Property investment guide
Townhouses and
apartments as
investment property in NZ
LC
By Liam Cox, National Sales Manager
Liam has almost a decade of experience in NZ property investment. Last reviewed 1 October 2026.
On this page
On this page
Townhouses and apartments can give investors a lower entry price and a central location, with less outside upkeep than a standalone house. The trade-offs are shared ownership, yearly body corporate fees on many of them, and stricter lending on some apartments. This page compares townhouses and apartments as investments and explains what to check before you buy. For the wider picture, start with our guide to property investment in NZ.
Key takeaways
Townhouses and apartments often cost less than a house in the same area, and many are close to transport and shops.
Townhouses usually have more private space and fewer shared areas than apartments.
Many are unit titles, which means a body corporate and yearly fees.
Banks often treat small apartments and leasehold properties differently.
Before you buy, check the building, the title and, for a unit title, the disclosure statements.
Townhouse or apartment: how they differ
Townhouses and apartments both share walls or land with other homes, but they work quite differently as investments.
TOWNHOUSE | APARTMENTT | |
|---|---|---|
Land | Part of a small block, or sometimes freehold with its own land | Usually no private land |
What tenants get | Their own front door, often a small yard or deck | A shared entrance and hallways, sometimes a balcony |
Shared areas you pay towards | Few, such as a driveway | Lifts, stairwells and lobbies, sometimes a pool or gym |
Typical title | Unit title or freehold, sometimes cross lease | Usually unit title |
Body corporate | Small, or none for freehold | Usually larger, with more to manage |
Lending | Usually treated like a standard property | Small apartments can face stricter bank rules |
For an investor, a townhouse works more like a standalone rental. An apartment depends more on the building and how well its body corporate is run.
Investing in a townhouse
For an investor, a townhouse is usually the simpler of the two. It often has its own front door and a small yard or deck, much like a standalone rental, with few shared areas to pay towards. Many townhouses are built in small blocks, so any body corporate tends to be small, with lower fees and fewer shared decisions. Some are freehold, with no body corporate at all.
Banks usually treat a townhouse like a standard property. The main things to check are the type of title, how and when the block was built, and whether parking and outdoor space are included.
Investing in an apartment
With an apartment, you’re investing in a building as much as a single property. The building’s size, age and facilities, like lifts or a pool, drive the body corporate fees and long-term maintenance costs, and those come out of your rental income. Apartments are often in central locations, close to transport and work.
Small apartments can face stricter bank rules, and some, like studios and serviced apartments, are treated as non-standard. The main things to check are the floor area, the body corporate’s finances and maintenance plan, and the building’s history.
Pros and cons of townhouses
and apartments as investments
The main pros and cons, side by side. Each one is explained further down the page.
PROS | CONS |
|---|---|
Often a lower price than a house in the same area | Shared costs, such as body corporate fees and levies |
Often in central locations | Rules and group decisions |
Less outside upkeep | Small apartments can be harder to finance and sell |
Many are newer homes | Some buildings from certain eras carry weathertightness risk |
Less land than a standalone house |
What makes a townhouse
or apartment suit renting
These are the factors to weigh when you compare properties. They help you judge a property, but they don’t guarantee rent or demand.
Location. Being close to public transport, work, shops or a university matters more for a small home than a large one.
Size and layout. The number of bedrooms and bathrooms, storage and how the space is used. Very small apartments can limit both tenants and lenders.
Parking. Some apartments and townhouses are sold without a car park. Check what’s included.
Building type and age. A low-rise block and a high-rise tower have very different running costs, and the era a building was constructed in affects what you need to check.
Outdoor space and shared walls. A yard or balcony, and how much noise travels between homes.
How townhouses and apartments are owned
The type of title decides what you own, what you share, and who makes the decisions.
TITLE | WHAT YOU OWN | IS THERE A BODY CORPORATE? |
|---|---|---|
Unit title | Your unit, plus a share of the land and common areas | Yes |
Cross lease | A share of the land, plus a long lease on the property | No, but changes need the other owners’ consent |
Freehold | The land and the building on it | No. Sometimes a residents’ association |
Leasehold | The building, but not the land, which you lease | Depends on the development |
Unit title. This is the most common title for apartments and many townhouses. It’s governed by the Unit Titles Act 2010. You own your unit outright and share the rest with the other owners. MBIE’s unit titles website explains the rules.
Cross lease. All the owners share the land, and each leases their own home from the group. If you want to change the outside of the property, you usually need the other owners’ agreement.
Freehold. You own the land and the building on it, like a standalone house. Freehold townhouses sometimes share a driveway or have a residents’ association to look after shared areas.
Freehold vs leasehold
With a leasehold property, you own the building but lease the land from a landowner, such as a trust, council or iwi. You pay ground rent for the land, on top of any body corporate fees
The lease sets how often the ground rent is reviewed. At each review, the rent is reset, often based on the current value of the land, which can mean a big jump in cost. Some banks lend less on leasehold, and leasehold properties can sell for less than similar freehold ones because fewer buyers want them. Check how many years are left on the lease, when the next review is, and how the new rent will be worked out.
