Real estate company forgoes rent on Auckland city apartments to allow purchasers to save deposit

Exterior of The Airedale Apartment building
RE/MAX is offering purchasers of The Airedale Apartments up to six months' free rent as they save the required deposit. Photo credit: Supplied/RE/MAX.

An Auckland real estate company is offering to forgo rent on newly-built apartments for up to six months while buyers instead save a deposit to buy them.

Don Ha, the owner of RE/MAX New Zealand, said he'd partnered with mortgage brokers to pre-approve prospective buyers of The Airedale Apartments, based in Auckland city.  

Those struggling to save a deposit on top of rent costs could move in and put that money into their own apartment instead.   

RE/MAX said purchasers are treated as property buyers and are liable to complete the purchase. They sign a Sale & Purchase Agreement and get a valuation done.  

Referring to the offer as a "savings programme", Ha said he hadn't seen it done in about 15 years. The offer was suited to people who had existing savings. They could save the rest of their deposit faster and become homeowners sooner.

"Let's say you're renting for $600-$800 a week and you're saving only $400 a week - now you can move into this apartment rent-free, technically speaking you're saving $1200 per week," Ha said.

One-bedroom apartments are priced at $595,000. For two-bedrooms, prices start from $648,000 and for the penthouse, up to $1.8 million. Sizes start at 45 square metres for a studio apartment and 70sqm for two bedrooms.  

The price of a two-bedroom apartment starts at $648,000.
The price of a two-bedroom apartment starts at $648,000. Photo credit: Supplied/RE/MAX.

Depending on circumstances, buying an apartment could be cheaper than paying rent.

"For example, if you have a mortgage of $800,000 at 3 percent and pay $3373 per month or $771 per week over a 30-year mortgage, but the same apartment is renting for $900 per week…then with home ownership you're far better off," Ha added.

He said that the economic environment would benefit first-home buyers, as interest rates were low and developers were "realistic".

"We don't want quality housing stock sitting there not moving, and we want to get everyone who wants a home of their own into the right property. This model works brilliantly for developers, buyers, agents and banks at a time when we all are working hard to rebuild economic momentum," he said.

Ha confirmed that the apartments were completed in 2019 and buyers could move in immediately.  A valuation would also be done before the agreement settles.   

Brad Olsen, senior economist at Infometrics, said that as household incomes fall and more Airbnb's come onto the market, Auckland apartment prices could drop as much as 10 percent in the first quarter of 2021.

"For some buyers, locking in an apartment will provide security, but for others it might lock in a higher price," Olsen said. 

In Auckland, apartment construction is ongoing. As COVID-19 impacts the economy, the number of eligible buyers could decrease. People with a strong desire to get onto the property ladder should weigh this up.

"Do your due diligence: run your numbers, work out your budget and ask if more apartments in the area/type you're looking at are about to come online," Olsen said.

"Evaluate your financial position not just at present, but how it could look if your working conditions change."