Private property issue #46 - new build flooding

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Auckland’s floods have really messed up some properties. Take a look at this multi-million dollar property that has almost tipped over.

Sylvie, one of my investors from Invercargill, gave me a call this week. She’s got a new build under construction in South Auckland and was worried about whether her property was damaged.

Because she’s a 2-hour flight away, she can’t drive past to look at it.

So in case you’re in a similar position, here’s what I told Sylvie and the answers to her questions.

Most properties have not been damaged

There are about 500,000 properties in Auckland.

By the latest estimates, about 1,500 properties are too dangerous to go in (according to Auckland Council).

That’s about 0.3% of the total properties in Auckland.

So, there has been a lot of damage to a few properties. Most properties are ok.

I had a chat with Viv from my Auckland team this morning. She works with investors and developers. She said:

“After the floods hit, I called around our big developers. All their developments were fine. Most of them had good civil engineering, so there was no damage to the sites. But I have heard of other sites that have been damaged. One developer said that he’d seen a site where the New Builds had been ‘whisked away.’”

Some properties have borne the brunt of the floods. While others have come through safely.

Q: “Who do I call to find out if my new build has been damaged?”

Q: “Who do I call to find out if my new build has been damaged?”

You need to get a build update from your developer.

There are two ways to do this:

1. If you are an Opes Partners investor, talk to your Client Relationship Manager, they will get a build update for you.

Or

1. If you have bought directly through a developer (i.e. not through Opes), contact your developer directly.

Q: “Who will pay for the damage?”

If you haven’t paid for the property (a.k.a, you’ve paid a deposit but haven’t settled), you don’t own the property yet. The developer does.

So the cost of repairs is on the developer.

Q: “How do I know if the developer has fixed any flood damage?”

Sylvie (my Invercargill investor) was worried that even if there was flood damage, the developer might cut corners and not fix everything.

Remember, before you pay the money for (and settle) a property, you must get a Code Compliance Certificate (CCC) from Auckland Council.

This is where the council inspects the property to ensure it meets the building code and is safe to live in.

On top of this:

• If you find any defects with the property in the first year, the developer will fix it for free, and
• With any new build, there is a 10-year guarantee in the Building Act. So if you find the property isn’t structurally sound, that’s on the developer.

But to give yourself extra comfort, get a building inspection before you settle the property (and become the owner).

This is something we, here at Opes, recommend to all New Build investors anyway.

When you do this, tell your building inspector: “I’m worried about the floods … can you look out for any flood damage that hasn’t been repaired.”

This will give you extra comfort that the property is sound.

The bottom line is Auckland’s floods have impacted some (but not all) properties.

The best thing to do is

1. get a build update from your developer, and then
2. make sure the property is independently checked by a building inspector so you know the property is undamaged.

And if, like Sylvie, you’re an Opes investor with questions. Give your Client Relationship Manager or Property Partner a call. We’ll talk through it and answer any questions you have.

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