Buying real estate in New Zealand as a foreigner?

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Buying property in New Zealand as a foreigner: a full guide

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Everything you need to know is included in our New Zealand Property Pack

New Zealand is a top pick for foreigners who want to invest in real estate. It boasts stunning landscapes, a vibrant culture, and welcoming locals.

However, buying property in a foreign country can be complicated, especially with all the laws and regulations involved.

Don't worry! This guide is here to make it easy for foreign buyers to understand how the property market works in New Zealand. We'll cover everything you need to know in a straightforward and simple manner.

Also, for a more in-depth analysis, you can check our property pack for New Zealand.

Can you purchase and own a property in New Zealand as a foreigner?

If you are American, we have a dedicated blog post regarding the property buying and owning process in New Zealand for US citizens.

Buying real estate in New Zealand as a foreigner involves navigating a set of specific rules and regulations, which were designed to regulate foreign ownership and protect the interests of local residents.

New Zealand has restrictions on foreign property ownership to address concerns about housing affordability and land conservation.

As a foreigner, you're generally prohibited from buying existing residential homes unless you meet certain criteria. However, you can buy new properties in specific housing developments.

Owning land as a foreigner is more complex. You can't buy sensitive land, which includes farmland, islands, and land near water bodies, without going through a rigorous Overseas Investment Office (OIO) screening process. This process assesses factors like the benefits to New Zealand and your connection to the country.

Locals, including permanent residents, face fewer restrictions in buying property. They can purchase existing homes and land without the need for special permissions, unlike foreigners.

The rules apply broadly to all non-residents, regardless of their country of origin. However, citizens and residents of Australia and Singapore have a slightly easier process due to free trade agreements.

You don't necessarily need to reside in New Zealand to buy property, but residing can make it easier. If you plan to move to New Zealand, buying a home can be part of your residency application, and vice versa.

Owning property in New Zealand doesn't directly entitle you to a visa or residency. If you're looking to live in New Zealand, you'll need to apply for a visa through the standard immigration process.

For buying sensitive land or if you're exempt from the general ban on buying existing homes, you'll need approval from the Overseas Investment Office. This process ensures that your investment benefits New Zealand.

There's no specified minimum investment for buying property as a foreigner, but the costs associated with the OIO application can be substantial, and the property itself must meet certain criteria to be considered beneficial for the country.

Can you become a resident in New Zealand by purchasing and owning a property?

In New Zealand, there isn't a direct pathway to residency solely through purchasing and owning property.

Unlike some other countries that offer "Golden Visa" schemes, where significant investment in real estate can lead to residency, New Zealand's approach is more nuanced and doesn't guarantee residency just by property investment.

However, there are investment visas that can potentially lead to residency, but these involve more than just buying property.

The Investor Visa categories in New Zealand, like the Investor 1 and Investor 2 visas, require substantial financial investment in the country, which can include but is not limited to real estate.

These visas require you to invest a significant amount of money in New Zealand over several years. The Investor 1 category requires an investment of NZD 10 million over three years, while the Investor 2 category asks for NZD 3 million over four years.

These investments can be in various forms, including bonds, equities, and potentially property.

If you fulfill the requirements of these investor visas, including the duration of investment and time spent in New Zealand each year, you can apply for residency. This process involves proving that you've maintained your investment and complied with visa conditions.

Initially, the residency you get through investment visas is conditional. After meeting all the conditions, you can apply for permanent residency.

Permanent residency in New Zealand is a step towards citizenship, but it requires additional criteria, like a minimum period of living in the country and demonstrating commitment to New Zealand.

The number of people who have used these investment visas for residency is limited, especially when compared to more common pathways like skilled migration or family reunification. The high financial threshold and stringent requirements make it less accessible.

There are other requirements for these visas, such as good health, character, and English language proficiency.

The application process is thorough and aims to ensure that investors contribute positively to the country beyond just financial investment.

Thinking of buying real estate in New Zealand?

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buying property foreigner New Zealand

Market data

You can find fresh and updated data in our pack of documents related to the real estate market in New Zealand.

If we look at the the GDP per capita indicator, it seems that New Zealanders have become 4.6% richer throughout the past 5 years.

