What residential property buyers need to be aware of when buying or selling a heritage property
Although New Zealand is a fairly new country, our history is profound. And as New Zealanders, we’re all proud to preserve our culture.
Heritage buildings are one way our culture and history is looked after. One of the valuable ways New Zealand’s heritage is identified is through the New Zealand Heritage List (Rārangi Kōrero). This is protected in many ways, including a local authority district plan.
A heritage building can prove to be a special and valuable investment. Given its unique status, it’s important for property investors to understand the finer details and classifications of a heritage property.
More buildings are classified every year. What defines a ‘heritage’ building?
Houses and buildings identified as holding heritage value are classified under six categories on the New Zealand Heritage List, and are deemed to hold significant cultural or historic value. Councils and others often use a similar criteria when assessing heritage values.
In New Zealand, anyone can nominate a building to be considered for the New Zealand Heritage List. Both residential and commercial properties can become classified, along with archaeological sites.
The amount of heritage buildings varies from place to place, with local councils directly participating in heritage protection through district plans, policy statements and partnerships. In fact, as of 2019, Dunedin alone holds over 730 heritage items on the city’s district plan, while opening up the new category of ‘character contributing buildings’.
As more and more buildings gain heritage status, it’s important for buyers and sellers to understand how these classifications can affect your property’s value.
Key things to know about heritage investment
When investing in property, there’s a wealth of information you need to learn before making a decision. If you’re considering heritage buildings, the impact of its Heritage New Zealand classification demands a particularly detailed approach.
While heritage places often have a higher value, investing in one can mean additional responsibilities – so it’s crucial for you to give this area thought and careful consideration.
This means knowing exactly how your building is affected by its classification and any regulatory rules, and if it’s something you’re willing to deal with in the long term.
When looking at heritage investment, consider the following important factors:
1. The impact of classification on the property’s value
Your property’s value can be tied to historic and cultural significance, and that status will affect its market value. Typically, heritage buildings gain a higher value.
If you’re looking at buying or selling a building with heritage status, it’s important to consider how the classification can increase its value, although the increase of maintenance required is also something that will largely affect your investment.
2. Opportunities for funding
While there's more maintenance required to keep your residential heritage building preserved, there are also more opportunities for government funding. The government is particularly favourable towards funding buildings of national significance.
If your heritage building is earthquake prone, you may also be eligible to receive funding through Heritage EQUIP.
3. Strong restrictions and rules
If you’re looking at buying a residential building of heritage status, it is always going to come with restrictions. These restrictions, however, will vary from building to building.
This means that your property could potentially have restrictions on altering its interior or exterior. These restrictions may include:
- The removal of any interior items
- Alterations made to the exterior of the building
- Tiling, removal or replacement of flooring and other structures
- Removal of any surrounding landscapes
This also causes restrictions when it comes to renovating your residential property. Residential buildings of heritage status must get approval for any renovation work, and special conditions will apply.
4. The cost to keep it preserved
If you own a heritage building, it’s important to maintain the property with care, – to preserve its significance for future generations to come. You’ll require specialised advice, labour and materials when making changes to the property, so it may cost more than similar projects for non-heritage buildings. It’s also crucial to consider how you can protect it from long term damage and natural disasters.
Heritage buildings are more expensive to strengthen and renovate, because of the restrictions that any such renovations must comply with.
New Zealand sees an unfortunately large amount of such events, so it’s important to understand what risks your residential property is prone to and how to protect it.
Make informed decisions about purchasing heritage buildings
When purchasing a building with a Heritage New Zealand classification, the best thing you can do is research. While heritage buildings are an exciting investment, they’re each classified on a case-by-case basis and will come with their own unique restrictions.
If you’re interested in buying a residential heritage building with an existing classification, finding out exactly what the restrictions will inhibit you from doing will mean you’re fully prepared for dealing with the property.
There are several ways you can go about making the process of buying or selling a heritage building easier:
- Consult your council. Some councils across New Zealand have heritage grant funding. This means they’ll help you to afford the cost of maintenance, since it can be extremely high due to the restrictions. Consult your local council, and find out how they can help with the costs of any renovations or alterations.
- Talk to a qualified valuer. Since the restrictions and regulations around heritage buildings are handled case-by-case, it’s important to talk to a valuer. If selling, the value of your residential heritage building should be professionally assessed. A qualified valuer will be able to assess your building and provide independent advice about its value.
With the increasing amount of heritage buildings across the country, it’s important to be aware of their impact on the market if you’re buying and selling a property.
Although purchasing a residential heritage building can be daunting, it can also prove to be a valuable and worthwhile investment.
Making an informed decision about the purchase means consulting the experts, and gaining thorough knowledge of its rules and regulations.