Buying Real Estate in New Zealand
Buying real estate in New Zealand is pretty standard. There are a few different ways to go through with this process.
Attorneys and Real Estate Agents
The real estate system in New Zealand is considered straight forward, so whether or not you want to hire a lawyer is your choice. It is not required, but can be a good idea in certain cases. For instance, some people hire lawyers to look for contractual issues at a fixed rate. In New Zealand, real estate agents will charge a percentage of the overall purchase price to do the same task, which could end up being more expensive.
You should set up a real estate agent who will help you search for property. Your agent is meant to research properties according to your interest, and will often help you tour properties.
Further in the process, you will also need a land surveyor to inspect your prospective property. Most real estate agents can refer you to one in New Zealand, but it’s a better idea to find one by yourself. You should try to get referrals from outside parties. Surveyors recommended by agents may act on the agent’s best interest and not yours.
When you are setting up a mortgage to finance your property, it is wise to set up a good mortgage broker. When you set up a mortgage, some banks also may require a valuation from a Registered Valuer on the property. You’ll need a solicitor for the bank (see below).
Rules, Regulations and Restrictions
Foreigners are allowed to buy land in New Zealand under certain restrictions. They can also set up mortgages in New Zealand banks. You’ll usually have to put down a deposit of 30-35%, depending on your financial conditions. Foreigners also must be able to give evidence of their funds, prove overseas income, appoint a New Zealand Solicitor with a Power of Attorney, and provide information about their credit history.
If you wish to buy a property on beachfront, or close to a river or a lake, you must make a request to the Overseas investment office. It is simplest to buy urban properties that are not close to bodies of water.
General Process
You should search around and research particular properties before you make an offer or a bid. Have the land surveyed before you make an offer or bid at an auction for the property. Sometime before you complete your purchase, you should ask to see a Land Information Memorandum (LIM). This document outlines information about the property zoning, any hazardous contaminants, Government Valuation, boundaries, building consents and other essential facts. It may cost you a few hundred dollars to obtain this document, so you should only ask for it if you are serious about the property.
Once you find a property that you like, you should make an offer. Most property is offered at a fixed asking price in New Zealand. If the property you desire is through an auction, you can make an offer a few days before the auction ends. However, this bid is legally binding, so do not overbid. There are legal consequences if you back out of it.
When you finally have an offer that you are going to go through with, you should make a formal offer to purchase in writing. The offer must include sums for fixtures and fittings. This will be conditional to a mortgage offer, surveys and searches.
If your offer becomes accepted, you must then pay a 10% security deposit to either the solicitor or the estate agent. This deposit is held for ten days, or until all the conditions for sale are met.
You and the vendor must then sign the contract that includes conditions of the sale and completion date. It takes an average of three weeks from the time when you sign this document until you finally own the property. There is no stamp duty when you sign this document, but there are other fees, such as legal fees and getting utilities connected.