“The new Victoria Residences building, now going up on the corner of Federal and Victoria Streets in Auckland, will be a 25-level tower, but a render of the project shows it soaring about squat buildings that, in reality, include the 17-storey Telco tower.”
Take a look at this picture I drew up – the artist impression building picture and the reality.
The Dangers are obvious. If you buy off plan – go and look at the actual site. As I explained to Stuff
“When walking up Victoria Street, I saw a picture of a project being sold off the plans and I was like, “Hang on, this is just wrong! The images of the buildings in front are made to look much smaller than they really are.
“Imagine buying an apartment off images of a view and then finding out that there was a building right in front the whole time!”
How to avoid getting duped by artists impressions
Here is my advice to everyone who considers buying apartments in Auckland off plan.
Go and Look at the Site Yourself.
Get onto Google Maps and look at the streetview – both sides of the street. Look at adjacent streets and see where the tall buildings are.
For highrise buildings, also look at Google Earth and click the sun icon to show shadows (here’s how to use Google Earth). This will show you how tall adjacent buildings are.
Also understand my points below about furniture and swimming pools. Don’t get caught out – be the informed buyer.
“I also have a problem with the way some developments show perspectives of amenities, such as swimming pools. I know of one development’s lap pool that really can be used by only one person at a time, which is scarcely adequate for a building that will house 1000 people. Yet, the perspectives make it look much larger and show lots of people enjoying the facility.
“The same applies to perspectives showing furniture in a room that can make it look much larger than it is. My advice is to NEVER rely on digital imagery.
Make sure you visit the site; or at least get on Google Maps and see what’s around it. For interiors, get the actual dimensions. Measure that out in your own living room.”
There are commonly 3 taxes which can be charged when property is bought or sold.
Goods & Services Tax (GST)
Capital Gains Tax (CGT)
There is no Stamp Duty in NZ (but it is charged in Australia).
CGT only applies if you bought after November 2015 and sell within 2 years.
GST applies when an apartment is on a commercial lease.
When selling your apartment, it is important to know what taxes you may or may not have to pay as this effects the outcome.
There are three main taxes involved when selling your property/apartment in Australasia but not all or any will apply to you necessarily.
New Zealand is a great place for property as the taxes charged are lower than any other first world country.
There is no Stamp Duty which is a tax charged on purchasing a property in Australia or the UK.
Capital Gains Tax only applies to you if you bought after November 2015 and sell within 2 years.
However, the one tax to look out for which many owners forget or are unaware of is GST.
Goods & Services Tax or more commonly known as GST applies to you if the apartment is bought with the intention to be used for what is called a taxable supply.
I.e. for a commercial capacity.
For example, a guaranteed rental, commercial lease or an apartment in a hotel lease.
The important thing here is if your apartment was intended to be used as a taxable supply make sure you talk to your accountant, as there is a good chance that when your sell your apartment a 15% tax will be applied or passed onto the next purchaser both effectively reducing what you are left with.
As an owner you have to find an agent that best suits you and your needs when selling your apartment.
Finding an agent and building a relationship and setting expectations that both parties are happy with is the first and most important aspect of selling your apartment.
Once you have found an agency the rest is fairly simple. You will need to sign a listing agreement and as this is a legally binding document we suggest you get a lawyer to look over this for you. The difference with Apartment Specialists is that we don’t lock you in. You are in control.
The agent will advise you with all the details of the campaign, marketing, the current market and so on.
The final step is making sure you are kept up to date – setting these expectations and how much involvement you would like is up to you and we tailor these to suit you as an individual.
When selling your apartment, did you know there are more than just commission costs? We know, at Apartment Specialists, that, at the end of the day, you want to know how much you’ll be getting in your back pocket when your apartment has sold. You might be surprised to know that you may even get money back. We’ll help you to get a broader picture of what these other expenses are, understand ALL the costs when selling your apartment, so you can take them into account.
The knowledge of what costs you will incur during the process of selling is so important and it is more than just the agent’s commission.
The costs involved are more than just the commission. There are several others involved but don’t let that deter your choice to sell.
