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Land & Build Contracts

September 2019

As the Auckland urban sprawl continues, particularly in the South Auckland areas, we are seeing an increase in clients entering into land and build packages. These types of purchases are particularly popular with first home buyers as there are larger Housing New Zealand Home Start grant incentives when purchasing a brand new home. 

Purchasing a new property, whether you are an experienced purchaser, or attempting the process for the first time can be a frustrating and often stressful process; couple that with the added pressure of embarking on a new build and we see an increase in stressed clients presenting at the office wanting urgent advice on often lengthy and seemingly complicated building contracts. 

So what should you be keeping your eyes out for to ensure that you are not signing up for a contract that contains provisions unsuitable for your situation?

Firstly, be aware that a contract labelled as a “Fixed Price Building Contract” is very rarely genuinely fixed price. There are almost always clauses which allow the developer or the builder to increase the contract price, sometimes without firstly obtaining your consent. 

Secondly, while the builder may promise you a ‘move in date,’ there are often clauses which allow the builder to extend that date without your input as is often required due to unforeseen issues such as lengthy winters. You may wish to look out for a sunset clause, which may provide scope for you to cancel the agreement and potentially retain any deposit if the work is not completed by a certain date. 

Also, make sure you know what you’re buying. While some companies are very thorough with their build contracts which come complete with scheme and build plans all the way down to the colour of the driveway, some agreements can be vague.  If possible, ensure that the contract has clear and specific details surrounding section size, house size and even design and landscaping. 

Finally, as a purchaser of a new build you have the right to certain guarantees and warranties from the builder to ensure your new property is up to standard.  Ensure that you discuss what warranties and guarantees are on offer to you from the builder and/or the vendor and that this is reflected in the agreement. 

The good news is that by coming in and asking us for advice you have taken the first step to protect yourself from encountering any unwanted surprises as your build progresses. Furthermore, the team at Inder Lynch are experienced and ready to assist you to navigate the process and alleviate as much stress as possible. 

In summary, it is an exciting time in the South Auckland market, especially for first home buyers who are now able to consider a brand-new house as their first home. We always recommend that the best and safest way is to provide us with a copy of the agreement before signing.  We appreciate, however, that circumstances don’t always lend themselves to allowing clients to come in the moment they are presented with what may seem like an attractive land and build package; especially if said client has found themselves walking through their dream show home and the last section is about to sell if they don’t sign up and pay their deposit almost on the spot. 

We wish you home-buyers all the best out there, and as always, we are here to help.