Author: Toitū Te Whenua Land Information New Zealand
Overseas buyers need the right advice on the rules for buying a property in New Zealand to comply with the law. It is important for real estate professionals to have the right resources and a good understanding of how to point buyers in the right direction and avoid stress for vendors.
With our borders opening again, we are likely to see an increase in people moving to New Zealand and calling it home. Subsequently, some of these people will want to buy a house here.
Real estate professionals play a vital role in helping these people navigate the legal rules and requirements ensuring their home buying journey is as smooth as possible.
REINZ and Toitū Te Whenua Land Information New Zealand have jointly produced a new information resource that real estate professionals can use to help people understand the rules and get consent when they need it. Legal advice early in the process is essential for buyers who are not New Zealand citizens.
Who can apply for consent to buy a property?
Since 2018, foreign buyers have been prevented from buying residential property in New Zealand. There is an exception for people who have made a commitment to living in New Zealand and hold a residence class visa.
Some of these people need to gain consent from Toitū Te Whenua before they make a purchase. Others can buy without restriction if they meet the criteria to be ‘Ordinarily Resident’ under the Overseas Investment Act (OIA).
To be considered ‘Ordinarily Resident’ a buyer must meet the following criteria:
Hold a residence class visa, and
Have lived in New Zealand for at least 12 months, and
Been physically present in New Zealand for at least 183 days of the last 12 months, and
Be a tax resident in New Zealand.
These requirements are strictly enforced and people who want to buy a home but are not New Zealand citizens need to understand the rules and be sure to follow them.
How can those eligible get consent?
The good news is that while the rules are strict, gaining consent is straightforward. Applications are made online on the Toitū Te Whenua website. Buyers can get preapproval that allows them to buy any qualifying property for up to a year. It is important to note that holding a preapproval is the only way a buyer who needs consent can legally purchase a property at auction.
Engaging with potential buyers to make them aware of the restrictions and making the new information sheet available at open homes can be a huge help to potential buyers. It can also avoid problems and hold-ups in the sale process that will impact the vendor if a breach of the OIA occurs. Unfortunately, many unintentional breaches are uncovered at conveyancing when it is too late to avoid the issue.
If someone is not a New Zealand citizen or seems unclear about their status in any way, real estate professionals should recommend they seek competent legal advice before they make an offer or attend an auction.
For further information and advice head to the Toitū Te Whenua website.