Buying your New Zealand Home

New Zealand with its clean, green image and wide open spaces, temperate climate and low healthcare costs is considered by many people to be the country that is as close to paradise on earth as is possible.

Overseas buyers are able to purchase most types of property, including intensely desirable areas such as a beachfront home. However, if the land is deemed to be "sensitive land" you would need to obtain permission from New Zealand's Overseas Investment Commission. (See www.linz.govt.nz/overseas-investment.)

Excellent capital growth combined with low taxation levels means that New Zealand is reasonably safe for investment.

New Zealand does not have stamp duty, inheritance tax or problems with gazumping. Tax is only applicable if you are trading in property as a profession. Once a contract is "unconditional" the purchaser is by law required to settle on the property. The average time taken to complete a sale is four weeks with solicitors settling the sale on your behalf.

Mortgages and loans are readily available from New Zealand banks and it is possible to rent out your home although it is recommended to utilize the services of a Property Management company.

For information on current immigration policies, including Business Migrants view www.newzealandnow.govt.nz.

• Client refers to the seller/ vendor of the property.
• Customer refers to the person buying/purchasing the property.
• Conveyance/exchanging contracts and settlement of the property are executed between the two parties solicitors.
• A deposit of up to 10% is required upon an agreement being deemed "unconditional" but is often required at the conditional stage of the contract to indicate the purchaser's commitment to buying the property.
• Generally a prospective purchaser will work with one salesperson per office.

Agents have standard law society sale and purchase agreement contracts for making offers on a property.

A conditional contract is one which gives you a set time, perhaps one or two weeks, to sort out various aspects of the agreement. Clause conditions may include:

• Finance (so you can organize a mortgage)
• A valuation by a registered valuer if required for mortgage purposes
• A title search checking for easements, covenants or restrictions
• A Land Information Memorandum (LIM) from Council. The LIM is used to highlight anything that may not be permitted
• A satisfactory builder's or engineer's report
• Sale of the buyer's own house

The property owner may add an escape clause to any conditional offer, which means that if the client receives an attractive back-up offer, they give the first buyer a set time (about three days) to satisfy the conditions to make the first agreement unconditional.

The contract will specify the chattels to be left in the house (usually curtains, fixed floor coverings, dishwasher, etc) and a settlement or completion date. The settlement date is when you pay the agreed price in exchange for the key. Settlement is normally four to six weeks after the unconditional date although it can be earlier or later by mutual agreement.

To buy at a public auction you need to have any finance required approved by the bank as an auction sale is an unconditional sale requiring the successful purchaser to immediately pay by cheque 10% of the sale price straight after the bidding. Prior to the Auction date you would need to complete all your due diligence on the property. For example obtaining and being satisfied with the LIM report, valuer's report and approved finance. The sales person will have certain documentation available including the approved Auction sales contract with details such as the settlement date, etc, for you and/or your lawyer to peruse.

The owner will have set a reserve price which is the minimum price they are prepared to sell the property for. A property cannot be sold "under the hammer" until the bidding has reached that reserve. Once the bidding has reached the reserve, the auctioneer will say "the property is now on the market", which means that the top bidder will buy the property.

If the bidding does not reach the reserve price, the property is "passed in" to the highest bidder and negotiations will continue with them. If negotiations are unsuccessful then negotiations will continue with other interested parties.

A tender is similar to an auction but without the public bidding. Essentially, you complete the tender documents which have been approved by the seller's solicitor. The purchaser will nominate the amount that you wish to buy the property. This must be accompanied by a 10% deposit cheque .If you are unsuccessful then this will be returned to you. Tenders are sealed and opened on the day the tender closes. All of the tender offers are opened and the most acceptable (if any) chosen.

For an owner, a tender gives the benefit of privacy as all interested buyers complete the tender sale and purchase agreement and the sale price/ terms can remain confidential until the property has settled. They also don't have to accept any of the tenders if they are not happy with the price or conditions. In this case they will ask the agent to negotiate with one of more of the potential buyers to see if an agreement can be reached.

This is why it is important to offer your best price if you wish to purchase the property. Unlike other methods of selling you may not get another chance to make an offer.

Unlike the Auction process you are able to insert conditions to the offer, much like a negotiated sale -- but remember that a cleaner offer is always most attractive to the seller.

Settlement of your Property Purchase

Once your offer to purchase is declared unconditional by your solicitor (e.g. finance, valuation, builders report conditions have been satisfied) your solicitor will:

• Prepare your mortgage document and explain them to you
• Prepare the Memorandum of Transfer, which transfers ownership to you
• Check that the council rates and any other costs are paid
• Confirm that you have arranged insurance for your new home from settlement date
• Searched the property title from Land Information New Zealand (LINZ), which is a protection by statute against somebody else making a claim against the title to the property you are buying
• Arrange with you and your bank for payment of your loan and your remaining share of the purchase price (excluding your deposit)
• Arrange for you to (finally!) get the keys to your new home

• Provide you with a new settlement statement containing all the details of the purchase
• Register the new mortgage and the transfer of the title with the LINZ office
• Give you a copy of the title showing you registered as the new owner
• Report to your lender that the mortgage has been registered and provide a copy of the title and certificate of insurance as confirmation of security for your loan

Settlement Day

Prior to settlement day you are entitled to a pre-settlement inspection of the property. This is to check that the property is in the condition that you saw it in between signing the contract and moving in and that the agreed chattels remain.

If you do notice a problem, inform your solicitor who will contact the seller's solicitor.

Once settlement has occurred the seller's solicitor will authorize the release of the keys to the house and you are able to move in.