Horror story #3 – An Airbnb issue
Sometimes the changes developers make are buried deep in the paperwork.
In one Christchurch development, buyers thought they were buying a property that could be split into a residential flat and a studio.
Effectively it was a 3-story building. The bottom floor was meant to be a residential studio that would work on Airbnb; the top 2 floors were a separate flat.
So it was meant to be the best of both worlds. You could have one property rented out to long-term tenants and the studio could be used as a short-term rental.
But just before settlement, the developer reclassified the bottom studio as a commercial space. That way, they could get it through the council faster.
But that meant the studio couldn’t be rented out as a regular home.
And to make matters worse, it could mean the bank looks at it like commercial lending (not residential).
That comes with higher interest rates and more headaches (restrictions).
Again, technically the developer wasn’t in the wrong (they're allowed to make changes to simplify council paperwork). After all, they just wanted to get things moving.
But it changed the property the investors were buying.
So, I stepped in to negotiate with the developer. They then re-engaged with the council and had the studio reclassified as residential.
That saved the buyers from higher interest rates and reduced rental flexibility ... at no cost to them.
Now, if a buyer was negotiating with a developer themselves, they might not have reached this outcome, but because I’ve been:
- in the industry for decades,
- was representing all the buyers in the development,
- and have NZ’s #1 property podcast (where I can name and shame developers)
The developer did the right thing in the end.
