Property has no code of compliance and needs re-cladding

[em720]

The owner recently found out there was no code of compliance on the house. It’s a big, 90’s house with monolithic cladding. But, it’s in a very popular suburb of Wellington. One that I’ve always wanted to buy in, but could never afford to, but now this opportunity has popped up. I’ve lived in the house for over a year as a tenant.

Some people recoil in horror when I say I’m considering buying both a ‘leaky home’ and one that doesn’t have a code of compliance. The council have been round, and say the whole house needs recladding, and new windows, balcony removal etc...

I’m struggling to find out how much this house is actually worth, as the quote we have received for all work is $180,000. That’s if nothing goes wrong though. Does that seem reasonable? However, if we remove the cladding and find a nightmare underneath, then we really are screwed. I suppose If we go for it, it will be a calculated risk. I’m just trying to minimise that risk as much as possible.

Having said that, having lived in the house for a year and a half, there haven’t been any visible signs of leaks or excessive moisture. I know this isn’t enough evidence alone to take such a big risk, so I wanted to put the situation on the forum, and hopefully get some advice on whether or not it’s worth attempting. Obviously if the price is right, but I really am struggling to find out how much these kinds of issues devalue a property such as this.

There has been a builders report, moisture testing with a camera/probes (but not on the end of the house where they actually think the moisture could be an issue - they said access with limited).

What other investigative steps would you take before potentially making an offer? Would you run a mile? What other questions would you be asking that The builders report might not answer?

Owner is looking for 500K. The plot of land it’s on is probably worth around 350,000, looking at other plots in the surrounding suburbs. As for the house, I can’t seem to make an informed guess as to how much it’s worth.


Any advice / pointers / “run a mile” stories much appreciated. Thank you.

[Oopsiedaisies]

Noooooooooo! Dont do it. I had a brick (with cavity) house with no CCC. Safe as a brick house? You would think that it isnt too much a risk? Decided to get a CCC as there were menial items to be completed. Then discovered that all 3 bathrooms showers had leaked slowly for years. Absolutely no sign of this at all. I even had a building report. It wasnt worth the paper it was written on....ha, by so called building and engineering experts!
Pull the bathrooms apart and wow! Then what looked like a repair job of 20-30k is now at 50k and counting,and thats with us doing all the demo work and rebuilding the frames (partner is a builder). As there was bracing involved needed to add bracing elsewhere in the house to bring it up to code, had to remove partial brick walls to redo the brick ties. There are so many unknowns that I bet your $180,000 will be the very conservative end of the cost. Unless you are an expert in remediation of leaky buildings I would run a mile. The stress and the unknowns and I guarantee mounting costs will not be worth it. And for all that money you will always have the stigma of it having been a leaky home. Never good for resale. Run em720, run......

[em720]

Oh gosh, thank you for the reply. It is good to hear your story, although I’m sorry it was such a stressful one. Yes you’re definitely right in that it will always have that stigma attached to it, even when it’s fully renovated.

The thing that I struggle with, is that we could pay double the money in the same area,and get a ‘lovely’ character house with a tin roof and sinking piles....it seems like the only way to win in terms of getting a safe house in wellington is to build new... we’ve been to over 40 open homes and have just been flabbergasted at what these homes have been going for! So that’s why this leaky home looks so appealing.

Thanks for your reply. We are going to try and get some invasive testing done on the house (which the builders report has recommended), so we will assess after that. But I agree, there’s always going to be a risk that we take off the cladding in an area that hasn’t shown any symptoms, and it could be a nightmare beneath. It’s so difficult!

[artemis]

How do you know it is leaky? Is that what the council said? Based on what exactly? Does not sound like the building report is indicating a major problem. Are they saying can't issue CoC because house is not currently to code?

I am not sure what the implications are of no CoC. I know there are potential issues with tenants but is it different if owner occupied? IOW would the council stop you living there? Or could you live there for years and years, fix issues along the way as needed, and then demolish and redevelop the section when you are ready?

Just a thought.

Problem places are potential goldmines. Have bought a couple very cheaply (in full knowledge). One leaky, one with partly finished major extension, no council signoff as owners ran out of money. In each case nobody else was interested. (We have a small tradie business which helped.)

[donna]

Maybe that's what you do - buy and raze to the ground and build new. I know it's probably cost prohibitive but you did answer your own question re. building new is the way to go and if you can do it in an exclusive area you'd be onto a winner.

No CCC is a biggie - and we're realising just how big as we attempt to get a reno approved. Essentially we're having to go way back and in some areas - it's likely even the frame may need to be rebuilt too.

