Friday, 20 April 2018

Building in NZ - Pre-Contract

This is my journey from purchasing a section to signing a building contract in NZ. I hope you'll find it useful.

It would have been better if I could have afforded an architect to build me what I want (a French-inspired home) but such costs were quite beyond me. They can be 15% of the total build. With an architect's plans you can shop around for the best price amongst builders. The best option for me was to find a quality builder with a good range of plans, one of which might suit.

It sounds simple but I can assure you that if you want other than a bog-standard box it is not. House and land packages/turnkey deals are the easiest but my chosen builder didn't have anything on offer so I chose my section and then chose my builder based on the fact they were the only ones with a plan that resembled something I might like.

Why I liked their plan:
There was natural light coming directly into the kitchen and I could stand at my sink and look out on my garden. These days the trend is to put the kitchen in the middle of the house with no natural light, only whatever light would come in from the dining or living areas. In short, you need to use electricity to light your kitchen any time you want to work in it, they are so dark. Not very sustainable in my opinion. I live in a duplex currently which is exactly like that. It's consequently dark and cold to live in.
I also liked the plan because it had elements of 'character' such as great indoor-outdoor flow to multiple patios and pergolas which climbers could climb, wind and ultimately drizzle down - think grapes, wisteria and roses. There was also a European-shaped external chimney much as you might find in an old cottage in France or England. I wanted street appeal and friends had suggested I use one of my bedrooms as an Airbnb to help meet my living costs. Tick!

After careful thought I felt the current plan used up too much of the section on driveway, robbing me of garden space. This single aspect meant we had to work out how to reorganise the garage, the entranceway and the bnb. Driveways are scarily expensive folks. Keep them minimal, especially if you want tinted exposed aggregate to look a bit classier and to eliminate the horrendous glare from raw, white concrete.

Danger: the minute your builder makes a drawing of your ideas they become your builders ideas and thus copyrighted. You can't take your own ideas to another builder and ask them to come up with something that meets your needs ie trot your plan around for pricing. Other builders get nervous about legal ramifications of 'shopping plans'. They all want to propose one of their standard plans which of course don't meet your needs. They then have to come up with something different that is not like the first builder's ideas so they can't be accused of plagiarism. For a 3-bedroom house it's hard to come up with something original. None of them wants to design something from scratch for you no matter what their marketing says. They feel safer using their own plans, most of which are boring to me. My builder is expensive but the barriers to going with someone else really dissuaded me from changing. i found seeing my ideas with the builder's logo irkesome. They've got you by the curlies. I checked with a building design copyright lawyer who said I'd better stick with my expensive builder to be safe.

Bear in mind your design must meet stringent developer covenants if they are in place. These are a list of materials you are 'allowed' to build with and what style. You must have street appeal. No heat pump condensers may be seen from the street. Take care with positioning of solar panels, raintanks etc. Nothing 'ugly' facing the street please. Covenants dictate your colours, pets, exact fence type, activities you can indulge in and size of home. I am forced to build a 200m2 home just for me. Ridiculous!

OK, you've got your layout pretty much sorted so your builder provides a rendering of what it might look like. Exciting! They should show you how the house is positioned on the site to profit from the sun. Do you want most spare land in front on the street or, like me you prefer your space to be private around the back? Your site layout should show any easments, boundaries. distance to road and neighbours, recession planes because your council will need to be happy with your choices. See, it's not just about you.

Next your builder will draft a sales proposal consisting of basic specifications for the house and a total cost. I wanted a fixed price. OK except that in reality it's not, really. So many things are NOT included such as driveways letterbox, fences. landscaping, sometimes spashbacks, logfire surrounds and hearths, curtains. Sometimes your builder will decide to change the specs because they can't build the house for your budget. This is disappointing and results in uncomfortable but necessary negotiations as you make trade-offs. I sacrificed the security system and doorbell so I could have 2.2m internal doors to match my 2.7m stud. That extra height makes  a big difference in the whole feel of my home.

Beware the PC sums. Your builder doesn't know your tastes so they decide on the specs for plumbing, electricals, flooring, tiling, heating and attach a guestimate for costs. Go around every supplier checking that the PC sums are realistic or you could get hit with thousands of dollars of additional costs.

You get the Sales Proposal and they should also send you a blank copy of the contract and the Residential Building Guide support documents. I had my lawyer check this even though it was a standard Masterbuild contract. Your builder MUST supply these documents in advance of you signing.

You will be sent an Authority to Proceed to concept plan drawings to sign and which you must pay for. They say the drawings are included in the cost if you decide to go ahead and build the house but how would you know? The cost of the house was the same before I signed and paid for the drawings as when I later signed the contract to go ahead and build. I queried it but - how can you know? For me the house price hadn't reduced $2400. Building is not a transparent process and these are not the working drawings.

Your builder should also apply for a Project Information Memorandum from the council to see what the state of the section is for building on. Geo reports are not enough, even if supplied free by your developer. Your section might need special testing even though the council knows the foundation category. In my case the equivalent of TC1.

Note: talk to others who have built. Listen to their horror stories and learn from them, pick yourself up off the floor and keep going.

Next post: signing the contract and what you need to do while you are waiting to start building.

Sunday, 8 April 2018

Building in NZ - The section

To build or not to build. That's the question many of us ask ourselves when trying to get out of the rental noose around our necks.

