Guide to Buying a Property in New Zealand
Posted on April 1, 2014
Congratulations on making the best decision of your life and deciding to move to sunny New Zealand! Now, to live the dream, you need a place to call home. While it may be sensible to rent for a while until your find your feet, buying a property is a good investment and there are no real restrictions for foreigners, unless you are buying a particularly expensive place, or it comes with a lot of land.
Unless you are in the fortunate position to be able to purchase your property outright, you are likely to need a mortgage.
Banks and lenders offer 3 categories of mortgages, depending on your residency status:
Category 1 for Permanent Residents. You will have access to the same mortgage facilities as New Zealand’s citizens and will be able to borrow up to 95% of the value of the property you are buying.
Category 2 for holders of Work Permits. Mortgage lenders will be slightly more cautious and require more guarantee from you, in the form of a deposit. The amount varies from bank to bank, from 20% to 50% or more, but generally speaking, you are likely to be able to get a mortgage for 80% of the price of the property you are considering.
Category 3 when a property is bought as a holiday homes. Lenders will apply similar rules to those in Category 2, although they may tend to be a little stricter on the deposit required.
However, you should note that, unlike other countries, 10% of the price of the property is payable when the contract is signed, so you need to plan for this capital to be available at that time.
Do you need a lawyer to complete the process?
The answer is yes. Buying a property in New Zealand is straightforward and quick but it is also one of the most expensive purchases you will ever make, so would you really want to take risks? Once you have found a property you want to buy, you should make an offer in writing to the estate agent. If the offer is accepted, this is when you will be asked to pay the 10% deposit mentioned above, which will be held by your solicitor. Should you change your mind after that point, you would lose your deposit.
If you are buying a property which:
- Is worth more than NZ$10 million;
- Comes with more than 5 hectares of land (developed or not);
- Is a plot of land larger than 2,000 m2 and consists of coastal land,
you will have to apply to the Overseas Investment Office for approval of the purchase unless you are a permanent resident.
Likewise, if you are buying a property or plot of land on or next to an island or nature reserve and are not a permanent resident, you won’t be allowed to buy more than 0.4 hectares (1 acre) of land.
You and the seller will then agree on a "settlement date" which is the date when you will own the property and when the balance of the purchase price is due.
The whole process usually takes no more than around 6 weeks.
What are the costs involved in buying a property in New Zealand?
The costs of buying a property in New Zealand are very reasonable, as there is no stamp duty payable to the government and the estate agent’s fees are paid by the seller.
In addition to the price of the property itself, you can expect to have to pay the following fees:
Solicitor’s fee: They can vary between NZ$1,000 to $2,000 depending on the searches that need to be carried out.
Property valuation fee: usually around NZ$400-500
Bank Transfer fee: NZ$50-70
Building inspection report: although it isn’t an insignificant sum of money, as they cost around NZ$400-$500, it is money wisely spent as it will flag up potential problems with the property.
Land Information Memorandum containing information from the local council showing the property’s boundaries and its building consents , etc..., usually costing around NZ$100-400.
If you are getting a mortgage, you will have to pay a registration fee of about NZ$50.
New Zealand’s quality of life is well known and keeps attracting people from all over the world. Stunning nature, friendly people, good weather, there is nothing not to like about it, so don’t wait any longer and join us!
And if you need any help with shipping your belongings, call us on +64 9 303 0075 or get a free quote.