If the population's wealth grows, it can lead to a heightened demand for real estate, potentially resulting in price increases in the future.

Looking at the data reported by Numbeo, we can see that rental properties in New Zealand offer gross rental yields between 2.3% and 5.0%.

These yields are typically seen in markets with average demand and rental rates, where the rental income generated from the property covers the expenses associated with owning and maintaining it, while also providing a modest return on investment.

To know more, you can also read our dedicated article: is it a good time to buy a property in New Zealand?

The life as an expat

Life as an expat in New Zealand can be incredibly rewarding and enjoyable. The country is well known for its stunning scenery and outdoor activities, with plenty of opportunities for those looking to explore the outdoors. It's also known for its laid-back atmosphere and friendly locals, making it an ideal place to settle down and start a new life. The cost of living is relatively low compared to other developed countries, and there are plenty of job opportunities available, making it a great place to work and live.

New Zealand is a multicultural country, so expats will find a diverse range of cultures and ethnicities living side by side. This can make it an ideal place to learn more about different cultures and make new friends. The country also offers excellent healthcare, education, and transport systems, making it easy to get around and access the services you need. New Zealand is also a safe place to live, with low crime rates and a strong sense of community.

Overall, life as an expat in New Zealand can be an incredibly enriching experience. With its stunning scenery and friendly locals, it can be an ideal place to settle down and start a new life. The country also offers plenty of job opportunities and a low cost of living, making it an attractive place to live and work.

What are the best places to buy real estate in New Zealand?

This table summarizes some of the best places to buy a property in New Zealand.

City / Region Population Average Price per sqm (NZD) Strengths
Auckland ≈ 1.7 million 8,000 - 15,000 Largest city, economic hub, diverse culture, beautiful harbors
Wellington ≈ 420,000 7,000 - 12,000 National capital, vibrant arts scene, coffee culture, coastal beauty
Christchurch ≈ 380,000 6,000 - 10,000 Rebuilt after earthquakes, English heritage, proximity to ski fields
Queenstown ≈ 16,000 10,000 - 20,000 Tourist hotspot, adventure activities, stunning landscapes
Dunedin ≈ 120,000 5,000 - 9,000 University town, Scottish influence, wildlife, Victorian architecture
Nelson ≈ 50,000 6,000 - 12,000 Artistic community, sunny climate, beaches, wineries
Tauranga ≈ 150,000 7,000 - 12,000 Coastal city, relaxed lifestyle, outdoor activities, kiwifruit industry

Do you need a lawyer when buying a property in New Zealand?

When purchasing a property in New Zealand, engaging a local lawyer can be crucial in navigating the legal requirements and ensuring a successful transaction.

One important document they can assist with is the Sale and Purchase Agreement, a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.

The New Zealand lawyer can also help with conducting a Land Information Memorandum (LIM) search to obtain crucial information about the property, such as zoning restrictions, building permits, and other relevant details.

Moreover, they can guide you through the process of obtaining necessary permits and approvals, such as consent from the Overseas Investment Office (OIO) for foreign buyers.

They will ensure that all applicable taxes and fees, such as the Goods and Services Tax (GST) and Property Transfer Tax, are paid correctly and in compliance with New Zealand laws and regulations.

What are the risks when buying a property in New Zealand?

We've got an article dedicated to the risks associated with purchasing property in New Zealand.

One of the main risks when buying a property in New Zealand is the potential for natural disasters, such as earthquakes, volcanic eruptions, and floods.

Since New Zealand is located in the Pacific Ring of Fire, it is more prone to these types of disasters than other countries.

Another risk is the potential for soil liquefaction in areas with high water tables. This can cause serious damage to buildings and infrastructure, and can be difficult to predict or prevent.

The third risk is the potential for pest infestations, such as rodents or termites, which can cause significant damage to buildings.

Finally, there is the risk of poor construction quality, which can lead to expensive repairs or replacements. This is especially true of older properties, which may not have been built to modern building codes and standards.

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Everything you need to know is included in our New Zealand Property Pack

What are the documents needed for a real estate transaction in New Zealand?

