The physical-asset threats, explained.
A profit-and-loss tells you what the property earned. It tells you nothing about whether the building is quietly failing underneath the income. This is the companion to your true return — the asset, not just the P&L.
A business that only reads its income statement is flying blind on its own plant and equipment. A rental property is the same — the spreadsheet says it earns, while the slab cracks, the cladding holds water, or an unapproved deck quietly voids the insurance that was meant to backstop all of it. The Threats Register is the discipline of reading the asset itself, category by category, so the risks are named while they are still cheap to fix or walk away from. This is the plain-English version of those categories. It isn't a building report and it isn't legal advice — it's the set of questions to take to a licensed building inspector, engineer, surveyor or solicitor so you know what you're holding before the cost arrives uninvited.
“The P&L tells you what the property earned last year. It says nothing about whether the building will still be standing, insurable, and legal to let next year.”
Read alongside the reports a real owner commissions, this is the map of what those reports are looking for — and why each line, left unread, lands as a bill you didn't budget for.
A. Structure & foundations
The bones of the building — the slab, footings, subfloor and frame. Movement here is the most expensive failure there is, because nothing above it can be trusted while the base is shifting. Why it costs you: structural repair is rarely a single trade and rarely small, and it sits outside most insurance policies because it's treated as wear, defect or earth movement rather than a sudden event.
Footing movement & underpinning
When footings shift, walls crack and doors stop closing. Underpinning — strengthening or extending the footings beneath an existing building — is one of the costliest repairs a small property can face, often five or six figures.
Subfloor decay
In timber-floored homes, poor ventilation and damp rot the bearers and joists out of sight. You smell it before you see it; by then the floor is the cheap part.
Concrete cancer / spalling
In concrete and brick-veneer construction, moisture reaches the steel reinforcing inside the concrete, it rusts, expands, and blows the concrete apart from within. Common in older balconies, basements and units.
Reactive clay (AU)
Much of Australia sits on clay soils that swell when wet and shrink when dry, lifting and dropping the slab through the seasons. The leading cause of cracking in Australian homes — see soils, below.
Earthquake-related movement (NZ)
In New Zealand, the structural question runs through seismic events: foundation damage, out-of-level floors, and the difference between cosmetic cracking and a compromised structure. Post-quake repair history matters as much as current condition.
B. Pest
Living things that eat the building. What it is depends entirely on which side of the Tasman you're on, and the costliest cases are the ones an insurer won't touch.
Termites (AU)
White ants eat structural timber from the inside, often undetected for years. The detail most Australian owners miss: termite damage is usually explicitly excluded from building and landlord insurance, because it's preventable through inspection. A separate timber-pest inspection — and an active management plan — is the only real cover.
Borer & moisture decay (NZ)
New Zealand's older timber housing stock faces the common house borer and, more seriously, moisture-driven rot in framing — the structural cousin of the weathertightness problem. Decay in load-bearing timber is slow, hidden, and expensive to put right.
C. Soils & site
What the building stands on. The ground decides how much the structure will move and what it will cost to build on or extend — and it can carry a history that becomes your liability the day you take title.
Reactive clay & site classification (AU)
Australian sites are classified under AS 2870 — from Class A (stable sand or rock) through M, H and E (highly reactive clay) to P (problem sites). The class drives footing design and cost; a highly reactive site means seasonal movement you'll manage for the life of the building.
Fill & compaction
Land built up with imported soil that wasn't properly compacted settles unevenly over time, taking the building with it. Common on sloping and subdivided sites in both countries.
Contamination (AU)
Former industrial, fuel, agricultural or dumping use can leave soil contaminated. Most Australian states keep a contaminated-land register; the obligation — and the clean-up cost — can pass to the owner.
Contamination (NZ)
New Zealand records historic high-risk land uses on the HAIL list (Hazardous Activities and Industries List), and the NES-CS (National Environmental Standard for assessing and managing contaminants in soil) governs what you may do with it. Both surface through the council LIM (Land Information Memorandum) you read before you buy.