Double if not triple your budget if you're going to take it on and attempt to remedy the existing property.

cheers,

Donna

[em720]

Hi Artemis, thanks for the reply. Having lived in it as a tenant for a year and a half, there’s no visible signs of leakiness. But, it is labelled a ‘leaky home’ because it was built between 1997-1998, and is clad with the type of cladding that has weather tightness issues.

There was no final sign off of the house when it was built. The owners believe it was just a simple mistake on the councils part. The council has now been round, and confirmed that a bunch of remedial work was identified in order for a new code of compliance to be issued. Code of compliance is only really useful when it comes to selling on, in that not having one devalues the property significantly. We could live in it happily til it finally crumbled away, without any issues from the council. Like you said, council can’t do anything if it’s owner occupied. If we were going to demolish and redevelop, we would not fix any of the issues. It’s perfectly liveable in as is, until we are ready to demolish.

The ‘goldmine’ part of your statement is what is making us tempted to put an offer in on the property. But we cannot do the recladding ourselves (we are not builders). But yes we could still pay someone to do it, and have a compliant, much more valuable house at the end of it. Potentially.

[em720]

Thanks Donna. I think you’re right. In an ideal world we’d demolish it, and start from scratch. However, we would struggle financially to rent and go down that route. We like some of the modular/prefab homes, but we need to make sure what we would put on the land would add value to it as an overall package. We need to do some sums on that. And get a quote for demolishing it.

[klauster]

As investment I wouldn’t – but living in the right house, preferred area, etc, it wouldn’t be a money decision, I describe it as lifestyle. At some point every house in NZ will leak, it’s a matter of time - good or bad depends on early detection. How confident are you to figure out the weaknesses before they become a problem?

[John the builder]

buy for land value plus 10% 385-400 ?
you already like the area so live in the house enjoy the experience and when you want to either sell as is or then spend the 250k then (allowing for worst case and inflation) but sell for what? 635 and you get your money back 835 and you make money.

Wait till you sell but otherwise the interest on loan (180k now) will add 90k over 10 years which is half the reclad cost? alternatively bank the interest now and accumulate the $$$ for the reclad
Reclad is not economic unless someone else pays or you do prior to a sale?
The bank is the problem but they should only lend on land?
I know someone who might give you confidence but you have to be realistic about condition. PM me if you want more

[em720]

Hi klauster, thanks for your reply. We are not confident that the weaknesses are not already a problem, in terms of having got into the timber framing. We cannot find this out until we buy this. I think I would vomit if we bought it, pulled off the cladding and found the issues had reached the internal structure of the house.
As first home buyers I think we’ve decided not to go for it - the stress, potentially huge building costs (which we don’t have a huge buffer against) and the potential for the house to be a write off, means the risk is not worth it for us. An experienced developer will come in with a team and I’m sure make a pretty penny off fixing it, but I think it’s too large a task for us. We have since I posted this thread, been speaking to some construction professionals and an architect, all of whom said don’t do it.

I agree though, as a lifestyle it would work - we could just live in it til it started falling apart, but I don’t think I could cope with that in my mind! Not being able to invest in improvements in the house (which is much needed) because it’s slowly succumbing to the elements is a bit too much for me! But someone else might perhaps look at it differently and enjoy the house and it’s location whilst it’s still standing!

Thanks for your post

[klauster]

But someone else might perhaps look at it differently and enjoy the house and it’s location whilst it’s still standing!
Thanks for your post

Thanks em720,
Valid points and understood. I’m a lucky one, having fixed everything in my pass so far. Started with the worst house in the street - and after 10 years, people would say “over capitalized”, underfloor heating, double glazing, solar ventilation… nice to live in. Have also taken a run-down state-house as trading property, developed and sold.

Figuring out the problem areas and estimating the consequences in terms of risk, work and money requires experiences. Thanks for sharing your thoughts and good luck with everything.

[John the builder]

put a moisture detection system in now before you buy

moisturedetection.co.nz


it may give you the confidence you need

[BlueSky]

How much is your health and peace of mind worth?
On the other hand, if you buy it or property isn't selling see if are able to get professional to do a through test including ripping out "wet" and flashings probe areas to give you some rough idea.

[klauster]

Looks like an insurance policy to avoid structural damage.

For residential homes I would prefer some kind of active protection. E.g. I installed more than 15years ago a water leak protection system, that shut off the water supply if water detected (washing machine, dishwasher, plumbing leak, etc). The link between water sensors and remote controlled shut-off valve is wireless.

[em720]

Yep that’s what my mother always said! Worst house in the best street. I think investing in proper heating and insulation is an excellent idea. I’m very intrigued by the passive house standards that Europe have got - I see one has been built down near Queenstown. I hope to see NZ heading that way in the future, at least towards high quality insulation, and central heating.

Yes I think experience is key, and isn’t what I have - so I think we will start with a more manageable, and enjoyable, project, and go from there.