Due diligence is the investigation you do on a property before committing to purchase. In New Zealand, buyers are largely responsible for their own due diligence — the principle of caveat emptor (buyer beware) applies, and sellers are not legally required to disclose most property defects. Thorough due diligence protects you from expensive surprises after the purchase is complete.
When to Do Due Diligence
In New Zealand’s property market, when you do due diligence depends on the sale method:
Conditional sale (offer with conditions): The most buyer-friendly approach. You make an offer with conditions for building inspection and/or LIM report. The conditions give you time to investigate and the right to cancel without penalty if you discover a problem.
Auction: Property sells unconditionally on the day. You must complete all due diligence before bidding. There’s no opportunity to investigate afterwards.
Tender (deadline sale): Similar to auction — your tender must be unconditional or very lightly conditioned. Do full due diligence before submitting.
For auctions and tenders, all investigations must be complete before the sale date. This is why many buyers invest in due diligence on multiple properties before buying — some of that cost is unavoidable.
1. LIM Report (Land Information Memorandum)
A LIM report is issued by the local council and contains all the information the council holds about the property:
- Council rates outstanding
- Building consents and Code of Compliance Certificates (CCC) for all works
- Stormwater and wastewater connection records
- Resource consent history
- Any notices, orders, or restrictions from the council
- Hazard information (flooding, land instability, contamination if recorded)
Cost: $150–$450 (varies by council, standard vs urgent processing) Turnaround: 5–10 working days (standard), 1–3 days (urgent at higher cost)
What to look for in the LIM:
- Unconsented works — any addition or alteration to the property that doesn’t have a building consent is a red flag. Unconsented work creates legal liability and can affect insurance and future sale
- Missing CCC — work with consent but without CCC is a risk (the work may not have passed inspection)
- Outstanding rates — rates in arrears transfer with the property
- Any flooding or natural hazard notations
See LIM Report NZ — What It Is and How to Read It for a detailed guide.
2. Building Inspection
A qualified building inspector physically examines the property and reports on its condition. This is distinct from the LIM — a building inspector looks at what they can see and test, not council records.
Cost: $400–$800 for a standard residential inspection Turnaround: Typically inspected within 1–3 days, report within 24 hours of inspection
What a building inspection covers:
- Structure (foundations, floor framing, roof structure)
- Exterior cladding condition (weathertightness — critical for houses built 1992–2004, the “leaky home” era)
- Roof condition
- Plumbing and drainage
- Electrical (visible components)
- Moisture testing (especially for weathertightness)
- Identified defects and their severity
Choose your own inspector: Don’t use an inspector recommended by the agent selling the property. The inspector works for you, not the vendor. Find one independently — look for members of the Building Officials Institute of NZ (BOINZ) or qualified inspectors with professional indemnity insurance.
See Building Inspection NZ — What to Expect for what inspectors look for.
3. Title Search
Your solicitor should conduct a title search to check the legal status of the property:
What a title search reveals:
- Fee simple (freehold): You own the land outright — the most desirable title type
- Leasehold: The land is leased from another party (Crown, council, or private entity). Ground rent is payable and can increase. Some banks won’t lend on leasehold
- Cross-lease: You own a share of the land with neighbouring properties and have a “licence to occupy” your portion. Cross-lease titles have restrictions — common in 1960s–1980s developments
- Unit title (apartment/townhouse): You own your unit and share the common areas under the Unit Titles Act
- Mortgages and caveats: Any existing mortgages or legal charges on the property
- Easements and covenants: Rights-of-way, drainage easements, and restrictions on how the property can be used
A title search costs a small amount (included in your solicitor’s legal fees) and is essential — never buy without it.
4. Checking Unconsented Work
Walk through the property looking for additions or alterations that may not have been consented:
- Garages converted to living space
- Decks or sheds added without consent
- Bathroom or kitchen extensions
- Sleepout or granny flat added
Compare what you see with what’s in the LIM and the original building plans. Anything present that has no consent may need retrospective consent (expensive) or removal. Banks may also refuse to lend on properties with significant unconsented work.
5. Flood and Natural Hazard Assessment
The LIM will include council-held hazard information, but it may be incomplete. Additional checks:
- LINZ flood hazard maps — national flood risk data
- Regional council flood hazard maps — often more detailed
- NIWA RiskScape — flood, tsunami, and earthquake hazard assessment
- Insurance assessment — get an insurance quote before buying. Some properties in high-hazard areas have extremely high premiums or are uninsurable
In a changing climate, flood risk is increasingly relevant in NZ. Some areas of Auckland, Wellington, and Canterbury have significant flood exposure.
6. Pre-Purchase Insurance Advice
Check that the property is insurable at a reasonable premium before you commit. Insurers may decline or charge significantly higher premiums for:
- Weathertight (leaky) buildings
- Properties in high flood or landslip risk areas
- Certain construction types (asbestos, lightweight steel)
- Properties with outstanding unconsented work
A declined or very expensive insurance quote is a legitimate reason to walk away or renegotiate the price.
7. Rates and Body Corporate (If Applicable)
Rates: Confirm the annual council rates for the property. This is in the LIM and directly with the council. Rates affect your ongoing ownership costs.
Body corporate (unit titles): If purchasing an apartment or townhouse under a unit title, get the body corporate financials:
- Annual levies (ordinary and long-term maintenance fund)
- Reserve fund balance
- Any outstanding special levies proposed
- Minutes from recent body corporate meetings (these reveal disputes, defects, and planned expenditure)
Underfunded body corporate reserves and proposed special levies can cost buyers tens of thousands of dollars after purchase.
Due Diligence Cost Summary
| Investigation | Typical cost |
|---|---|
| LIM report | $150–$450 |
| Building inspection | $400–$800 |
| Title search (via solicitor) | Included in legal fees |
| Specialist reports (weathertightness, structural) | $500–$2,000+ |
| Insurance quote | Free |
| Total typical due diligence | $550–$1,250 |
If buying at auction or tender, this cost is at risk — you may complete due diligence on a property and then not win it. This is a normal cost of the buying process.
Further Reading
- LIM Report NZ — What It Is and How to Read It — LIM report in detail
- Building Inspection NZ — what inspectors look for
- House Buying Process NZ — the full buying journey
- Making an Offer on a House NZ — offer and negotiation guide
- Property Costs NZ — All the Costs of Buying — full cost breakdown
- First Home Buyer Guide NZ — for first home buyers