Tompkins Wake
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Generally, foreigners are restricted from purchasing certain types of “sensitive land” and other sensitive assets in New Zealand, in particular residential land, large areas of non-urban land, and land incorporating or adjoining areas, such as foreshore, reserves, heritage and land subject to Māori interests. The overseas investment rules contain a number of consent pathways and exemptions, which facilitate overseas persons acquiring such land and assets. Consent criteria may include residence requirements, demonstrating economic, environmental or other benefits to New Zealand, and not being against New Zealand’s national interest. There are currently some favourable exemptions seeking to promote development of residential housing. In relation to owning residential land, exemptions from the rules are available to Australian and Singaporean citizens and residents (and their related entities) in certain circumstances.
Reform to the legislation is expected towards the end of 2025 in respect of high-value investments.
Our foreign investment rules are complex, and we recommend specific advice is sought.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
There are no restrictions on lending which are specific to foreign companies however taking mortgage security may trigger overseas investment consent requirements (particularly if the land is ‘sensitive’), but exemptions are available if the lending is in the ordinary course of business for the company, is made in good faith and is not entered into with the intent to avoid overseas investment rules.
The New Zealand Government from time to time imposes temporary restrictions on banks’ loan-to-value ratios to reduce the amount of low-deposit mortgage lending. This is not particular to foreign companies. Currently owner/occupiers are required to have a 20% deposit, and investors are required to have a 30% deposit.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
New Zealand does not currently have any stamp duty or other similar levies or taxes specifically applying to the purchase of land.
Goods and Services Tax (GST) at 15% can be payable as part of the purchase price (in particular where purchasing property from a land developer), but transactions for existing homes are usually exempt from GST, and most commercial transactions have GST set at 0% where both parties are GST registered and the property is, and will be, used as part of a taxable activity. Specific tax advice should be sought on a case-by-case basis.
Conveyancing fees will depend on the type of real estate being purchased and complexity involved. To buy a residential dwelling, legal fees would ordinarily be in the range of $NZ2,500 to $NZ5,000 plus GST and disbursements, whereas the purchase of commercial property or rural land could be $5,000 to $30,000 plus GST and disbursements, depending on the level of due diligence and other work involved. Disbursements include land registration fees payable to the regulator which maintains New Zealand’s land registry. These fees are usually only a few hundred dollars.
If consent under overseas investment rules is required, application fees payable to the regulator range from $2,040 for a permitted individual buying a residence, to $142,000 for a complex acquisition involving farmland. Legal fees associated with the consent process are often commensurate with the applicable application fee.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Local authorities levy rates on all landowners (in connection with provision of municipal services). Most commercial leases will pass the cost of these rates on to the tenant, but residential tenancy agreements do not.
Rental income attracts income tax. The income tax rate is 28% for companies and 39% for trusts. Individuals (including beneficiaries of trusts who receive income) are taxed at progressive rates that range from 10.5% to 39%, based on their incomes.
Commercial landowners (including those providing short stay accommodation) which derive more than $60,000 of income from their properties per year are required to register for GST and charge GST to tenants at a rate of 15%.
Whilst there is no broad-based capital gains tax on land in New Zealand, from 1 July 2024, if a residential property is sold within 2 years of the date of acquisition any gain on sale will be deemed income, taxable at the property owner’s usual tax rate. Certain exceptions are available, including an exception for a person’s main home. Note that this tax has regularly been subject to political attention and legislative change.
Any time a property is purchased with the intention of selling it for a profit, that profit is treated as taxable income.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
No. There are no specific tax breaks or incentives targeted at foreign buyers of land in New Zealand. However, New Zealand has no broad-based capital gains tax, stamp duty or inheritance tax.
Government incentives are usually targeted to businesses which bring new technology, research and development, raise New Zealand’s international profile, or enhance exports and tourism; rather than investors in land.
How is the ownership of Real Estate evidenced in your jurisdiction?
Use of the Torrens land transfer registration system is compulsory. The electronic register of titles in New Zealand, maintained by Land Information New Zealand is the basis of our title system, maintaining a current public record of legal ownership of and registered interests in land.
The concept of indefeasibility protects the registered owner against claims of a competing owner, and against encumbrances, estates and interests not appearing on the register. This system is supported by the government guarantee as to the accuracy of the registered rights. Indefeasibility can be defeated if it can be proven that fraudulent activity has been carried out by the owners in obtaining the title.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
Ownership of real estate is a matter of public record through the land registry.
Note that it may not be apparent if individuals or entities holding interests in land are doing so as trustees as there is no public register that identifies trusts or their beneficiaries (other than registered charitable trusts). A company can also be a trustee.
Details of directors and shareholders of companies registered in New Zealand are publicly available online free of charge through the Companies Office website.
As with land ownership records, it may not be apparent if company shareholders are holding shares as trustees/nominees.
Since July 2018 lawyers and conveyancers have been subject to ‘know your client’ anti-money laundering obligations. These require lawyers and conveyancers to positively identify their clients (including the ultimate beneficial owner(s)).