Buying a house in New Zealand: A guide for migrants
Do you have questions about buying a house in New Zealand? Then you’ve come to the right place. We’ve put together a guide with all the need-to-know information for when you have to find a place to stay in New Zealand.
Let’s start with the most important things to know…
Real Estate Authority (REA), a New Zealand industry regulator, recently launched a website, settled.govt.nz, to provide comprehensive, independent information on buying and selling a home in New Zealand.
The website address issues ranging from researching properties to making an offer. The site also features a summary of things REA consider the most important to know when buying a house in New Zealand:
- You must sign a written sale and purchase agreement when you buy a property. This agreement is a legally binding contract between you and the seller.
- Always check your sale and purchase agreement with a lawyer or conveyancer before signing. You must ensure that you understand what you’re agreeing to before signing on the dotted line.
- You can negotiate the conditions in a sale and purchase agreement.
- A sale and purchase agreement becomes unconditional when all the conditions are met.
- The agent helps you and the seller to include the conditions you both want. Even though the agent works for the seller, they also have to deal fairly and honestly with the buyer. They can’t withhold information and must inform you of any known defects of the property.
- The agent will probably use the agreement for sale and purchase approved by the Auckland District Law Society and the Real Estate Institute of New Zealand.
- Before you sign a sale and purchase agreement, the agent must give you a copy of the REA New Zealand Residential Property Sale and Purchase Agreement Guide. They must also ask you to confirm in writing that you’ve received it.
The sales process
Buying a house in New Zealand is a relatively quick process. It can take as little as three to four weeks to complete a house purchase once you’ve found the place you want.
Unlike in some parts of the world, last minute offers can’t be accepted once a bid is formally accepted. This makes home purchases in New Zealand a lot less stressful than you might be used to.
The role players
Aside from yourself and the seller, a real estate agent is involved when you’re buying a house in New Zealand. You may choose to hire a lawyer, especially since you’re not familiar with New Zealand processes, but this is not required by law.
Here’s why hiring a lawyer is a good idea:
Although you’re not required to hire a lawyer, it is a good idea to do so early on in the process. A property lawyer‘s advice and assistance will prove invaluable: can assist you in a number of ways:
- Handle the legal side of the transaction. You’ll be charged a standard conveyancing fee.
- Help you negotiate a purchase price, check the contract, complete a title search and arrange the payments.
- Advise about tax implications.
- Keep you informed of your risks, rights and obligations throughout the sales process.
The Sale and Purchase Agreement
The Sale and Purchase Agreement goes back and forth between you and the seller until a price and all conditions are agreed on.
The agreement will show the date the sale goes ‘unconditional’, i.e. when all of the conditions have been met, and the settlement date, i.e. when you can move into the property. Once the sale goes unconditional, you are legally committed to buying the property.
Property ads usually show either an RV or GV or CV figure:
- RV: Rateable Value
- GV: Government Valuation
- CV: Council Valuation
These figures refer to the valuation used by the local council to calculate rates for the property, but often don’t reflect the property’s true local market value.
You might also come across a BBO figure. This means Buyer’s Budget Over and is an indication of the price the seller wants.
Don’t be afraid to negotiate on the price you see. This is standard practice in New Zealand.
If you don’t have cash to buy a house, you’ll have to apply for a home loan. There are numerous loan types available in New Zealand:
- Table loans: Most of the early repayments go to pay interest and most of the later payments pay off the principal.
- Revolving credit loans: Your income goes straight into the mortgage account and your bills are paid out of it. This keeps your loan as low as possible, reducing the interest you pay.
- Straight line or reducing loans: You repay the same amount of principal with each payment, but the amount of interest you pay reduces over time.
- Interest only: You do not repay the money you have borrowed until an agreed time, but you do pay interest.
Keep in mind thought that it might prove difficult to get a home loan when you’re new in New Zealand, as you don’t have a credit rating in the country. That doesn’t mean it’ll be impossible. You may just need to have more paperwork in order than the average person.
News to know about buying a house in New Zealand
There has been a lot of press about proposed changes to the Overseas Investment Act of 2005. The bill which has been introduced propose that overseas nationals cannot buy existing homes or residential land within New Zealand.
The purpose of the bill is to ‘ensure that investments made by overseas persons in New Zealand will have genuine benefits for the country’. As such only a person who is considered ‘ordinarily resident in New Zealand’ will be able to purchase existing homes or residential property.
Under the proposed legislation, a person ‘ordinarily resident in New Zealand’ would include citizens and residents who holds a permanent visa and has been living in New Zealand for at least a year, including 183 days in the preceding 12 months.
However, the bill has not been passed yet and has received plenty of criticism, even from the IMF (International Monetary Fund).
Recapping what you need to know
While there are many things to know about buying a house in New Zealand, this is the most important:
You have to sign a sale and purchase agreement, which is a legally binding document. It is standard to negotiate the conditions of the agreement, including the sales price, and a conveyancer can help you do this. While appointing a conveyancer is not required by law, it is highly recommended.
With a property lawyer by your side, you’ll enjoy better peace of mind about the process and the deal you’re getting.