Can I buy an investment property in New Zealand as a foreigner?

Generally, New Zealanders, Australians and Singaporeans can buy property in New Zealand.

Other foreigners can also buy a property in NZ, but the options are very limited or you need to apply for government permission.

Why’s this? In 2018, the newly-elected Labour government introduced a foreign buyer ban.

While that sounds tough, the legislation does not have as much teeth as it may seem.

This article breaks down who can buy an investment property in NZ, and what you can buy.

What are the pros and cons of buying an investment property in NZ as a foreigner?

There are lots of benefits to buying an investment property here as a foreigner.

There are many pros to buying an investment property in NZ.

Our house prices have tended to increase consistently. Since 1992, Auckland house prices have risen 6.9% a year.

Outside our largest city, house prices have risen on average 6.2% per year.

On top of this, standalone houses are cheaper than some other countries. You can currently buy a 4-bedroom standalone house in Canterbury for NZ$750k - $800k.

Some people – especially from Singapore – like to purchase these properties. That’s because they are significantly cheaper than if they were to buy an equivalent property in Singapore.

But the biggest surprise for foreign investors is the lack of taxes. New Zealand doesn’t have any stamp duty; you don’t have to pay tax when you buy a house.

That is significantly different to Australia and Singapore. A foreign investor buying an $800k property in Melbourne would need to pay over $100,000 in stamp duty.

NZ also doesn’t have capital gains tax, like Australia does.

That said, banks need higher deposits for foreign investors. Almost all will ask for 30-35% because they’re considered a higher risk.

On top of this, if you aren’t a NZ, Australian or Singaporean citizen, you don’t have many options. You can generally only buy certain apartments and townhouses that are government-approved.

More from Opes:

• How do I invest in New Zealand as a Singaporean National? (Article)
• Foreign buyers back? What Nationals policy means for house prices (Podcast)
• How is the New Zealand property market going? (Article)

Who can buy property in New Zealand?

If you want to buy property, you’ll fall into one of three categories. This will determine what you can buy.

Here is a simple flow chart that can help you understand what property types you can buy within NZ.

Let’s go through each of these categories.

#1 People who can freely buy property in New Zealand

If you are a New Zealand citizen you can buy any sort of residential or commercial property.

You’ll face no restrictions through the Overseas Investment Act. It doesn’t matter if you’re in the country or not.

This also applies to Australian and Singaporean citizens so long as you are not purchasing “sensitive” land.

Sensitive land tends to be farmland, rural, or land by a river, sea, reserve or lake. Usually, a property lawyer will pick up if the land you’re attempting to buy is sensitive. 

Permanent residents of NZ, Australia and Singapore can also buy residential property.

The only condition here is that you are “ordinarily resident” within NZ.

This means you must:

• Hold a New Zealand resident or permanent resident visa
• Have lived in NZ for at least 12 months
• Have been physically present in NZ for at least 183 days (half a year) of the last 12 months.

Let’s say Lisa is a permanent resident in NZ, but she’s spent the last 6+ months overseas contracting for her company.

Lisa’s no longer an “ordinarily resident”. She can’t freely buy residential property and will fall into another category.

#2 People who need consent to purchase property within NZ

This applies to anyone who:

• Is a permanent resident of New Zealand, Australia or Singapore
• Is not ordinarily resident in NZ, and
• holds an NZ resident-class visa, but is not an ordinarily resident.

If you fall into this category, you can only buy one property, and it can’t be used as an investment until:

• You’ve lived in NZ for 12 months, and
• you’ve spent at least 6 of those 12 months physically present in the country.

At that point, you become an “ordinarily resident” again. Then you can convert it into an investment property.

This will not be a good way to purchase your first investment property in NZ, particularly if you have no intention of moving here.

That’s because you won’t meet the conditions of approval.

#3 People who are restricted to purchasing specific properties within NZ

If you don’t meet any of the above criteria, there are two types of residential properties you can still buy.

• Large multi-storey apartment developments
• Hotel units.

A developer building a large apartment block can apply for an exemption certificate. This allows them to sell up to 60% of their units to overseas buyers.

The requirements are largely the same as for apartment developments.

However, a hotel developer doesn’t need an exemption certificate.

But the foreign buyer does need:

• To enter into a leaseback arrangement with a hotel operator, and
• cannot use their hotel unit for more than 30 days a year.

That stops overseas buyers from purchasing a hotel unit and then choosing to live in it for a large part of the year.

What are the challenges of buying as an overseas citizen?

Here at Opes, we are currently seeing a lot of foreign buyers.

There is a pair of teachers living in Hong Kong, earning Hong Kong dollars. There’s another one on a cruise ship. But the majority live either in Australia, England or Singapore.

Based on this experience – here are the challenges we see foreign investors facing when they are buying in NZ:

#1 – If you’re buying with a partner

Jo and Steve live in London. Jo is a Kiwi and Steve is Canadian. They want to buy property in New Zealand.

The banks won’t be so keen on having Steve (as a Canadian) on the loan documents. This means his income might not be considered in the application.

So, this can add a layer of complexity. Ideally, Jo would have a strong enough income to service the mortgage herself.

#2 – If you’re self-employed

Many banks generally won’t lend money to foreign buyers who are self-employed.

Similarly, they usually won’t include any bonus or commission income. So, if you are in a role like sales, where the bulk of your salary is commission, you may find it hard to buy a property in NZ.

#3 – If you’re in a non-English speaking country

When you apply for a mortgage, NZ banks want to know how much income you earn, and what your expenses are.

Because you aren’t in the country, banks need even more information to feel comfortable lending to you.

So, if you’re in a non-English speaking country you may need your tax returns and bank statements translated.

This adds complexity and costs.

Can I buy an NZ investment property if I live overseas?

Yes, any foreign buyer can buy an investment property within New Zealand. But, some foreign buyers will face more restrictions than others.

If you’re an NZ, Australian or Singaporean citizen, you have more options compared to someone who is Estonian, for example.