New Zealanders like to own their own homes and, for most of us, it’ll be our biggest investment.
Whether you are buying or selling for the first time or not, you will want the experience to be positive and rewarding.
You can avoid a lot of potential stress, cost and frustration by following the basic steps in this brochure.
Choose a property lawyer – get recommendations from friends, family, work colleagues or your local branch of the New Zealand Law Society.
See your lawyer and make sure that whatever you sign is right for you before you sign it.
Whether you are buying or selling a property, you are the one who must be satisfied with the outcome – not the agent, not your family or friends. Stay in control of the process and let your lawyer help you to:
Remember, do not sign the agreement before discussing it with your lawyer. If you are selling a unit title property you must not sign the agreement until you have made pre-contract disclosure to the buyer.
If you are buying and are not a New Zealand citizen or permanent resident (or citizen of Australia or Singapore), do not sign an agreement unless you are sure that you are entitled to buy in New Zealand without the need for Overseas Investment Office Consent. Talk to your lawyer if you are unsure.
You, as the client, will see only a small part of the work that needs to be done to complete the deal. Behind the scenes, your property lawyer will make sure that settlement is completed with a minimum of fuss. Your lawyer will look after your interests every step of the way.
Your lawyer should protect your interests and ensure the smoothest, simplest, most efficient transaction for you, whether you are buying or selling.
Remember, get your lawyer’s advice before signing anything. Documents can be emailed or faxed to your lawyer when there is any urgency.
When you go to see your lawyer, take a list of the questions you want to ask. The final decision in all matters will be yours. Make sure you have enough information to make the right decision.
There are many checks you can make to be sure that what you are buying is really what you want. Every property is different and may require a different set of checks. Your lawyer will know what checks to make and who can make them for you.
For example, you’ll want to know:
Your lawyer can assist with any research required about the property, including advising you on how best to use any reports you obtain. This work is your insurance against disappointment and perhaps substantial additional costs if you have to fix something later.
There are a lot of choices of loans to buy property. Your lawyer can assist you interpret the documentation to ensure you understand your obligations, including in relation to:
Some of these decisions affect how long it will take to pay off your loan and how much interest you will pay overall.
Get these things right the first time. Changing them later will mean extra cost.
Should you own the property in your own name, a trust or a company? There are taxation and other issues here. There are also taxation and other implications if you are buying property as an investment.
You might buy the property as a single person, as a couple (married, civil union or de facto), with a friend or in a business partnership.
The decisions you make now might have important consequences later when you sell the property or if your relationship ends.
Here are some of the questions you should consider when deciding what property to buy, what area to buy in and how much you should pay. You might also have questions about more personal issues. Add your own points to the checklist and rank them in order of importance to you.
When you are planning to buy a home, you think first of what you would like and then it comes down to what you can actually afford. Think about:
It is recommended that you get a LIM if you are buying a property. The standard Agreement for Sale and Purchase includes a LIM condition, provided you select it on the front page. A LIM provides information the council holds about the property. It will show whether existing works have received council consent and whether the council requires any remedial work. It might, for example, show a fire burner has been installed without the appropriate certification. This could invalidate insurance on the property (eg, if the burner causes fire damage). A LIM report will also give you information about any site characteristics (such as contamination, propensity to flooding, etc) and zoning details. You can ask the seller to fix any defects disclosed in the LIM and cancel the contract if the seller refuses to do so, but only if you have selected the LIM condition in the contract. But remember, the LIM provides information only about those things reported to the council – not those that haven’t been reported.
Both sellers and buyers should ask their lawyers to search the title. Sellers should, among other things, make sure their property details are correct. Buyers should identify everything registered against the title that might affect their use and enjoyment of the property – e.g., easements including rights of way, drainage and sewerage, electricity, telephone, gas, etc. Your lawyer will also check what needs to be removed from the title before you settle, such as the seller’s mortgage.
Your lawyer should, in particular, get plans showing the site of buildings on the property when you are buying a cross-lease title or unit title. You should check, among other things, that the plans accurately show the outlines of the buildings on the land. For example, people sometimes add an extra room to a house on a cross-lease title without changing the plan to include the extra room. The cross-lease title is then defective. You might also need to get survey plans for other reasons, such as identifying the location of boundaries or easements.