Marketing costs generally are around $600 when a property is selling for under a million and around $2300 for property over and above that price.
Lawyer’s fees can range from anywhere between $800 and $1000 for a property with no mortgage and up towards $1300 for a property with a mortgage. Where there is a sale that is more complicated for example a building that may need more due diligence due to building issues these lawyers’ fees may be upwards to $2000.
Lastly, a cost that is overseen when your property is tenanted during the decision of sale being made, your tenants may leave before settlement date leaving you with no income for several weeks. This is where you need to ensure you are prepared for this and/or bring the settlement date forward if able to.
And the good news; you may sometimes be eligible for money back. If you have covered your Body Corporate fees for the year and sell part way through the year you will receive the overpaid amount back upon settlement. Rates are the same deal and will be reimbursed if any are overpaid.
What happens with you sign a sole agency agreement with an agency? Here are 3 examples from owners that we worked with who wanted to sell their apartment. Unfortunately the agencies with whom they signed just didn’t deliver at all or in a timely manner and this is due to the sole agency agreement in their contract.
Signing and selling my apartment with a sole agency agreement and what that means for me. This is important to understand as a Sole Agency agreement is legally binding. At Apartment Specialists we don’t lock you in.
It is important to understand and know your rights as an owner when selling your apartment and what it means when signing a Sole Agency Agreement.
This is because it is a legally binding document and sometimes owners don’t realise this and what implications this may have.
The most common clause in an agreement is signing with an agency and being locked into 90 days with the agency. This means if you are not happy or you feel the agent is not working for you, you can’t change until that time period is up.
We trust in that if the service is good why would you want to leave.
The choice should be yours.
In any other industry this would not be accepted, so why real estate?
How much commission is charged when selling an apartment in Auckland? You should know what you are going to be left with after all the costs.
You also should know what’s most important to you, as an owner, to look for in an agent. We’ll bet it’s that they’ll maximise the amount of money you’ll be putting in your pocket. Just because the commission costs are higher it doesn’t mean you’ll be getting less when your apartment sells!
Get insight on what real estate agents in Auckland charge for commission and why, sometimes, it’s better to pay a little more commission to get a lot more value.
The commission charged when selling your apartment vary depending on your apartments value. You are charged 4% for a value up to $500,00, 2% for a value up to $1,000,000 and 1% upwards from $1,000,000 plus GST.
It is not always about the sales price you can achieve but rather you want to know how much you are going to be charged in commission and what you are going to left with after the sale has gone through.
Usually you will be charged around 4% for a property with a value up to 500,000. 2% for a property up to a $1,000,000 and 1% for properties sold for more than $1,000,000. This is plus GST unless you living outside of New Zealand and can prove your residency, then you won’t be charged GST.
There is however a minimum cost you will be charged and this applies to properties worth 3,000,000 and under.
These can vary across agencies and Apartment Specialists we charge $11,500 plus GST
When you sell a property below 300,000 there is a minimum fee, at Apartment Specialists ours is 11,000 plus GST (This is subject to change without notice).
However, it is more than just what your commission costs are going to be – you want to ensure the agent you have chosen is going to get the best possible deal for you. Asking your agent for their recent sales and what records prices they have achieved is a good idea to inform you with what price you may get.
We have an advantage in the apartment industry to help you realise your apartments worth as there are so many like for likes, for example the same apartment that has been sold in the building with the same specs and so on.
How is the value of your apartment calculated? Oftentimes real estate agents will look at the sales statistics for the apartments in your building and base the current value of your apartment off these previous numbers. But how can sales in your building alone be an accurate gauge on price?
The value of your apartment is usually calculated by a number of factors including recent sale prices, sales in the buildings and the buildings in similar areas.
Firstly, we look at apartments that are the same, these are usually in the same building. Most agents stop there; we go further and look at other buildings that are similar to help us gauge the real market value of your property.
This is where our expertise are superior, we have the knowledge of all the buildings in Auckland and understand our market well.
Calculating size, carparks, level and so on are all important factors to consider when valuing a property as well as record prices in the building and recent sales in both your building and other that are alike.
