Buying Property in New Zealand, Part 2
In the previous article in this series, Mindy Born provides an overview of the home buying process, and highlights the differences between auction sales and fixed-price sales. Click here to go back and read “Buying Property in New Zealand, Part 1.”
Common Types of Titles
Freehold: An estate held in fee simple (an estate that may be willed, traded, or disposed of as the owner sees fit), or for life.
Leasehold: When the mortgagor does not actually own the property, but has a recorded long-term lease.
Unit title: Two or more units to be used as residence or businesses, and common property such as parking lots, lawns and elevators, also including private accessories such as a garage, parking spot, or garden.
Cross lease: A cross lease is a form of a multi-unit tenure in which each owner has an undivided share of a freehold as tenants, as well as a long-term (the standard is 999 years) registered leasehold estate of the particular unit occupied. The owners lease separate areas, all under that title, to each other for housing. A composite title is issued to each owner separately.
Requirements & Legalities
New Zealand is a very easy country in which to buy property as a foreigner. Foreigners can buy property with limited restrictions, without having residency.
In many cases you must gain consent from the Overseas Investment Office, unless you are:
- A New Zealand citizen
- Usually resident in New Zealand
- If yours is a New Zealand company, trust, partnership or joint venture with less than 25% of shares or voting power owned by overseas persons or any nominee of an overseas person.
- If your company is not incorporated in New Zealand
Limitations on Overseas Investors
Overseas investors may buy
- Property within the boundaries of cities or towns (urban property) used for commercial, industrial or residential purposes when it is not used for any type of farming.
- Land less than 12 acres
- Less than 4,000 square meters of land that is next to a reserve or a lake.
- Less than 2,000 square meters of land on the foreshore (the foreshore is the part of the beach visible at an average low tide, which is then covered by an average high tide.)
Farm land (and land over 12 acres) must be marketed locally for at least twenty days before overseas investors may have the opportunity to buy it, and then you must gain the consent of the Overseas Investment Commission. You must also gain the consent of the commission if the land is adjoining the foreshore, lakes, reserves, or historic or heritage locations.
Overseas Investors are not allowed to buy
- Land over 5 hectares (12.4 acres) unless it is part of another substantial investment in New Zealand and that property is just one of the assets. Overseas investors are not allowed to buy farms to be used as vacation accommodation.
Purchasing Land for Commercial Purposes
There are a few things you will need to have prepared, and present in your business plan in order to apply for a large land purchase. They are as follows:
- The number of new job opportunities that will be created.
- Show if there will be a substantial increase in production on the property.
- Detail increased market access or new export market opportunities
- Outline the costs and create a timeline for establishing the investment
- Detail how the investment is in New Zealand’s national interest
- Will business skills or technology be introduced? If so, when?
You must provide:
- Background details of all parties involved.
- Nationality and place of residence of all parties involved
- Financial details of all buyers
- A copy of the most recent annual report and accounts
Capital Gains Tax
If you buy a property with the intent of selling (at any point in the future), the gains on that property are taxable. However, if you buy for investment purposes, no tax is due on the gains from your investment – for example, rental properties are not taxable.
Excerpted and adapted from the ebook “Creating Your Ideal Life in New Zealand: Immigrating, Buying Property and Starting a Business on an Island Paradise” by Mindy Born.