If you’re buying a beach house and planning to rent it out or Airbnb it when you’re not using it, there are some things you might want to consider:
- If you are going to rent the property out – make sure that it complies with the healthy homes standards. If not, consider how much it might cost you to make it compliant.
- If you are going to rent it out with Airbnb, you don’t have to comply with the health homes standards.
- Either way, you might want to consider how difficult it might be to manage the property if you live a couple of hours drive away from the property. Think damage, parties, meth use or production, and cleaning up at the end of each stay.
- Consider additional costs for operating an Airbnb. Some councils increase rates for temporary accommodation arrangements like Airbnb.
- You will need to make sure that you obtain insurance that covers you if your Airbnb or rental tenant damage the property.
- Again, get yourself some tax advice.
- Finally, if you are renting, make sure you know your obligations as a landlord and how you can go about legally ending the tenancy.
We’re open again from 6th January to help you with your property purchases and conveyancing needs. We can also help you with ownership structures, negotiating property sharing agreements, succession planning, and any disputes that might arise.
Joanne Dickson
If you’re buying a beach house with friends or family, things can go brilliantly well. But sometimes things can go very badly! Protect yourself and those close relationships by taking these points into consideration:
- Think carefully about the ownership structure. Are you all going to own the property in your personal names? Is anyone in business and needing to protect their assets – their share of the property could be vulnerable to a claim from creditors, so you might want to consider using a trust? What if the worst happens and one of your co-owners dies – how will you feel about their children inheriting their share of the house? Is it going to be held in a partnership?
- Enter a property sharing agreement. If things don’t go according to plan, it is useful to have a contract that clearly sets out what is to happen if you don’t want to co-own that house anymore. This might be because you are no longer getting along, or you need to get your money back out of the house, or you’ve broken up with your significant other and need to sort out relationship property issues, or any number of other reasons. The property sharing agreement should also include when/how the co-owners can use the property, whether their friends or family can use the property, and how the expenses relating to the property are to be shared and paid.
- Get tax advice. Get along to your accountant, there could be some unexpected tax complications.
We’re open again from 6th January to help you with your property purchases and conveyancing needs. We can also help you with ownership structures, negotiating property sharing agreements, succession planning, and any disputes that might arise.
Wishing you all the best for the Summer holidays.
Joanne Dickson
If you think you might succumb to temptation and buy a holiday house at your favourite beach this holiday season, here’s some points to consider when entering a sale and purchase agreement.
Your best option is to talk to a lawyer before you enter a contract to buy that beach bach. But, they might be on holiday too. So, if you can’t get to your lawyer, make sure your sale and purchase agreement has some conditions in there to offer you a level of protection. There are the usual LIM, building inspection, and finance conditions. But, you might want to also consider having these conditions too:
- Due diligence condition: this condition allows you to do some investigations before the contract becomes unconditional. If the property doesn’t stack up, you can cancel the contract, usually without providing a reason. This clause can potentially save you thousands of dollars!
- Subject to solicitor’s approval condition: this condition can be sued to cancel the contract on the grounds of conveyancing aspects of the purchase. So, not as broad a protection as the due diligence clause, but still a “good to have”.
- Insurance condition: given the changing nature of insurance in New Zealand and the impact that natural disasters can have, it is worth adding a condition that provides you are able to obtain insurance for the property.
Don’t get caught up in the hype. There’s always “someone else” interested in the same property. Take your time and make sure it is the right purchase for you.
Finally, make sure you get some accounting advice, there could be some unexpected tax complications.
We’re open again from 6th January to help you with your property purchases and conveyancing needs. We can also help you with ownership structures, negotiating property sharing agreements, succession planning, and any disputes that might arise
Wishing you all the best for the Summer holidays.
Joanne Dickson
Joanne Dickson