I am constantly surprised at the number of properties out there which have had a bit of work done without having first obtained building consent.  

At the less concerning end of things, you might have added a new deck to create a nice outdoor entertaining area or extended a pergola for the same reason. But even that can cause a tripping hazard at sale time…

Moving on to bigger things – any additions that include water coming in (hot and cold taps), water going out (wastewater, sewage), or structural changes – often where load bearing walls should be – are quite problematic. Converting the garage to a sleepout or adding a fireplace can be detrimental too, if they were done without council signoff.

Even if work was done to a high standard by qualified tradies, you can still find yourself in a hole if final council sign off was never attended to.

We’ve noticed a strong change by real estate agents and lawyers whereby the level of disclosure to buyers has gotten much better – these issues are being brought up at sale time more often because agents are legally bound to disclose any issues, or potential issues, they’re aware of. That’s a good thing, but it has different implications for all parties involved. Here’s my take…

To home owners:

I find it hard to believe that people are ignorant of the fact that some types of work need council building consent. More like the reason they don’t bother comes down to cost or just being a lazy sod.

In nearly all cases, you will pay the price at sale time – either because it’ll take a bit longer to sell, you won’t sell for as much money as an equivalent house that isn’t defective, and you may even have to shell out cash as a contribution to getting the issue fixed for the new owners.

If you’re thinking of doing some work to the house, then check out what needs consent and what doesn’t. Piling into the work regardless and hoping that the additional value created will offset any problems is a false economy. Do it right first time and reap the full reward of your labour.

Before you come to sell, get everything in order. Perhaps the unconsented renos weren’t your doing… well you might have been happy to overlook them and sign that sale & purchase (S&P) agreement, but the next person probably won’t.

  • Fix any issues on the property that you know will be divulged in a builder’s report
  • If you’re on a cross-lease, make sure your council flats plan is up to date (that can include decks too…). If it’s not up to date it’s considered a defective title. There’s considerable cost involved (in the realm of $9k) but the reality is, there’s considerable $$$ to lose to at sale time too.

We suggest a few other points in the real estate agent section below.

To first time buyers: 

Banks have tough requirements for people with a small deposit (ie. under 20%) and properties that have problems are a serious hold up for first home buyers. With little equity to lean on, banks want to know how quickly they could dump a property in the event of a mortgagee sale, to get their money back. Unconsented work makes a quick sale more difficult, so it’s no surprise that banks are quick to spot bad renovations etc.

So first timers, if you find a cheap property then tread carefully. Check it out by looking at the council file and the S&P agreement for any signs of problems. Problems are not always deal killers, but they are almost always deal delayers. If a bank hesitates about a property then that’s a red flag for you too.

TOP TIP: If you make an offer, give yourself plenty of time to work through the conditions – 10 working days is good.

To real estate agents: 

Real estate professionals always prefer buyers to make unconditional offers because they are clean, quick and straightforward. And unconditional offers are nearly always taken by vendors, even when a higher (but conditional) offer is on the table. A property with unconsented work almost always invites conditions and makes for a more difficult sales process, so a bit more preparation prior to marketing a property is probably in order.

I don’t want to tell people how to do their jobs, but is there some work you and your vendor can do to minimise the problem of unconsented works? Can you actually go and get council sign off – perhaps, if changes were made before 1992? Maybe a building inspection to confirm that the work is good, even though it’s not consented? What about removing the offending structure? That way a clean (or cleaner) S&P agreement can be presented to the market.

Here are some examples:

  • Roller door removed from double garage and replaced with ranch slider to create sleepout
  • Deck built where height from ground was over 4 meters
  • Vendors using gazebo as fencing for a spa pool, violates pool fencing regulations
  • Bathroom and laundry added to garage to create semi self-contained unit
  • Small unit built on section, but structure not permitted by land covenants (unit too small)

Some of these issues were deal killers. Some were resolved by changing bank. Some could only proceed if the vendor dropped his pants. Every single one caused a delay and created pressure.

So whatever side of the fence you’re sitting on – make sure you’re up to speed with the impact not having building consent might have on you. Happy to talk anytime – CAM  

About Campbell Hastie

Cam is one half of Auckland based mortgage brokers, The Go 2 Guys.

He makes a living by sharing what he knows about mortgages with people, arranging mortgages for people and then insuring people.

He doesn't claim to know everything about mortgages himself which is why he teamed up with David Mercer — hence the ‘2’ in Go 2 Guys.

He writes posts regularly on his blog and has been told he has an ability to share his knowledge in a simple and sometimes memorable way.

Feel free to comment and ask any questions. Contact Campbell Hastie m: 027 697 7789.

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