Purchasing Property in New Zealand: Navigating the Risks of Monolithic Cladding
If you're considering purchasing a property in New Zealand, particularly one with monolithic cladding, it's important to understand the potential risks. Properties built between 1994 and 2005 using this type of cladding have garnered attention for their association with moisture ingress and the resulting "leaky home" issues. While not every property with monolithic cladding will have problems, it's crucial to approach such purchases with caution.
Understanding the Risks
Monolithic cladding was widely used in the late 1990s and early 2000s due to its modern aesthetic. However, homes from this era have been found to be more vulnerable to moisture problems, especially if the cladding wasn't installed or maintained correctly. This can lead to significant issues such as water damage and structural problems, which can be costly to repair.
Given these risks, many experts suggest that buyers should be wary of properties with monolithic cladding unless they are priced to reflect the potential need for future repairs. Even if a home appears to be in good condition, the underlying risks may still impact your ability to secure financing and could affect the property’s long-term value.
Steps to Take If You’re Considering a Purchase
If you’re still interested in a property with monolithic cladding, here’s how you can proceed with caution:
Make your Offer Subject to Builder’s Report: This report will provide insights into the condition of the cladding, any signs of moisture ingress, and the overall structural integrity of the home. It’s a critical step in ensuring that you know exactly what you’re buying. In our experience as Mortgage Advisors, banks will often require a builders report for these types of homes, and require it to be produced by a builder on their approved list.
Negotiate a Fair Price: If the property has monolithic cladding, consider negotiating a lower purchase price to account for the potential risks and future costs. This is especially important if the builder’s report highlights any concerns. A lower price can also provide some financial cushion should you need to carry out repairs later on.
Make Your Offer Subject to Finance: To protect yourself, make sure your offer is subject to finance approval within 10 working days. Banks are often more cautious with properties that have monolithic cladding, so this condition allows you to back out if the lender requires more stringent terms or declines your application.
Weighing the Decision
While not all homes with monolithic cladding are problematic, the potential risks mean that buyers should proceed with care. It's essential to weigh the price, the findings of a builder’s report, and the potential long-term costs before making a decision. In many cases, it might be wiser to explore other properties unless you’re getting a deal that justifies the risks involved.
Final Thoughts
Buying a home with monolithic cladding in New Zealand requires careful consideration. The risks associated with these properties can be significant, but with the right precautions—such as securing a thorough builder’s report and negotiating a fair price—you can make an informed decision. If you surround yourself with a team of professionals, it will help you greatly to navigate the property landscape. We can recommend excellent property lawyers, and we are here to provide expert mortgage and financial advice for expats in New Zealand.