Rising construction costs are putting the finances of first-time home buyers at risk.
The sharp rise in prices of materials such as bricks, wood and steel by up to 50% last year is putting pressure on builders. Enhancement clauses Within so-called “fixed price” agreements.
One lawyer warned that there is no such thing as a fixed price agreement, and buyers need to be careful.
Master builders are warning companies not to remove clauses in contracts that allow them to raise prices even after signing the contract.
Lucy McPherson, 25, and her partner Ben Butrick signed a جولائی 545,000 contract to build a salon near Christchurch in July.
He thought that by going to rural areas, he got a good deal on a four-bedroom house and land package.
But the price has already risen by 7,000 – and sleepless nights have begun.
“You don’t know what to do,” said McPherson, who works in marketing.
If they violate the 5 550,000 threshold, they will not only have to pay extra, they will also lose their Home Start Grant.
“I can’t even imagine demolishing your first house, and then come back and not only refund the extra expenses you didn’t know were going to pop up, but it That home start grant is such a big help before. Time buyers are just like us, “he said.
His bank had already approved up to $ 550,000 – but was “firmly, firmly” advising him not to go any further.
“They gave us a stern warning that they’ve seen a lot of cases that have gone out of control,” McPherson said, referring to cases where the cost runs have reached 60 60,000.
A mortgage broker mentioned RNZ. Two overs of the same size. He had recently seen it in Auckland.
“If someone came up to me today and said, ‘Oh, I’m a first-time buyer, should I build a new one?’ I would say, ‘No, not at all,’ “McPherson said.
“You will deal with all the madness on your land for months and months and months at a time.”
‘We’re sorry to put money in Kiwi Saver’
The pair is eligible to receive a maximum of 20,000. Home Start Grant Because of putting all your savings in Kiwi Saver.
“Years ago, we were sold this idea of Kiwi Saver and how wonderful it was to put all that money into years and you would be ready to buy your first home.”
Now, Kiwi Saver was just a “choke around your neck”.
“We are very sorry to invest in Kiwi Saver for this purpose.”
His builder told him that the Registered Master Builders Association had advised him a week ago: Don’t offer a fixed-price job.
The standard master builders’ contract covers price fluctuations, but builders are known to remove it.
David Kelly, chief executive of the Master Builders Association, has warned against this.
“Given the current environment, we recommend that builders take precautions before removing these clauses,” Kelly said in a statement.
The global constraint on material spending “was making it very difficult to determine how much a building would cost.”
“The key for builders is to communicate with their customers and be honest first.
“Provide realistic timelines and cost structures and talk openly about the risk – then you can manage it together.”
Move round post
However, Christchurch property lawyer Pro Miller said homebuyers are taking too much risk without realizing it.
He said he also had to tell banks that the regular “fixed price” agreements they asked customers for almost always allowed cost “adjustments”.
“A fixed price residential construction contract is never and never will be,” he said.
Before that, Miller would remove any escalating clauses, and the builders would “never argue” – but the goal posts were changing.
“Now they will definitely do it. [argue]. “
Kelly said buyers should talk to their builder and designer, and be clear about their budget.
McPherson has been told he could make less than $ 550,000 if he only builds two or three bedrooms, not four. But he is concerned that it will cost the builder a maximum of 5 550,000.
“There is no security. It is very uncertain.
“Months ago we were being encouraged to build more houses … blah, blah, blah. Now, it has been made very difficult.”