If you’re debating whether or not to get a builder’s report before buying a house, we strongly recommend you do. A building report is a comprehensive assessment of the property’s condition and can help you avoid costly surprises and unexpected repairs in the future.
While it is an additional expense, it’s a small price to pay early on to avoid any costly surprises further down the track.
What is a building report?
A building report, or property inspection report is a detailed visual inspection of a property conducted by a qualified building inspector. The inspector will assess the condition of the property, including its structure, plumbing, electrical systems and any other potential issues. Any problems concealed behind finished surfaces won’t be included in the report.
The report will provide you with valuable information about the property’s condition, highlighting any defects, potential hazards and areas that require maintenance or repairs currently and in the future.
Keep in mind that not all building reports are created equal. Your building report should be done by a trusted and qualified building inspector with professional indemnity insurance.
Do you have to get a building report when buying or selling a house?
A vendor is not required to provide a building report when selling a house in New Zealand. In situations where a vendor does provide a recent builder’s report, it’s often in the purchaser’s best interest to seek independent expert advice and obtain their own report before making an unconditional offer.
Obtaining a building report is not a requirement when buying a house, but we highly recommend that you obtain one (even for a newly built home). Builder's reports are an additional cost to the purchaser, however, they can help you make a fully informed decision when buying a property and can save you money in the long run. The report helps identify any current and potential issues with the property, you can also request the inspector to provide you with an idea of the costs associated with any necessary repairs or maintenance.
Without a building report, you may be unaware of possible issues that could affect the property’s value, pose a risk to your health and safety or result in costly repairs down the track.
What does a building report include?
A building report covers a comprehensive range of issues related to the property’s condition including:
Structural issues
The inspector will check for any cracks, warping, foundation issues or other structural issues that could compromise the property’s integrity.
Moisture issues
The inspector will check moisture levels throughout the house with non-invasive testing. Regardless of whether or not the moisture readings are high, the numbers will be recorded in the report. This will identify any signs of dampness, mould, potential leaks, and any other moisture-related issues that could affect the property’s value or pose a health risk to occupants.
Electrical and plumbing
The inspector will assess the property’s wiring and plumbing systems to identify any potential hazards or issues. They will inspect the fuse board, meter board and any hot water cylinders. If the inspector finds any potential issues, they will recommend that you seek advice from a registered electrician or plumber.
Additional issues
The inspector will also check for any other potential issues such as asbestos, retaining walls (up to a certain height), fences, roof condition, surface-water, exterior cladding and joinery, and any other issues that may affect the property’s condition over time.
A building report may identify where work has been done throughout the years on the original property. The report won’t be able to tell you if the renovations have building consent, you will need to obtain a LIM Report or look at the Council files to find this out.
How much does a building report cost?
The cost of a building report can vary depending on the size and complexity of the property and the level of detail required. The cost can range from upwards of $400 for a small property to over $1000 for a larger property. We recommend getting quotes from various inspectors to see which report fits best with your requirements.
While the cost of a building report may seem significant at the time, especially if you’ve had to pay for multiple in your journey to buy a new property, it remains a small price to pay for the peace of mind and protection it provides.
When should you get a building report?
As building reports don’t come cheap, it’s best to wait until you have found a property that you are seriously considering before investing in a report.
One way to protect yourself as a purchaser is to make the Agreement for Sale and Purchase conditional on a building report. This way, you can still make an offer prior to obtaining a builder's report and if the report brings up any issues, you’ll still have avenues to protect yourself – requesting issues be remedied, seeking a price reduction or cancelling the contract.
While it can be tempting to rely on a report provided by the vendor or their agent, you can only legally rely on the report you have obtained. If you accept the vendors report and find a problem later, you may have limited options for recourse.
What to do when you get your building report
Once you have obtained a building report, it’s important to review it carefully and seek further advice from a property lawyer and the building inspector if required. If you have any questions or concerns about the report, you can go back to the inspector who can help you understand the implications of any issues, as well as ways to remedy these and the potential costs involved. Our experienced lawyers can advise on any potential legal remedies available to you.
For example, if significant issues are identified, you may have the option to negotiate with the vendor to have the issues repaired by the vendor prior to settlement at their sole cost, or to renegotiate the purchase price to reflect the cost of repairing the issues yourself after settlement. You may also have the option to cancel the Agreement if the issues are too much.
Our property lawyers will help you understand the impact of the issues identified on the property’s value, as well as on your ability to obtain insurance or finance for the property. They can also advise on any potential legal issues that may arise if issues identified in the report were not disclosed by the vendor or their agent, or if there are any discrepancies between the building report and other documentation, such as the Title or LIM report.
In summary, a building report is an essential tool in identifying potential issues with the property and should be obtained before purchasing any property in New Zealand – even new build homes.
By seeking advice from a property lawyer both before and after obtaining a building report, you can rest assured you’ll be fully informed and protected throughout the property buying process.
In addition to providing advice on your builder’s report, our property lawyers will help you navigate the settlement process and ensure that all the necessary documentation is correct. This includes reviewing and advising on the Agreement for Sale and Purchase, liaising with the vendor’s lawyer and ensuring that all necessary documentation is signed and submitted on time.
If you have questions or concerns, get in touch with one of our property lawyers.
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