With no job offers and no income coming in I was obliged to sell my aging house in Pakuranga, Auckland and look for somewhere more affordable. Flat land? Less than $200,000 for a decent section with services? Near all the usual metropolitan services for aging folks and those who still need a job? Those criteria narrow New Zealand down quite a bit.

Hello Rolleston; not too far from Christchurch but far enough away in case of more earthquakes. Too far from the sea to be threatened by tsunamis. Limited snow, can be a bit windy at times.

I spent a lot of time meeting real estate agents and viewing existing homes: modern and souless with apalling excuses for gardens. I might have chosen one before I went to France but I've come back different, or maybe I'm more ME. I don't fit emotionally into a 'normal, modern' kiwi house and I really need MY kind of intensive garden. The later is rare to find these days. All up, I was bored and despairing with what was on offer. To get anything like what I wanted I would have to build and still make a lot of compromises. I knew it was not going to be an easy option and it was going to be $100,000 more expensive than an existing bog-standard home. But it could be unique.

I found a section in December 2017 during a brief trip to Rolleston. I sat down with the real estate agent to see what was available. Most sections had gone in the subdivision I was looking for but I was assured a section down a right of way was as good as any other and that title for the first stage would be released the following month. My section should be available for building in April even though the official word was July. "July is too late." I said. "No problem", he said, the good weather had them well on track for me to get title in April.

Just before Christmas he put a LOT of pressure on me to sign the contract. I had already received a copy of the contract and sent that on to my expensive Auckland lawyer. She had concerns over the vagueness in many areas and the lack of transparency concerning ALL the partners selling off the subdivision. I had concerns about how much money I might be up for to pay for the right of way and vehicle crossing. The developer was also charging $400 to approve my building plan. And then there was the $2500 bond in case of damage. Costs after costs.

The estate agent started getting aggressive with me and accusing my lawyer of stalling and ripping me off financially just to drag out the process and cost me more money than necessary. "I've had enough of this," raged the agent. I told him to calm down, I was the client, the one with the money and my lawyer was doing her job protecting me; necessary since the developers' lawyer hadn't even seen a copy of the contract written up by the agent. Christmas came and went and I made preparations to move from Auckland to Rolleston; stressful after an international move only 6 weeks earlier.

Down in Rolleston I checked out the subdivision containing my section. It was a dust bowl, a physical mess and little progress had been made. There was NO WAY the estate agent had been honest about title. I hate dishonesty and agression so I pulled the plug on the deal. It had cost me $2400 because the contract had so many holes in it my lawyer had been obliged to put in extra effort.. An expensive mistake but perhaps it would have been worse if I had persisted.

I found a more professional developer in another subdivision who was releasing the last of its stages. Timing is tricky with subdivisions. They take a long time to develop, depend on suppliers and the weather and finance. Getting title means you have to pay the balance of the section cost so you can then build on it. Prior to that you pay a deposit to hold it, usually 10%. This developer was quite relaxed about giving my lawyer and me extra time to feel comfortable with my decision before paying the deposit. Hughes Development is completing their major subdivision at Faringdon, Rolleston. It's massive with 24 stages and hundreds of homes. My section is in stage 22 and I'm hoping for title any day, even though I'm not yet ready to build because I need specific documentation for developer approval before I even submit my plans to Selwyn District Council.

Faringdon is a nicely done subdivision with recreational areas and facilities and VERY strict covenants. If you are building take heed of the covenants. These are the restrictions the developer puts on your building design, exterior colour scheme, landscaping, fencing, indeed anything you want to do that can be seen from the street and what activities you can do on your section. It's a pain in the butt and slows the whole documentation process down.

Unfortunately for me I have an easment running across one side of my section. I am not allowed to build any structures on the easement so that is quite restrictive in positioning my house. Along one side of stage 22 is the new Faringdon underground sewer. Chances are there won't be any problems in my lifetime but if there were they have the right to come onto my property and dig up my garden, destroying plants and trees to get at the problem down below. My lawyer said easements are common and aren't worth worrying about as it's rare that it causes a problem. Still, it did give me pause for thought. There are so many issues when building from the minute the idea of building a French-inspired home pops into one's mind.

Right now the pegs are in, the grass has germinated, the road is finished and the street lights are up, the deposit is paid, I'm trying to get my 'ducks in a row' for developer approval asap.

Next post: what's involved in getting developer approval and what hoops do you go through getting to the stage of signing a building contract.

Section tips in a subdivision:
  1. Get a Land Information Memorandum from the council to see what condition the land is in, if there have been hazardous substances. The developer may provide one free on their website. Otherwise you'll pay at lease a couple of hundred dollars.
  2. Check the developer covenants. they are there to protect your investment but can be quite restrictive in an urban environment.
  3. Check out homes in the area and see if people look after their properties
  4. What is the path of the sun? Will your preferred plan sit correctly on the section?
  5. Is your section on the best side of the road for sun? Many have the sun heating the garage instead of the living areas. Take care with this one as the rest of the house will be cold.
  6. Is there a bus service and what future developments will arise nearby? Talk to the planning section of your council.
  7. How long do you expect to be in this house/area - this will determine what you need nearby.
  8. Have you got fast broadband installed in the subdivision?
  9. Climate? Wind? Possible natural disasters?