New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses (the North Island and the South Island) and numerous smaller islands, most notably Stewart Island/Rakiura and the Chatham Islands.

New Zealand is notable for its geographic isolation; it is situated about 2,000 kilometres (1,200 mi) southeast of Australia across the Tasman Sea, and its closest neighbours to the north are New Caledonia, Fiji and Tonga. The country's sharp mountain peaks owe much to the earthquakes and volcanic activity caused by the clashing Pacific and Indo-Australian Plates. The climate is mild and temperate and most of the landscape is covered by tussock grass or forests of podocarp, kauri or southern beech. During its long isolation New Zealand developed a distinctive fauna dominated by birds, a number of which became extinct after the arrival of humans and introduced mammals.

Reasons to Buy: The reasons to buy property in New Zealand far outweigh the reasons not to. For example, the fact that the nation is roughly the same size as the UK but has a fraction of the population means that there is plenty of space for each citizen, additionally there is lower unemployment in New Zealand than in the UK and the cost of living is lower too. Despite a house price boom of late, property prices are also more affordable and the process to purchase property is as simple as it is in the UK.

Restrictions: If you have been granted permanent residency there are very few restrictions on the type, or the amount, of property that you are allowed to buy. If, however, you are coming in as an overseas investor then there is a certain amount of criteria that you must meet.

The main instances are when the property costs more than $10 million (£3.52 million), when the property consists of more than five hectares, or when your plot is made up of coastal land and is larger than 2,000 square
metres in size. In these three instances you will need to apply to the Overseas Investment Commission for approval to purchase, and it is likely that permission will only be granted if you can prove that you will be adding economic value to the country.

The Buying Process: Unlike in the UK where you have to make an appointment to view a home that you are interested in through the estate agent who is marketing it. In New Zealand the vast majority of homes for sale have open days.  These days and times of opening are advertised with the property for sale in newspapers, or you can call the estate agent marketing it for details.  Open days, or rather, Open Homes as they are called are opportunities for potential buyers to visit the property, spend time looking around it and speaking to the estate agent and possibly the vendor as well. 

Naturally enough, the more popular the house the more popular the viewing will be.

Some homes are for sale like in the UK with viewings by appointment only.  Once you have viewed the homes that you are interested in they will either be for sale at auction or at a fixed price. If the home is for sale at a fixed price you have to submit a formal written offer to buy the property at a given value. This offer is then given to the vendor by the estate agent or your lawyer. If the offer is accepted it is usually subject to such stipulations as an independent evaluation being conducted on the property by you, a clear and successful title search being carried out for you by your lawyer, a building inspection report coming back with no problems having been found, a satisfactory LIM (land information memoranda) report result and also probably the sale of another property by you and also having mortgage financing approved as well.

Whatever type of property you decide to buy, you can rest assured that you wonít be gazumped, as accepting a written offer is legally binding.

So, the offer is accepted and a preliminary sales agreement is drawn up stating that you will buy at the agreed price subject to the satisfactory outcome of all the above stipulations for example.  Within the contract there will be a settlement date which can be as little as three weeks hence, or as much as six months ahead, but which is usually set at six to eight weeks from the contract creation date.  At this point it is usual to pay a deposit which is held by the lawyer or estate agent.  The deposit is about 10% of the purchase price. 

Until the settlement date you and your lawyer have time to get all the surveys, searches and reports done on the property to ensure all is in order with the home and that the sale should go ahead.  You can get advice about the searches and reports you need to have done from the Real Estate Institute. Once all is found to be in order with the house, your own house sale has gone through and you have the mortgage ready and in place, settlement date will be reached, final monies transferred and you can take possession of your new home. 

Your lawyer will take care of registering you as the new owner but you should have taken care of getting utilities and services transferred into your name from the settlement date forwards.

Auctions: If your preferred property is for sale at auction rather than at price, donít panic.  Whilst buying at auction in the UK is unusual, in New Zealand it is pretty much normal practise.  What you have to do is all your homework in advance of the sale.  So, register your interest in the property formerly with the estate agent and then get the builders and inspectors in to check every nook and cranny of the home because an auction property is sold unconditionally, i.e., it is sold as seen.

The other thing with an auction is that you have to have all the money to hand to pay for the property. On the day of the auction, if you are the successful bidder you have to literally have enough in hand to pay the deposit and you cannot ask for time to arrange a mortgage or bank transfer. You need to have a mortgage in place or the cash in the bank as the remainder will be due within days of the sale.

If in doubt about the process, ask the estate agent any questions you may have.  And finally, in terms of taxes etc., the good news is that there is no stamp duty in New Zealand and you should allow 10% to comfortably cover you for all additional expenses.

Legal: You are advised to choose a lawyer to represent you before you want to make an offer on a house. Your lawyer will be responsible for checking the contract, explaining your rights, attending to all the legal paperwork and to advise you and ensure that everything is in order. 

Shortly after settlement your lawyer will give you a settlement statement with all the purchase details, register your mortgage and the property transfer with the Land Registry, give you a copy of the property title showing you as the new registered owner and send the property title, mortgage and insurance certificate to your mortgage lender to be held as security.

Finance: It is relatively easy to get a mortgage in New Zealand, providing that you meet the usual criteria. Generally banks lend 90 per cent of the purchase price for up to 25 years. Interest rates fluctuate from bank to bank, but tend to vary between six and eight per cent depending on whether you opt for a fixed or variable rate. Banks do tend to be slightly more flexible in New Zealand, and are occasionally open to negotiations regarding rates. It may also be possible to split the loan into different parts, for example so that a certain amount of the mortgage is paid on a fixed term, and some of it on a variable.

Repayment mortgages are known as Table mortgages. Interest Only loans are also available, but so are Reducing mortgages. A Reducing mortgage means that your repayments change every month, with your actual repayment figure staying the same during the course of the loan, while the interest payments gradually reduce. So your payments start relatively high and reduce over time, hence the name.

Taxes & Costs: The good news for potential property buyers is that there isnít any stamp duty in New Zealand, or indeed any inheritance tax. Capital Gains tax is also non-existent Ė unless property trading is your profession.

Therefore, when buying a Kiwi home, you will need to budget for solicitorís fees at around $1,000 (£352), a valuation fee of about $400 (£140), a building inspection report at $400, the Land Information Memorandum at $150 (£53) and a transfer fee of around $50 (£18). If you are buying with a mortgage, you will also be required to pay a registration fee which will cost about $50. All of the above figures include GST (goods and services tax) at 12.5 per cent.

When selling a property in New Zealand you will be liable for solicitorís fees and estate agency charges. You need to budget around three to four per cent of your asking price for the latter.

Map of New Zealand

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Disclaimer: This guide is for information only and should not be relied upon as definitive. Details have been obtained from various sources and although we have done everything possible to ensure that it is correct, we cannot accept responsibility for it or guarantee its accuracy. This is because processes and laws change frequently, and may also vary dependant upon personal circumstances. You are welcome to use the information provided, but should always obtain confirmation of specific details and get independent specialist and legal advice in the country that the information refers to.

10-02-2011