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  1. #1
    Member
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    Sep 2010
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    Default Buying uninsured properties in Chch

    Has anybody been buying uninsured properties in Christchurch and renting them out?

    I have found one that has been damaged and a cash payout has been taken. The damage isn't actually that bad and the house is weathertight and in a perfectly liveable state. I'm able to pay cash for it. My main concern is insurance, I'm not too worried if the house was damaged but I am concerned about public liability if a neighboring property burned down. Has anyone been able to obtain any type of insurance to cover this sort of thing? If so then who is it with (a PM is fine if you don't want to reply to this post)?

    If anyone has been buying properties like this and renting it out is there anything I need to be aware of or any suggestions? Again PM is fine if you don't want to reply in public).

    Thanks
    ArcticBlue

  2. #2
    Junior Member
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    I am a property investor and i see there are 2 issues you need to resolve . 1 The department of building and housing has been looking into this very issue from the point of view of the tenant. and i think there is info.
    2 i do not know of any new owners that have been able to get insurance on an earthquake damage property without engineering reports geotec. You would stand a chance of getting insurance cover for all except earthquake cover with reports, and yes without insurance you carry the liability. Quantify the risk and see how it feels. Good luck

  3. #3
    Legend
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    Apr 2008
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    Sth Island. New Zealand.
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    6,428

    Default

    Quote Originally Posted by arcticblue View Post
    Has anybody been buying uninsured properties in Christchurch and renting them out?

    I have found one that has been damaged and a cash payout has been taken. The damage isn't actually that bad and the house is weathertight and in a perfectly liveable state. I'm able to pay cash for it. My main concern is insurance, I'm not too worried if the house was damaged but I am concerned about public liability if a neighboring property burned down. Has anyone been able to obtain any type of insurance to cover this sort of thing? If so then who is it with (a PM is fine if you don't want to reply to this post)?

    If anyone has been buying properties like this and renting it out is there anything I need to be aware of or any suggestions? Again PM is fine if you don't want to reply in public).

    Thanks
    ArcticBlue
    The thing I'd be wary of is resale. Most buyers require a mortgage, and mortgagees won't cover uninsured properties. That means the property can only be sold to a limited market, so less competition when buying, and few buyers when selling.

  4. #4
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    Check with the City council first and maybe the tenancy tribunal, the rumour that I have heard is that they intend to be lenient with property being let out at present while there is a housing shortage.
    In the long run though the Council spokesperson suggested that the onus will be on the owner to prove that the property is sound and safe for letting, and for resale, especially where property has been written off as unsound by insurance companies. Where the property is proven to be unsound there may be a requirement to demolish or repair. So if it does or doesn't burn down either way you may eventually only be left with the land value.

  5. #5
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    Default

    Thanks for the responses. I thought there might have been one or two who had actually rented out a place like this. Yes I am aware of the difficulty of resale and that land value may be all it's worth. The house hasn't been written off by the insurance company, the current owners just took the option of a payout to buy elsewhere and in doing this the insurance was canceled. The payout was for about 2/3 the resale value of the whole property and the remaining 1/3 would come from the land, however the insurance company never deemed it uneconomic to repair.

    Anyway I will continue investigating the possible risks before making a final decision.

  6. #6
    percy
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    Would it pay to form a company to buy the property?
    That way you would have limited liability.

  7. #7
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    Default

    That does sounds sensible. Would it definitely limit my liability?

  8. #8
    percy
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    Quote Originally Posted by arcticblue View Post
    That does sounds sensible. Would it definitely limit my liability?
    Would pay to check with your lawyer.

  9. #9
    Advanced Member robbo24's Avatar
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    Quote Originally Posted by arcticblue View Post
    That does sounds sensible. Would it definitely limit my liability?
    And your accountant - no hiding from the intent of a rental property with a company...

  10. #10
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    Mar 2014
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    Hi arcticblue

    Any updates?

    Was thinking along a similar line to you about 6 months back. Decided against it in the end.

    Did you end up following through with a purchase of an uninsured property?

    T

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