We can market your apartment without even entering the building as we have floor plans of all buildings in Auckland and know these buildings inside and out.
What is the difference being a specialist for you, an apartment owner looking to sell? With thousands of apartments in the Auckland CBD and surrounding suburbs and at least 100-150 apartments selling every month, you need the right information so you can make the best decisions for you.
Apartment specialists looks at the value of apartments, not just in your building, but of those in the surrounding buildings as well. The apartment market moves all the time and we make sure we’re aware of it when valuing your apartment.
There are over 26,500 apartments in the Auckland CBD and fringes and around 400 buildings which will become up to 450 in the coming years. Each month there are 100 to 150 sales of apartments.
We know this by understanding our market well. This is done by constantly keeping up to date and being in the know. It is not just about being an agent but about being a specialist in the market.
We look at apartments that are the same, these are usually in the same building and look at other buildings that are similar to help us gauge the real market value of your property. Calculating size, carparks, level and so on are all important factors to consider when valuing a property as well as record prices in the building and recent sales in both your building and other that are alike.
By being well informed, we can help you make the best decision that works for you and selling your property.
If you’re looking to sell your apartment in Auckland, although there’s no real ‘right’ time there is definitely a period you want to avoid which. we recommend the only time you avoid is December through to early January. If you sell during this time, it can cost you anywhere from $20,000-$50,000.
Selling at the wrong time can end up costing you more than you may have anticipated. However, apartments are very different to houses and most of the year is a good time.
However, the only time to avoid would be the December, early January period – the holiday period, this is due to a lot of events happening in people’s lives, end of deadlines, holidays, family commitments and so on.
Some apartments have GST connected to them because when they were initially purchased, they were purchased as a commercial property.
If it wasn’t even intended for commercial purposes or receiving income for it – you will still owe GST.
You need to avoid this by talking to your accountant and figuring out whether it is a good idea to sell or what other options you may have.
Good day, Andrew Murray from Apartment Specialists talking about Auckland apartment sales.
I just recently had an owner sell an apartment that was in a residential tenancy and then they came to selling the apartment and I told them to go and ask their accountant for advice and they found out that they had GST owing on the apartment and they couldn’t figure it out.
To everybody else, on the surface it looked like, why would you owe GST on an Auckland apartment? Why would they owe it? It’s in a residential tenancy. But it came down to when they purchased the apartment. Some apartments have GST connected to them because when they were initially purchased, they were purchased as a commercial property.
What I mean by that is, the owners would have been receiving GST. So, a lot of people, when they first bought their apartments, weren’t to sure what they were buying, especially apartments with GST and that kind of thing and so they found out when they come to sell the apartment, that there is a GST component and this really, really changes their decision making process.
If you think about it, GST being on an Auckland apartment, if you sell it for say $400,000, well that’s 15% so that’s $15,000 x 4, that’s $60,000 less than you thought you would have got in the hand. The way to tell that is, when you purchased your apartment, was it being used commercially, or was it intended to be used commercially?
Was it in a hotel lease, or was it in a lease of some form, and were you receiving GST on that income? So, if it was in a hotel and you are receiving income, that means there is a GST component so that means you owe GST.
What happens is that basically, when you bought the apartment and it was sold as a commercial apartment with a commercial lease on it, you would either have had the price reduced by the GST factor which back then would have been 5.5% or your accountant would advise you that you can claim the GST.
Often, having an accountant you let them do what they do and they save us money, but we don’t always understand exactly what they did. So, they would have claimed that $12,500 back and you would have got that money. So, when it comes to sell the property, you have to pay that GST back.
There’s a little bit more to it than that and I’ll explain that in my next podcast which is, when you have GST on an apartment but you don’t actually have to pay that GST back and I’ll be talking about that later. The key thing is, if any of this is actually ringing a bell – you’ve purchased your apartment.
Make sure you ask your accountant because they’ll give you advice and let you know if there is a GST component attached to your apartment and that will change, no doubt, your decision making process on whether it’s the best idea to sell your apartment at this current time or what other things can be done.