Body corporates and fees
A body corporate is all the unit owners in a development, acting together as one group. When you buy a unit title, you become a member automatically. It insures the buildings, looks after the shared areas, plans long-term maintenance and sets the rules.
As an investor, you get a vote, but not control. If most owners vote for a project, you pay your share even if you voted against it. The rules can also limit changes to your unit and how it’s used.
Body corporate fees are your share of the running costs: mainly building insurance, shared maintenance and a fund for future repairs. Bigger costs outside the budget can be charged as one-off special levies. For what the fees cover, how they’re calculated and why low fees aren’t always good, see body corporate fees in NZ.
Checking a townhouse or
apartment before you buy
The checks fall into three groups: the building, the title and council records, and, for a unit title, the disclosure statements. Have a property lawyer go through them with you before you sign.
The building
Get a builder’s report. If the building went up between the late 1980s and the mid-2000s with plaster-style monolithic cladding, it has a higher risk of being a leaky building, so ask for a thorough weathertightness inspection (settled.govt.nz). For an apartment, a builder’s report covers your unit. The disclosure statement and body corporate records tell you about the wider building.
The title and council records
A title search shows the type of title and anything registered against it. A LIM is a council report on the property. It shows consents, known hazards and any outstanding notices.
Unit title disclosure statements
When you buy a unit title, the seller must give you two disclosure statements under the Unit Titles Act (MBIE).
STATEMENT | WHEN YOU GET IT | WHAT'S IN IT |
|---|---|---|
Pre-contract disclosure statement | Before you sign the sale and purchase agreement | Fees and budget, the long-term maintenance plan, works planned for the next three years, three years of meeting minutes, financial statements and the body corporate rules |
Pre-settlement disclosure statement | Before you signAt least 5 working days before settlement the sale and purchase agreement | Updated fees, any levies due, insurance details, and any legal proceedings or claims involving the body corporate |
Since 9 May 2023, most of the information buyers used to have to ask for is included in the pre-contract statement. If either statement is late, incomplete or wrong, you may be able to delay settlement or cancel the agreement (MBIE).
In the statements, check the long-term maintenance fund, planned major works and any special levies. Also look for disputes or claims, the insurance excess, and rules that affect how you plan to use the property.
How banks lend on
townhouses and apartments
Standard rules. The Reserve Bank’s loan-to-value (LVR) and debt-to-income (DTI) limits apply to townhouses and apartments the same way they apply to any investment property (RBNZ).
New builds. A new townhouse or apartment may qualify for the new build exemptions from those limits. Banks apply the test differently. See new build investment property.
Small apartments. Many banks set a minimum floor area for apartments, often around 40 to 50 square metres, not counting balconies or car parks. Below that, banks often ask for a much bigger deposit, or may not lend at all, because small apartments appeal to fewer buyers and can be harder to sell. Each bank sets its own rules, and they change over time.
Non-standard properties. Some banks treat leasehold properties, studios and some serviced apartments as non-standard. They may ask for a bigger deposit.
Who a townhouse or apartment tends to suit
IT TENDS TO SUIT YOU IF YOU... | WHY |
|---|---|
Want a lower-priced property in a central location | Townhouses and apartments often cost less than houses nearby |
Want less outside upkeep | Small sections, and shared areas looked after by the body corporate |
Are comfortable sharing decisions with other owners | Big spending on a unit title is decided by vote |
Whatever you buy, it still has to stack up. Check the location, size and building against the rent the property is likely to earn, and count any body corporate fees in your numbers.
Frequently asked questions
It depends on the apartment and your situation. Apartments can offer shared upkeep, central locations and a lower entry price. But body corporate fees, special levies and stricter lending on small apartments all affect the numbers. Check the disclosure statements and the bank’s rules before you decide.
Neither is better in every case. A townhouse usually has more private space and lower shared costs. An apartment may sit in a more central spot. Compare the specific properties on location, size, building and running costs.
No. Townhouses on a unit title have a body corporate. Freehold townhouses don’t, though some have a residents’ association for shared areas. Check the title to see which applies.
Several things affect how easily a townhouse sells and who wants to buy it: the type of title, when and how it was built, how many similar townhouses are for sale nearby, and, for a unit title, the state of the body corporate and its maintenance fund. These are factors to check, not a guide to future value.
Disclaimer
This page is general information only. It isn't financial advice, and it doesn't take account of
your goals, financial situation or needs. For advice on your own situation, speak with one of
our advisers.
We've taken real care to get this right, but lending rules and tax settings change, and the odd
detail can slip through. Check the current position, and talk to a financial adviser, solicitor or
accountant before making any investment decision. See our disclosure information.
Keep reading
Where this sits in the bigger picture
MAIN GUIDE
Property investment in NZ
How strategy, lending, structures and readiness fit together.
Guide
New build investment property
Pros, cons, and what counts as a new build for lending.
ARTICLE
Body corporate fees in NZ
What the fees cover, how they’re calculated, and why low isn’t always good.