Property Briefs: Ovens, Rent Reviews and Connection Services
The oven doesn’t work – what to do?
Nothing is worse than planning a celebratory dinner in your new home and finding the oven doesn’t work. How can you ensure this doesn’t happen?
The last thing you think about when making an offer for a property is the condition of the chattels (like the oven). These are listed in the agreement and are often breezed over. When the oven doesn’t work when you go to use it, there isn’t much that can be done if you haven’t thought about it when you signed the agreement.
If the chattels aren’t in the same condition as they were when you signed the agreement, you can try to seek a solution from the vendor.
Our best advice is that you should check chattels, such as the oven or the garage door opener, before you sign. If they don’t work, you can remedy this by including a clause.
You are entitled to check the chattels before settlement. It’s too late to raise issues that weren’t issues when you signed, but it isn’t too late to check that nothing has changed. This is your only opportunity to try and get something fixed before you have to pay for the property.
Any issues after settlement can either be addressed by contacting us or through the Disputes Tribunal. The far easier way, however, is to make sure everything works before you sign and double-check that it still works before you settle.
Commercial CPI rent reviews
Owners of commercial properties are often attracted to an annual CPI rent review. Standard agreements and deeds of lease make it very easy to agree to what seems like an annual 1% increase but it’s not that straightforward.
When it comes to reviewing the rent, you cannot just take whatever percentage you think ‘the CPI’ is and adjusting the rent accordingly.
The deed of lease contains a formula for calculating exactly what the new rent will be. This involves researching the CPI index (from Statistics New Zealand) and inserting the previous and current index points into the formula which also contains whichever multiplier is agreed. The formula gives you the new rent.
This is often overlooked and a simple 1% increase is agreed to by the parties; this is incorrect.
If your property manager or agent isn’t working out the new rent correctly, you could be missing out on income. Check they know what they’re doing by understanding it yourself. We can also explain how the CPI review clause works.
Sections without connections
An issue that arises with section purchases is the connection and cost of connecting services (gas, power, phone, internet, ultra fast fibre (UFF), water and sewage). A good developer knows this, but not all are so diligent.
UFF often requires under-boring, the cost of copper phone wires is high, you may not be getting a traditional ‘phone’ (it may be linked to UFF) and adding houses requiring power to the grid may overload the current transformer which may need an upgrade. All of these things can result in delays and increased costs for the developer, who may look to pass them on to a purchaser.
Always check the status of the services, and when and how they’ll be connected. If you are presented with an agreement with a warranty that they will be connected, ask for a condition instead. A warranty allows you a right to be compensated after the fact. A condition can allow you to terminate the agreement if the condition isn’t met. We can help with drafting something suitable.