“The ground under a building is the one part of the asset you can't repaint, re-tenant, or refinance your way out of.”
D. Building compliance & unapproved works
Whether the building, as it stands today, is legal. This is the quiet killer, because an unapproved structure is fine until the day it isn't — and that day is usually a claim, a sale, or a council inspection. Why it costs you: unapproved work can void insurance on the whole property, force costly retrospective approval or removal, and stall a sale while the title is "unclean."
Unapproved works (both)
A deck, granny flat, carport, bathroom or structural alteration built without approval is a liability that travels with the building. It can be the cheapest-looking renovation on the listing and the most expensive thing you inherit.
Occupation certificate (AU)
Australian building work generally needs approval and, on completion, an occupation certificate confirming it's lawful to occupy. Its absence is a red flag a buyer's solicitor will catch — and so should you.
Consent & CCC (NZ)
New Zealand work needs building consent and, on completion, a Code Compliance Certificate (CCC) confirming it was built to the consent. Outstanding consents or a missing CCC show on the LIM, and clearing them is the new owner's problem.
E. Cladding & materials
What the building is wrapped and lined with — and whether those materials are safe, legal, and watertight. Some of the most expensive defects in both countries live in this category.
Asbestos (pre-1990)
Buildings from before the 1990s commonly contain asbestos in sheeting, eaves, fencing and flooring. Undisturbed, it's usually managed; disturbed during renovation or storm damage, removal is specialised and costly, with strict handling rules in both countries.
Combustible cladding on units (AU)
Following the cladding-fire crisis, many Australian apartment buildings carry combustible cladding that must be replaced — a building-wide cost owners meet through special levies. For a unit, this can be a six-figure liability hiding in the body-corporate records.
Weathertightness (NZ — lead issue)
New Zealand's leaky-building era left a large stock of homes where water gets behind the cladding and rots the framing. It is the single most consequential physical risk in NZ residential property, and it has its own playbook — see below.
F. Environmental overlays
Hazards the location carries regardless of the building's condition. These show up on planning maps, council overlays and the LIM — and they shape insurability, what you can build, and what the property is worth.
Flood
Mapped flood risk affects insurance pricing, lending and what councils will let you do on the site. A flood overlay is a value and insurability question, not just a weather one — in both countries.
Bushfire / BAL (AU)
Australian bushfire-prone land carries a Bushfire Attack Level (BAL) rating, from Low to Flame Zone. A high BAL drives construction requirements and insurance cost, and limits what you can rebuild.
Mine subsidence (AU)
In old coalfield districts, land can sink as historic mine workings collapse. Affected areas sit under mine-subsidence boards, and building approval runs through them.
Coastal hazard (both)
Erosion and sea-level overlays restrict coastal development and can render a site difficult to insure or finance. The line on the hazard map is increasingly the line on the value.
Liquefaction (NZ)
In an earthquake, saturated loose soils can turn briefly to liquid, sinking and tilting buildings. Liquefaction-prone zones — well mapped since the Canterbury quakes — affect foundation requirements, insurance and value.
G. Title
The legal rights and restrictions attached to the land itself — invisible on a walk-through, decisive for what you can do with the property.
Easements
A right someone else holds over your land — typically a drainage, sewer or access easement. You can't build over it, which can kill an extension or a subdivision you'd assumed was possible.
Covenants
Restrictions written into the title — minimum house size, materials, single-dwelling-only. They bind you regardless of what the council would otherwise allow.
Heritage
A heritage listing or character overlay restricts changes to the building and can add significant cost and delay to any work. Charming on the listing; constraining on the title.
H. Strata / body-corporate
If you own a unit, you co-own the building's shared parts and share its future bills. The threat here is financial as much as physical: a scheme that hasn't saved for the repairs it knows are coming.
Under-funded sinking fund (AU)
The sinking fund (or capital-works fund) is the scheme's savings for major repairs — roofs, lifts, cladding, painting. If it's thin and a big job lands, the shortfall comes to every owner as a special levy. Read the fund balance and the maintenance plan before you buy, not after.
