planning rules. The District Plan provides a complicated ‘box’ of building rights that your neighbour can build within. Furthermore they can apply for a resource consent to build beyond this ‘box’ – and the Council does not necessarily have to consider that you are adversely affected by the development.
But that’s just buildings. Trees are another common view-obstruction and (more often than not) aren’t controlled by the District Plan or any Council bylaws. Any disputes are a ‘civil matter’ between the parties (think lawyer bills..).
Lesson: Understand the planning and development rules before you purchase the property – and accept that, unfortunately, an amazing view is often nothing more than a luxury that you have no permanent right to.
Mistake 5. Not anticipating the future environment around you
Things change, they always do. The once sleepy towns of the District are no longer and seem to be growing at an ever-increasing pace. Areas once used for grazed paddocks now contain multi-million dollar developments. People often buy property without truly understanding just how much their surroundings can change and just how quickly this can happen.
- Stay in the loop about the District Plan review process and from the Council. This will directly affect your built surrounds into the future and you can have a say in the process.
- Keep in touch with your neighbours and discuss future plans – alternatively there’s another way you can find out what your neighbours are up to.
- Most importantly: expect things to change – try to foresee what you consider to be the ‘worst-case scenario’ and plan accordingly.
Lesson: Things change! Be ready for it.