When buying a property in New Zealand, the documents you will need to provide include:

1. A copy of your passport or other form of photo identification such as a driver's license.

2. Proof of residence in New Zealand, such as a bank statement or utility bill.

3. Evidence of your financial position, such as a recent payslip or tax return.

4. A signed and dated copy of the sale and purchase agreement.

5. An up-to-date survey of the property.

6. An up-to-date valuation of the property.

We review each of these documents and tell you how to use them in our property pack for New Zealand.

What are the key steps to develop a successful negotiation plan with New Zealanders?

Here is a list of recommendations when you negotiate a property deal with a local in New Zealand:

  1. Build rapport: Establish a friendly and respectful relationship with the seller. New Zealanders value personal connections, so take the time to engage in genuine conversation and find common ground. For example, discussing local sports, outdoor activities, or cultural events can help foster a positive rapport.
  2. Open and honest communication: New Zealanders appreciate direct and transparent communication. Clearly express your intentions, expectations, and concerns during negotiations, fostering an atmosphere of trust and understanding. Avoid excessive formality and use clear, concise language.
  3. Respect cultural diversity: New Zealand is a multicultural nation with Māori, Pacific Island, and other diverse communities. Show respect for different cultural perspectives, customs, and traditions during negotiations. For example, acknowledging and understanding the significance of the Māori culture and incorporating appropriate cultural protocols can help build trust and goodwill.
  4. Thorough due diligence: Conduct comprehensive research on the property, including its value, market conditions, and any legal or zoning requirements. Being well-informed strengthens your negotiating position and shows your seriousness as a buyer. Additionally, being aware of local environmental and sustainability practices can demonstrate your commitment to responsible property ownership.
  5. Consider professional advice: Engage the services of a local real estate agent or lawyer who specializes in New Zealand property transactions. Their expertise will help you navigate the negotiation process effectively, including understanding local market dynamics and legal requirements specific to the region.
  6. Flexibility and compromise: Negotiations often involve give-and-take. Be open to considering alternative options or compromises that align with your interests while also respecting the needs of the seller. For example, demonstrating flexibility in terms of settlement dates or inclusions/exclusions in the property sale can lead to a mutually satisfactory outcome.
  7. Punctuality and reliability: New Zealanders value punctuality and reliability. Arrive on time for meetings and follow through on any commitments made during the negotiation process. Being punctual reflects your professionalism and respect for the seller's time.
  8. Written agreements: Ensure all negotiated terms and conditions are documented in writing. Seek legal advice to ensure the contract is clear, comprehensive, and protects your rights and interests. Additionally, demonstrating a willingness to work collaboratively on drafting a fair and balanced agreement can help foster trust between both parties.

Do banks offer loans to foreigners in New Zealand?

Yes, foreigners can obtain property loans in New Zealand. The New Zealand banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.

If you're a foreigner looking to get a property loan in New Zealand, you'll typically need a valid residence permit, evidence of income or employment, and meet the specific requirements of the lenders.

Some banks in New Zealand that can grant mortgages to foreigners include ANZ New Zealand, ASB Bank, and Westpac New Zealand.

Additionally, mortgage rates in New Zealand for a 20-year term range from 3% to 7%, which are exceptionally good.

What are the taxes related to a property transaction in New Zealand?

Here is a breakdown of taxes related to a property transaction in New Zealand.

Tax Description Calculation Who pays
Rental Income Tax Tax on rental income generated from the property 10.5% to 33% depending on the level of rental income Owner
Goods and Services Tax (GST) Tax on the sale of new or newly built residential properties 15% of the property purchase price Buyer

What fees are involved in a property transaction in New Zealand?

Below is a simple breakdown of fees for a property transaction in New Zealand.

Fee Description Calculation Who pays
Registration Fee Fees paid for registering the property transfer A flat fee of NZD 80 for every transfer of property Buyer
Legal Fee Fee for legal services related to the property transfer Generally around NZD 1,500 Buyer
Real Estate Agent Commission Fee charged by real estate agents for their services Typically around 3% to 4% of the property sale price or a fixed fee agreed upon with the agent Seller
Land Information Memorandum (LIM) Report Fee for obtaining a report providing information about the property and the local authority's records Varies depending on the local authority and the complexity of the report Buyer

Buying real estate in New Zealand can be risky

An increasing number of foreign investors are showing interest in New Zealand. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner New Zealand