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Buying PropertyBack to top Back to main Skip to menu
New Zealand - Buying Property
Many people in New Zealand buy houses for residential purposes and not for business. Therefore, investing in real estate in New Zealand is not a get-rich-quick scheme. Of course, there are entrepreneurs who make profits by purchasing ocean front properties, renovating, and reselling at a profit. Others buy townhouses in unfavorable neighborhoods and then renovate them, increasing their values. Although it may seem like a sound investment, you may lose significant amounts of money if you make the wrong real estate investment decision.
Permanent residents are not restricted from buying any type of home they wish. Temporary residents, on the other hand, are limited by the 1973 Overseas Investment Act. The act restricts temporary residents from buying homes that are on more than twelve acres of land. In addition, temporary residents cannot purchase property that sits on more than an acre in certain areas, such as animal reserves and islands. Buying property in urban areas is not affected by the act. It is important to seek the services of a lawyer who will tell you whether you need an agreement from the Overseas Investment Commission. If you require an agreement, make sure your lawyer inserts a clause within the contract that makes a purchase conditional upon obtaining consent.
It is common for domestic properties in New Zealand to be offered for sale at public auctions. Most of the properties being auctioned are those whose values cannot be easily determined because they are either luxury properties or ones that require renovation. Banks often repossess the properties of people who have failed to pay their mortgage and auction them to recover their money. Those who know how to bargain can look for properties in auctions to purchase.
Be sure to research the market value of a property on auction before purchasing it. You can do this by checking the selling prices of properties of the same type within the area. It is important to put your finances in order because you may be expected to pay a ten percent deposit if your bid is successful. You can sign the purchase contract a day or two after the auction. Set some time aside to inspect the property before you commit to buying it in an auction. Do not make the mistake of buying a property that you have not seen, even if the quoted price is low. If you have seen the property and it seems genuine, make a pre-auction bid, which is usually about thirty percent less than the market value. The seller may even strike a favorable deal before the auction.
Once you find the property you would like to purchase, you are required to make an offer in writing. Most real estate agents usually have a standard form for this. You need to make a formal offer even if you are willing to pay the quoted price. The conditional offer usually includes an independent valuation and financial approval. If you have not agreed to pay the asking price, you can start the bargaining process, which ends when both the seller and buyer have agreed on the price. Once you agree on the price, you will be required to sign a sales contract. You may opt out of the contract if you change your mind or find out that the property has some undesirable qualities. However, you cannot legally opt out of the contract once you have signed it. You may be required to pay certain fees if you opt out of the contract after signing it.
Some real estate agents may push you to pay for the property as soon as a sale agreement has been reached. It is important to first confirm the title and consult legal advice before signing the contract. If you feel the need to sign a contract before the conveyance checks are finished, ask your lawyer to insert a clause in the contract stating that the contract will be invalid in case any problems occur. There is no law that states that you have to sign the contract immediately after agreeing on the price of the property. If you are not a hundred percent sure about a property and your estate agent tells you that there are other people who want the property, feel free to pass it up.
One of the benefits of the property purchase process is that once a contract has been signed the seller cannot accept a higher offer. Most agents will try to hike the price in an attempt to get the highest bidder to sign. The ten percent deposit is non-refundable but some contracts have a clause that allows its return if the title is not clear or the land is under government requisition.
Expect to part with money for the property survey, title search, and the lawyer’s fee. It is important to get a reputable and licensed lawyer who will guide you through the process. When you buy property, you will be expected to pay property tax, which is sent out at the beginning of the financial year. Anyone who lives in a property, whether it is a tenant or the owner, is expected to pay taxes. If you occupy a house for part of the year, then you are liable to pay only a portion of the tax. The yearly bill for a regular home can range from 1000 to 2000 New Zealand dollars.
Property tax caters for local services such as lighting, street cleaning and subsidies paid to public transport firms. Also included are rubbish collection, water, and recycling collection fees. Expats often find it difficult to obtain financing from banks to purchase properties.
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