The failure to squirrel away enough money to pay for the long-term maintenance of multi-unit dwellings like high-rise apartment blocks must be addressed before the country further intensifies its cities, warns the Home Owners and Buyers Association (Hobanz).
The lobby and consultancy group, set up during the leaky homes crisis, alleges that many body corporates have woefully inadequate long-term maintenance plans (LTMP), and simply aren’t salting enough away to pay for future maintenance.
Hobanz has been helping prospective apartment-buyers assess LTMPs, but has been unimpressed so far. “Many are totally under-funded,” says Hobanz spokesman Roger Levie.
This penny-pinching attitude threatens great unfairness to future owners of apartments, who will find the previous owners effectively transferred some of the cost of ownership to them, Levie said.
Hobanz is calling for a prospectus-style set of documents including LTMPs to be given to all prospective apartment buyers. The law does not currently require owners or real estate agents to hand over details of the LTMPs unless asked to do so.
It also wants improvements in the enforcement of the Unit Titles Act 2010 which requires bodies corporate to have LTMPs and maintenance funds, many of which will have to build into millions of dollars to meet the cost of future repairs.
The Ministry of Building, Innovation and Employment (MBIE) is the regulator tasked with ensuring LTMPs are fair and maintain equity between present and future owners.
The ministry has the regulatory power under Section 133 of the Unit Titles Act 2010 to act on LTMPs. Levie says the MBIE has not checked a single one since becoming responsible for regulating them in June 2011. In its defence, MBIE said it had never been asked to check a plan, therefore, hadn’t done so.
It acknowledged a “well-functioning unit titles framework” was an important part of a well- functioning higher density housing market, and said it was helping body corporates and unit owners to manage their own affairs and exercise their property rights by providing advice online and via a contact centre.
The ministry added it was researching how much body corporates and unit owners knew about their rights and obligations and where any gaps were to see if it needed to improve its services.
Not everyone shares Hobanz’ views. Andrew King, executive officer of the New Zealand Property Investors’ Federation, said: “It’s potentially a problem. The larger ones should be okay.”
It is an area investors need to investigate when buying an apartment, King said.
Lyn Clapperton from property manager Crockers, which has a body corporate management business, had not seen anything to indicate widespread problems, but she acknowledged it was early days for the Unit Titles Act.
She said the LTMPs brought in by the act were a “100 per cent improvement on what there was before”, but added that most LTMPs had been in place for three years and that body corporates were revisiting them now.
Source: Sunday Star Times 23 March 2014