OPINION: If there is one good thing to come out of the Covid-19 crisis, it’s that more employers are happy to have staff work remotely. Mostly out of necessity, a decent percentage of employers found ways that employees could still complete their required tasks from home without a significant loss of efficiency.
The obvious question for most commuters, especially in Auckland, is this: if you can work remotely, why not find and buy home in a smaller, cheaper city and enjoy a more relaxed lifestyle?
A logical first step is to decide which city you’d like to move to and begin hunting for a home to buy. But, if you are looking to purchase, the first step should be to get confirmation from your employer that, if you move cities, they will continue to employ you. If not, then decide on the new city and secure a new job there. In other words, sort your income out first, find a place to live second.
Banks are required to adhere to the Responsible Lending Act and so you must be able to prove that once you move, you have ongoing income. Just stating that jobs are easy to get in the area isn’t enough. Written confirmation from your current employer that working remotely is acceptable should be fine for the bank. Otherwise a signed employment contract with a start date will work as well.
Start your property search
The painful part is that finding a job and finding a house you’d like to buy (and consequently winning the auction or tender) is difficult to time correctly. Moving cities can often involve living in short-term accommodation while finding the house or apartment you want to buy. Not always an easy option with children.
One strategy that can work is to sell your current house and remain in the city with your current employer. You can make this strategy clear to the bank and works especially well if you can stay rent-free with family. If you need to pay rent, the bank will need to build this into your expenses and will reduce the amount you can borrow. But, in effect, you are telling the bank that your intention is to purchase in a new city but are staying in the old city until you can find a job. Two things to be careful of with this strategy:
One, if it is your first home and you are using KiwiSaver as your deposit, you are required to live in it for at least six months. Employment in another city may cause you to fall foul of this requirement. If in doubt, talk to your lawyer.
Two, most banks require you to declare what your newly purchase house is to be used for. If it’s unlikely that you will find a job soon, you may need to rent out the property. Banks do audit mortgages after they settle and you may fall foul of the bank if you have told them you intend to live in it and then rent it out, particularly if it’s only a short time after settlement
My suggested strategy is to get an estimate from the banks of what you can afford based on a realistic income in your new city. Once you know that you can purchase something you’re happy with, secure your income in the new city and try to get the start time as far out as possible. Then begin aggressively hunting for your new home. Although painful, you can view any short-term accommodation as a cost of moving.
