How do I review body corporate records before buying?

Request the body corporate minutes, financial statements, long-term maintenance plan, and any rules or policies. Look for upcoming major works, disputes, or financial issues. Consider having a lawyer experienced in unit titles review the documents.

What is a long-term maintenance plan?

This is a plan that body corporates must have showing anticipated maintenance needs and associated costs over at least 10 years. It helps ensure the building is properly maintained and that levies are sufficient to cover future work without surprise special levies.

Do apartments qualify for the new build exemption?

Yes, new build apartments with a Code Compliance Certificate issued after 27 March 2020 qualify for the interest deductibility exemption, the same as houses. This can make new build apartments more attractive from a tax perspective.

Are townhouses a good middle ground?

Townhouses can offer some benefits of both; they often have more land than apartments and may have simpler body corporate arrangements. However, they still typically have body corporate fees and shared elements. Evaluate each townhouse development on its specific merits.

Apartments vs Houses for Investment Property NZ

The apartments versus houses debate has been ongoing among property investors for decades. Each has distinct advantages, and the right choice depends on your investment goals, budget, and risk tolerance.

New Zealand has traditionally been a nation of houses, with apartments representing a smaller portion of the housing stock compared to many other countries. However, intensification in major cities is increasing apartment supply, and understanding how these properties perform as investments is increasingly relevant.

Rental Yields Compared

Apartments generally offer higher gross rental yields than houses. This is because apartment purchase prices are lower relative to the rents they can achieve, particularly in central city locations.

Typical Yield Comparison (Auckland CBD area):

1-bed apartment: $550,000, rent $550/week = 5.2% gross yield
3-bed house (suburb): $1,100,000, rent $700/week = 3.3% gross yield

However, gross yield does not tell the full story. Apartments come with body corporate fees that can substantially reduce your net return.

The Body Corporate Factor

Body corporate levies are one of the most significant differences between apartment and house ownership. These fees cover shared building costs including:

Building insurance
Common area maintenance and cleaning
Building management
Long-term maintenance fund contributions
Lift maintenance, pool upkeep, and other amenities

Body Corporate Impact Example:

Annual rent: $28,600 ($550 x 52)
Body corporate levy: $6,000 per year
Rates: $2,000 per year
Net yield after body corp and rates: 3.7%
Gross yield was 5.2%; body corp reduces by 1.5%

Body corporate fees vary enormously. A modest low-rise building might have fees of $3,000 to $4,000 annually, while a building with lifts, pools, gyms, and concierge services could exceed $15,000. Always review the body corporate financials carefully before purchasing.

Capital Growth Potential

Historically, houses have outperformed apartments for capital growth in New Zealand. The primary reason is land value. House owners directly benefit from land appreciation, which has been the main driver of property value increases over time.

Apartments have a much smaller proportional claim on land value. In a high-rise building, your share of the underlying land is minimal. While the improvements (the building itself) do have value, buildings depreciate over time while land generally appreciates.

Value Composition:

Typical house: 50 to 70% land value, 30 to 50% improvements
Typical apartment: 10 to 30% land value, 70 to 90% improvements

This does not mean apartments never appreciate. Well-located apartments in desirable buildings can achieve solid growth. However, on average, houses have delivered stronger capital growth over most periods in New Zealand property history.

Tenant Demand and Demographics

Different property types attract different tenants:

Apartment Tenants

Young professionals and couples
Students (near universities)
Corporate relocations and short-term stays
Empty nesters downsizing
People prioritising location over space

House Tenants

Families with children
Professionals wanting more space
Pet owners (many apartments prohibit pets)
Those wanting outdoor space and privacy
People who prefer quiet suburban living

Understanding your target tenant helps you choose the right property. In areas dominated by families, houses will have stronger demand. In CBD areas with young professionals, apartments may rent more easily.

Management and Maintenance

Apartments: Less Owner Responsibility

Apartment ownership means you are responsible for the interior of your unit, while the body corporate handles building exterior, common areas, and major systems. This can simplify ownership but also means you have less control.

Apartment Advantages:

No individual responsibility for roof, exterior, or grounds
Building insurance is collective and often cheaper per unit
Professional building management handles issues
Lower individual maintenance burden

Houses: Full Control, Full Responsibility

With a house, you control all decisions but are also responsible for everything. This includes roof repairs, exterior painting, fencing, gardens, and all maintenance.

Financing Considerations

Banks generally view apartments as higher risk than houses, which can affect your borrowing:

Some banks have minimum floor area requirements (often 40 to 50 square metres)
Apartments in certain buildings or developments may be on bank exclusion lists
LVR restrictions may be tighter for smaller apartments
Valuations can be more conservative for apartments

Before committing to an apartment purchase, confirm with your lender that they will finance it under acceptable terms.

Risk Factors

Apartment-Specific Risks

Weathertightness issues affecting the building (shared liability)
Special levies for major repairs you cannot avoid
Body corporate decisions you may disagree with
Building quality issues, particularly in some 2000s-era developments
Oversupply in some areas reducing rents and values

House-Specific Risks

Full responsibility for all repairs and maintenance costs
Weather damage, fire, or other events you must manage individually
Land contamination or geotechnical issues
Higher individual insurance costs

The Bottom Line

Neither apartments nor houses are universally better for investment. Apartments can work well for investors who prioritise cash flow, want a lower entry point, and are comfortable with body corporate ownership. Houses tend to suit investors focused on long-term capital growth who want full control over their asset.

The most important factor is not property type but property quality. A well-located, well-built apartment in a well-managed building can outperform a poorly-located house with issues. Focus on the fundamentals: location, condition, tenant demand, and the numbers, rather than making a blanket decision based on property type alone.