By Ben King, Solicitor, Aspiring Law
Latest stats show building is booming in our neck of the woods.
And you don’t need to take too long a Sunday drive to see new homes of all shapes and sizes popping up everywhere – a trend fuelled no doubt in part by the current bargain basement interest rates.
Reading the new Wanaka App the other day, I see it’s reporting building consents are up a whopping 30 percent this year, on top of year-on-year increases, and tradespeople are estimating building activity’s jumped 50 percent since last year.
Building your dream home is – or, at least, should be – one of life’s milestone moments. Few reach the stage of being able to buy a section and put all that’s needed into creating their patch of paradise without a fair bit of planning, sacrifice and saving for years beforehand. There’s a lot at stake, and, for all the excitement at imagining the end result, there’s plenty of hard work, decision-making and stress to plough through first.
Every day, here, we see clients excitedly sign up for their land, ready to embark on the journey. Often, we support them through the whole process, ensuring all the legal and contractual i’s are dotted, t’s crossed and that sleeping patterns remain relatively settled.
Given so many in our community are taking the building plunge, or seriously considering it, we thought it timely to put pen to paper with some of our top tips.
Let’s start right at the start: the section. It might sound obvious, but you’d be amazed how often a basic check of the title is overlooked in the heat of the moment. You might find restrictions on what you can and can’t build, and where. If you’re a section-buying novice, or it’s been a while, it’s a good idea to give your lawyer a call before you start. They can outline the key considerations you should be aware of.
When you find your section of choice, steer clear of the dotted line until you’ve had your lawyer take a look at the documentation, including assessing it for any restrictions that might stop you building what you want. Aspiring Law Director Mike Toepfer wrote an extensive piece last year on buying a section. You can check it out here.
The next step is choosing your builder. This is no small decision. You’re entrusting someone with not only realising your vision, but hundreds of thousands of dollars. Ask friends and contacts for recommendations, check out prospective builders’ other projects and know your rights.
About 18 months ago, the Government amended the Building Act to provide more consumer protections. At the time, Aspiring Law Director Janice Hughes dedicated a Hard Case column to the changes. The article is well worth a read if you’re looking to build.
Again, this might seem like a no brainer, but all the time we see people – fretting, upset people – who’ve been caught short. Do a rigorous budget at the outset, and make sure it’s both well-researched and realistic. Get pricings for everything – and don’t forget the finishing. Carpets, curtains, appliances, heating, landscaping and the like can all add up to a pretty penny.
If you need bank funding, your lender will want a wealth of information from you, including evidence of the final cost. The bank will also build in a margin for overruns, in the event of budget blowouts.
Once you’ve chosen your builder, make sure you sign a building contract and know exactly what the builder’s responsible for doing and providing. This is your fall-back if anything goes wrong. The terms of the contract should be clear and include whether the builder is charging a margin on materials, whether it’s a fixed-price contract, and ultimately how much it’s going to cost you. Be wary of any fine print, and be crystal clear on all aspects of everything you’re signing up for.
When reviewing the contract, be on a particular lookout for what are known as “PC sums”. These are estimated costs that can change significantly, if it transpires they were under-priced in the first place. Do your checks and balances on these and, where possible, select fixtures and fittings before you sign the contract to eliminate as many “PC sums” as you can.
Remember, we’re here to help. Having a lawyer run over the contract with you is pretty cost-effective peace of mind and, don’t forget, we’re talking large sums of money if you’re caught out.
Don’t push go on plans until you’re sure each aspect is what you actually want. If possible, avoid at all costs making changes to plans throughout the build. This is a one-way street to overruns, and, as well as blowing your budget, banks tend to get a tad grumpy with clients who arrive cap in hand asking for more money than has been approved.
And, finally, remember that old adage: it’s as much about the journey as it is the destination. Enjoy the process, and soak up all that experience and knowledge – you might just decide to do it all again one day.