Under-funded LTMP (NZ)
A New Zealand unit-title body corporate must keep a Long-Term Maintenance Plan (LTMP) and ideally a fund behind it. The same risk applies: a plan with no money behind it means special levies when the work falls due.
I. Services & retaining walls
The building's organs — the systems that make it habitable — and the structures that hold the land in place. Both have a finite life, and both can become someone else's argument.
Services at end-of-life
Wiring, plumbing, hot water, roofing, switchboards and drainage all age out. A property can present beautifully while every major service is one cold snap from failure — and they tend to fail together, in the year you bought it.
Retaining-wall liability
A retaining wall holding back soil between two properties is a frequent and bitter dispute: who owns it, who maintains it, and who pays when it fails. Responsibility isn't always obvious from the boundary, and a collapsing wall can damage both sides. Confirm ownership and condition before, not after.
J. Title type
How you actually own the property changes everything downstream — what you can do, how you finance it, and how easily you can sell. Not all "ownership" is the freehold most buyers assume they're getting.
Company title (AU)
An older ownership form where you own shares in a company that owns the building, rather than a title to your flat. Harder to finance, harder to sell, and the company can veto who you let or sell to.
Leasehold (AU)
You own the building but lease the land for a term. As the lease shortens, value and finance both get harder — and you need to know what happens at expiry.
Cross-lease (NZ)
A common but awkward NZ form where owners jointly own the land and lease their dwellings from each other. Alterations often need every other owner's consent, and defective cross-lease titles can be costly to fix.
Unit title (NZ)
Apartment-style ownership with a body corporate and shared common property — the LTMP and levy questions above apply in full.
Leasehold (NZ)
As in Australia, you own the building and lease the land. Ground-rent reviews can rise sharply, and the same expiry and finance questions apply.
Two threats deep enough to have their own playbook
Two of these categories carry enough weight, and enough country-specific detail, that they each warrant their own read. Weathertightness & cladding covers the leaky-building problem that leads the NZ list and the combustible-cladding exposure on Australian units. And trees & what you can cut deals with the boundary, root-damage and protected-vegetation questions that sit alongside retaining walls as the most common neighbour disputes. Threading through every category above is insurance — because whether a threat is your bill or the insurer's turns on the cover you hold. See insurance — every position.
The questions worth taking to a building inspector
- Is there any sign of structural movement — cracking, out-of-level floors, doors that won't close — and is it cosmetic or is it the footings?
- In Australia: what's the soil class under AS 2870, and is this a reactive site? In New Zealand: what's the seismic and liquefaction history of this ground?
- Has the property had a current timber-pest inspection (AU termites / NZ borer and moisture decay), and is there an active management plan?
- Is every structure on the title approved — and can you show me the occupation certificate (AU) or building consent and CCC (NZ)?
- Does the building contain asbestos, combustible cladding (AU units), or weathertightness risk (NZ), and what would addressing each cost?
- What overlays sit on this land — flood, bushfire/BAL, mine subsidence, coastal, liquefaction — and how do they affect what I can do and what I can insure?
- What does the title carry — easements I can't build over, covenants, heritage — and what do they stop me doing?
- If it's a unit: how funded is the sinking fund or LTMP, and what major works are foreseeable?
- What's the remaining life of the major services, and who owns and maintains the retaining walls on the boundaries?
- What title type is this actually — freehold, company title, cross-lease, unit title, leasehold — and what does that change about financing and selling?
None of this is meant to talk you out of owning property. It's meant to make sure the property you own is the one you think you own. Most owners read the rent and never read the asset — and the asset is where the surprises live. Lay the threats out once, against your real building, and the repair bill stops being a shock and starts being a decision you made on purpose.
Before the inspector
See your whole property position first.
Before You Hold is the diagnostic course for 1–3-property owners in AU and NZ. Eight modules, your real numbers, and the Threats Register laid out against your actual building — so you know what to commission, what to ask, and what to walk away from. The physical risks land very differently once you've seen them next to the return.