The best start

The hidden costs of buying an apartment

4 min read

Home ownership is something of a tradition in New Zealand, and we’re keen to help our customers get onto the property ladder. Due to high property prices, you may be looking at apartments, which makes sense because they are usually less expensive than houses. However, there are some costs that are unique to apartment ownership that you need to be aware of. 

Body corporate fees

Yes, apartments are generally cheaper than houses. However, apart from the deposit  and mortgage payments, there are several other costs you must take into account, like body corporate fees.

Unlike a stand-alone house, an apartment shares amenities such as an elevator, a gymnasium, a swimming pool, and gardens with other apartments in the building. So, to keep everything maintained, almost all apartment buildings have what’s known as a body corporate. To pay for the shared amenities, as well as a property manager and insurance etc., the body corporate will charge all apartment owners a body corporate fee.

How much is the fee likely to be? Well, as you might expect, it depends on things such as location, the size and quality of your apartment, and whether or not you have a carpark. To give you an idea of price, in Auckland, for a one-bedroom apartment you’ll probably pay somewhere between $4,000 to $5,000 per annum. Having a carpark could add another $1,000 to the fee. Be aware that body corporate fees do increase over time to keep pace with the rising costs of things such as wages, rates, and maintenance.

If you see an apartment you like, it’s important to ask for a copy of the body corporate's maintenance plan, which should span 15 years. Your body corporate fees will reflect this plan. However, if something necessary such as a periodic repaint plan has been omitted, you will be responsible for a portion of the cost when the building needs painting.

Also, to get an idea of what has been going on at the apartment, ask for a copy of the minutes from the body corporate’s regular meetings.
Putting costs aside, make sure you understand the rules of the building. For example, for aesthetic reasons, some body corporates prohibit apartment owners from hanging washing out on the balcony or installing an air conditioning unit. You also may not be allowed to keep a pet.


Another cost to consider is water. It may not be part of your body corporate fees, so find out what the setup is for the apartment you are looking at. For example, some buildings have individual water meters for each apartment, so you pay only for what you use. However, others may have just one meter for the entire building — everyone pays the same amount. Consequently, if you purchase a one-bedroom apartment with your partner, you could be subsidising a family of four living in the same building.

Leasehold or freehold

Is the apartment leasehold or freehold? There is a big difference between the two types of title.

With a freehold title, for example, you own your apartment and a portion of the land that the apartment building stands on. With a leasehold title, however, you don’t own the land.

Considering most property value increases, particularly in Auckland, can be attributed to land, not buildings, you will unlikely enjoy much future capital gain with a leasehold title.

There are also several types of leaseholds in New Zealand, so to ensure you understand what you are getting, it pays to consult a solicitor.
On the plus side, a leasehold apartment will be considerably cheaper than one that is similar, but freehold. For example, a freehold apartment might sell for one million dollars while a comparable apartment that is leasehold might go for $300,000. Consequently, buying leasehold can enable you to get a nicer apartment than you would if it was freehold.

Swipe cards

Houses have keys; apartments usually have swipe cards, which are convenient and excellent for security. However, if you lose or damage your swipe card, it can cost more than one hundred dollars to replace. And, if you’re the forgetful type, the cost can add up.

Leaky buildings

In Auckland alone, leaky buildings have cost ratepayer $600m in claims. Thankfully, avoiding purchasing a ‘lemon,’ which will cost you thousands in repairs, is relatively easy. Just ask the vendor or real estate agent for a copy of the building’s pre-contract disclosure document, which is required by law. This agreement must state whether the building has been subject to a claim under the Weathertight Homes Resolution, and the body corporate and vendor must sign it. For extra peace of mind, consider commissioning a building report through a registered building company. Doing so can unearth other nasties, like methamphetamine contamination.