Purchasing property in post-flood New Zealand

by Mar 20, 2023Property Law

With extreme weather events becoming increasingly prevalent in our everyday lives, what does this mean for purchasing property?

Buying a property that is in or close to a flood prone area comes with several risks that prospective purchasers should consider before making a purchase. Some of the general risks include:

  • Property damage: Flooding can cause significant damage to property, including structural damage, water damage to the interior of the property, and damage to household contents.  The costs of repair work and loss of property can be substantial.
  • Insurance: It may be difficult to obtain insurance cover for a property located in a flood prone area, and premiums may be higher than expected.  There may also be limitations on the insurance available and that insurers are willing to provide.  Consideration should also be given to whether insurance will still be available in the future;
  • Resale value: Properties located in flood prone areas may be less attractive to potential buyers in the future, which could negatively impact resale value;
  • Safety: Flooding can pose a risk to the safety of occupants of a property, as well as emergency responders which may need to access the property during a flood event;
  • Regulatory requirements: Local authorities may have specific requirements for building in flood-prone areas, such as height restrictions, foundation requirements, etc which can impact building and design costs;
  • Access: During a flood event, roads and bridges may be closed, making it difficult or impossible to access the property.  This can be a particular concern for properties located in rural or remote areas.

    It is therefore crucial to undertake a proper due diligence investigation before buying any property. As a first port of call, a purchaser should order a LIM report from the local Council to ascertain what records the Council holds in respect of the property they are looking at purchasing. A LIM report provides valuable information about a property and the surrounding areas, including any land features and hazards that may affect the land.  Some important reasons for obtaining a LIM report are:

    • Identifying potential hazards: A LIM report provides important information about potential hazards that may affect the property, including flooding, erosion, and natural hazards such as landslides.  By identifying these hazards early on, buyers can make informed decisions about whether to proceed with the purchase and can take appropriate measures to mitigate risks;
    • Understanding the risk of flooding: The LIM report provides information about the flood risk for the property, including the likelihood of flooding and the severity of potential flood events.  This information is important for buyers to understand, as it can impact the safety of the property and the cost of insurance;
    • Compliance with regulatory requirements: The LIM report provides information about any regulatory requirements that apply to the property, including any building restrictions or resource consents that may be required for properties located in flood prone areas.  This information is important for buyers to understand, as it can impact the costs and feasibility of any future development or renovations;
    • Protection of investment: By obtaining a LIM report, buyers can make informed decisions about the potential risks associated with purchasing a property in a flood-prone area.  This information can help buyers protect their investment by taking appropriate measures to mitigate risks and ensuring they have adequate insurance coverage.

    Additional steps potential purchasers should take include:

    • researching the history of flooding in the area, including the frequency and severity of past floods
    • consulting with local authorities and experts to understand the risks and any regulatory requirements
    • carefully review insurance options and viability
    • consider the potential impact on re-sale value

    In addition, a prospective purchaser should also make due enquiries with their lender (bank) to ensure that the lender is satisfied with the property being suitable for securing any lending arrangements they are looking at entering into to complete such property purchase.

    As you can see, if you are considering buying a property in the near future, you should undertake a thorough investigation of the property to determine its suitability and to ensure that your investment is protected in the long term.   Gaze Burt are experienced in this area and can assist with all your property purchase needs. It is prudent to get legal advice before entering into any agreement to purchase a property.  Please reach out to one of our helpful team members should you require any further information or assistance in this area of law.



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