Buying guide
Unit Title act explained: The apartment buyer’s guide
Everything you need to know before you buy a unit title property
Last updated: 10 July 2024
If you’re considering buying a unit, townhouse or apartment, chances are you’ll come across several unit title properties. This type of ownership is common in buildings with multiple residences like apartment blocks.
Before you sign a sale and purchase agreement it’s a good idea to understand what the term means, what to look for when buying a unit title property, and what your obligations are when you eventually sell.
What is the Unit Titles Act?
The Unit Titles Act is the legislation that governs unit title properties in New Zealand, originally drafted in 1972 then revised in 2010 and 2022. Most buildings with multiple homes in them are under unit title, like blocks of townhouses and apartment complexes.
When you buy a unit title property you automatically become part of the body corporate. This group of unit title owners meets at least once a year to discuss matters relating to the management, maintenance and repair of the property and its common areas (for example, shared spaces like gardens, lifts, pools etc).
What you need to know when buying a unit title property
When buying a unit title property do thorough due diligence with the help of a lawyer who has knowledge of the Unit Title Act 2010 and body corporates:
Make sure you fully understand the body corporate’s rules. These may restrict your use of common areas or your ability to use your property as a short term rental.
Find out what the body corporate’s fee is. These average $4,000 to $6,000 per year in apartments but can be much higher.
Make sure that the body corporate is in a good financial position and that fees won’t need to increase soon to cover maintenance or repairs.
Check body corporate minutes for any problems with the building or disputes.
Make sure you receive and check pre-contact and pre-settlement disclosures (more on this below).
While it’s a good idea to make sure you understand the above details yourself, it’s important that your lawyer check the above details too. Once they have, talk to them to make sure you fully understand what you’re getting into. As well as checking the unit title and body corporate all buyers should complete detailed due diligence.
Unit title ownership works a little different to freehold.
Changes to the Unit Title Act in 2022
Unit Title regulations were changed recently via the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022. These changes provide better protection for people buying and owning unit title properties:
Prospective buyers must receive pre-contract and pre-settlement disclosure statements, including key information about the unit title such as governance information and details of any remediation or defects in the building. If this is not provided, the sale and purchase agreement will be incomplete. Read more about disclosure statements.
Governance arrangements in body corporates were strengthened.
Professional standards for body corporate managers were raised.
A new set of dispute resolution fees and rules was introduced.
Most of these changes came into force on 9 May 2023, with the final changes in law by 9 May 2024.
Unit title VS freehold
Freehold is the most common type of property ownership in New Zealand and often the simplest. With freehold you own the land and whatever buildings are on it (unless there are registered interests such as easements, covenants and restrictions).
There is no body corporate and no common property. You won’t need to pay any body corporate fees. Most freehold homes are standalone homes, but in rare cases some townhouses and units may be freehold too.
Unit titles are always in multi-unit buildings like apartment complexes. You’ll own the space inside your apartment and accessories like garages, private courtyards and sheds. But you’ll own a share of common property like driveways, lifts and gardens.
This type of ownership involves body corporates, and you’ll need to pay body corporate fees. Unit Titles are designed to make it easier for people to live together and jointly manage common property. They may be more complex than freehold properties, but as long as you do your due diligence, unit title properties can make great homes or investments.
DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute an advice service. The article is only intended to provide education about unit title property in New Zealand. Nothing in this article constitutes a recommendation that any property or service is suitable for any specific person. We cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you. Before making decisions around property, we highly recommend you seek professional advice.
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