The standard Agreement for Sale and Purchase includes a builder’s report condition in clause 9.3, provided you select it on the front page. The Weathertight Homes Resolution Service run by the Department of Building and Housing will, if asked, check if the property is subject to a claim.
The local council (sometimes called the local or territorial authority) and local regional council charge annual rates on each property for the services they provide. Rates are set annually and collected throughout the year in instalments. Each council fixes its own number of instalments – usually between two and five each year. Your lawyer will make sure rates are adjusted on settlement. You will pay rates up to the settlement date if you sell and from the settlement date if you buy.
See your lawyer! There are now major implications for de facto couples buying or owning property – and even for those who live in the property that just one of them owns. Part 8 of this pamphlet sets out a lot of the issues you will need to consider if you buy a property in these circumstances. Make sure you discuss these issues with your lawyer before you sign the agreement to purchase.
If you sell a residential property you have owned for less than 10 years you may have to pay income tax on any gain on the sale. This is the bright-line property rule and it also applies to New Zealand tax residents who buy overseas residential properties. The bright-line property rule does not apply to properties acquired before 1 October 2015.
Residential land withholding tax is a tax deducted from some residential property sales. It's paid by offshore people who sell their residential property. Withholders deduct and pay the tax to Inland Revenue for the offshore people. Your lawyer is obliged to collect residential land withholding tax on your sale, if you are liable for it, and must pay it to Inland Revenue on your behalf when it is due. Your lawyer will be familiar with these requirements and will advise you what you need to do and how these requirements affect you.
You can buy residential property without the need for consent if you are either:
If you are not any of the above, you may still be eligible to buy without Overseas Investment Office consent under some limited circumstances (e.g. if buying an apartment in a large development off-the-plans, from an exempted developer) but you should check with your lawyer first before signing any agreement. If no exceptions apply and you do need to apply for consent, your lawyer can also guide you through this.
A written contract for the sale and purchase of the property between the seller (vendor) and the buyer (purchaser). Never sign an agreement without first discussing it with your lawyer.
The body corporate is a statutory entity made up of all the unit owners in a unit title development. When you buy a unit you automatically become a member of the body corporate and when you sell your unit you cease to be a member of the body corporate (but may remain liable for levies if you don’t give proper notice).
The body corporate is responsible for a range of management, financial, maintenance and administrative functions relating to common property and to the development as a whole. It is also responsible for maintaining and repairing some building elements and infrastructure which may not be common property. Some bodies corporates have or are required to have a committee to which the body corporate may delegate some of its powers and duties. The body corporate committee elects a chairperson, who must be a unit owner. The chairperson has certain powers and duties under the Unit Titles Act.
The rules governing the election of the body corporate chairperson and the committee and the rules governing meetings and voting are set out in the Unit Titles Act and can’t be changed by the body corporate. Make sure your lawyer explains them to you.
The body corporate operational rules help the body corporate govern the unit title development. All unit owners, occupiers and the body corporate must comply with the rules. Under the Unit Titles Act, default operational rules are set out in statutory Regulations. The body corporate can revoke, amend or add to the default rules within certain limits set out in the Act.
Items included in the sale that are not legally part of a building. They usually include any stove, television aerial, carpets, blinds, curtains, drapes and light fittings on the property. They may also include rangehoods, dishwashers, refrigerators, heaters and so on. Make sure the agreement correctly includes the chattels you intend to buy or sell. Chattels not specifically listed in the agreement are not included in the sale.
A legally-binding agreement that can be cancelled if certain conditions are not satisfied. An agreement can, for example, be conditional on:
The agreement becomes ‘unconditional’ when all the conditions are satisfied. Ask your lawyer to make sure all the conditions you need are included in the agreement.
More than one dwelling (or commercial premises) is included on one freehold title. All owners jointly own the freehold title. Leases by all the owners (as lessors) to individual owners (as lessees) give the individuals the exclusive right to occupy their own property. A cross-lease title is a combination of the owner’s share in the freehold plus the owner’s lease as lessee.
Part of the purchase price (usually a maximum of 10%) paid by the buyer when the agreement is signed or becomes unconditional.
The way of transferring title electronically in New Zealand. Your lawyer will have a licence from Land Information New Zealand (LINZ) to do this.
What you own – rather than owe! The market value of your property less what you owe on your mortgage. Your equity will increase as the value of your property increases and the amount of your mortgage decreases.
You own the property even if you have a mortgage. Also known as a freehold title, although some people do not regard their title as freehold until the mortgage has been paid off. It is the most common form of title in New Zealand.
Interest is the cost of borrowing money, usually expressed as an annual percentage of the amount borrowed. Interest is usually paid monthly for housing loans, but can be paid at different intervals.
You do not own the property, but a ‘lease’ gives you the right to occupy the property. ‘Tenancy agreements’ are leases. It is possible to lease a property and own the building on the property. Your lease might also include an option to purchase. Ask your lawyer to explain the terms of the lease to you before you sign anything and, in particular, to identify any costs in addition to rent the lease requires you to pay.
The security you give your lender in exchange for the loan of money. It is usually registered against the title to the property you buy. The property cannot be sold, except in rare cases, without the loan being repaid and the mortgage removed (discharged) from the title. The lender can sell your property if you fail to meet your mortgage requirements. However, the lender must first meet certain legal requirements, including giving you an opportunity to remedy any defaults. Make sure your lawyer explains the consequences of signing your mortgage.
The date when the buyer takes physical possession of the property.
The amount you borrow.
The person who buys the property.
The date when the purchase price of the property is paid in full. Usually the same date as the possession date.
The period of time over which your loan (mortgage) is to be repaid. The longer the term, the more interest you pay.
The Certificate of Title is an electronic document that describes the property and shows the legal owner of the property. In New Zealand, it can be a freehold, leasehold, cross-lease or unit title.
An agreement not subject to any conditions: as buyer you must buy; as seller you must sell. Don’t sign one unless you have discussed it with your lawyer first.
Unit titles are a common form of multi-unit property ownership. Owners privately own an area of land or part of a building and share common property (such as lifts or driveways) with other unit owners. Unit titles have a body corporate management structure to enable decisions affecting the development to be made jointly by unit owners.
Under the Unit Titles Act sellers of units are required to provide buyers with disclosure statements containing information prescribed in Regulations under the Act. In some cases prescribed forms must also be used.
There are three types of disclosure:
Failure to provide a disclosure statement or failure to provide it within timeframes set out in the Unit Titles Act can have serious consequences and in some cases a buyer may even be able to cancel an unconditional agreement. Make sure your lawyer explains the types of disclosure and consequences of failing to make the proper disclosures to you.
Your local council uses a valuation for rating purposes (previously the Government Valuation). The valuation is only a guide to the market value of the property. A private valuation, carried out by a professional valuer or Quotable Value New Zealand, should give a more accurate value.
The person who sells the property. The vendor pays the commission to the real estate agent who arranges the sale of the property.
Lawyers deal with many personal, family, business and property matters and transactions. No one else has the training and experience to advise you on matters relating to the law. If your lawyer can’t help you with a particular matter, he or she will refer you to another specialist.
Seeing a lawyer before a problem gets too big can save you anxiety and money. Lawyers must follow certain standards of professional behaviour as set out in their rules of conduct and client care.
When you instruct a lawyer, he or she must provide you with certain information, as outlined in our guide Seeing a lawyer – what can you expect?
This includes informing you up front about the basis on which fees will be charged, and how and when they are to be paid. The fee, which must be fair and reasonable, will take into account the time taken and the lawyer’s skill, specialised knowledge and experience. It may also depend on the importance, urgency and complexity of the matter.
There could also be other costs to pay, such as court fees. You should discuss with your lawyer how you will pay for the work and advice if you don’t want to spend more than a certain sum without the lawyer checking with you.
A lawyer is required to tell you if you might be entitled to legal aid. The guide Seeing a lawyer – what can you expect? also outlines how you can help control your legal costs and get best value from your lawyer.
Choose your own lawyer for independent advice. You do not have to use the same lawyer as your partner or anyone else involved in the same legal matter. In fact, sometimes you must each get independent legal advice.
Lawyers must have a practising certificate issued by the New Zealand Law Society. You can call the Law Society on (04) 472 7837 (or at one of the offices listed below) or email email@example.com to see if the person you plan to consult holds a current practising certificate. You can also check this on the register accessible through the website www.lawsociety.org.nz.
If you have a concern about a lawyer, you can talk to the Lawyers Complaints Service, phone 0800 261 801.