5 Steps to Buying a Property in NZ while living abroad
1. Home loans for non residents - are you eligible?
Whilst you can be working and residing outside of NZ, to legally be able to own property in NZ you will need to be a citizen of either New Zealand, Australia or Singapore. In a relationship/married with a citizen of one of these three countries? there may still be an option for you. Make your contact request here to start the process.
If you are legally(citizenship status, as above) allowed to own property, you will then find most banks unwilling to lend in part due to your income being generated outside of NZ. There are however still potentially options(including main bank) available to you. We work with a leading mortgage broker who specialises in this type of approval as he has the highest approval success rate that we know of. It's a complex lending environment currently, all the more reason to have 'boots on the ground' and appoint an independent mortgage broker to help secure an approval for you.
Often the biggest stumbling block to buying a home in New Zealand while you are living abroad is to obtain bank finance. New Zealand banks have been tightening the rules for lending to NZ expats, and many expats who were previously able to borrow money have found their borrowing capacity dramatically reduced (or become non-existent). Depending on your situation we find that there are currently only two banks in NZ that may lend in the situation now. With so few options available now, request our help today and with our support your property plans can become more attainable.
Due to changes to the current lending restrictions in February 2021, you will need a minimum deposit of 30-40%(30% specialist lender & 40% NZ bank) and typically be employed earning wages or salary rather than self employed to be eligible. The rental income from the proposed property that you wish to purchase can be used to add support and further strengthen your home loan request.
2. Determine your main motive for buying a home in NZ
Are you looking for property as a long term investment or perhaps wanting to buy your dream home as an expat prior to returning to NZ to live in permanently.
Do you plan to move into the house when you return to NZ, or will the property be for investment purposes? Are you wanting a low maintenance, brand new apartment, or an older property that has future development or renovation potential?
3. Start Searching For Your Property or Engage a Buyers Agent
A Buyer’s Agent for a lot of people is a great way to go, again using the principal of 'it's hard to beat, boot's on the ground' whilst you are not able to be in NZ. Others opt for the do-it-yourself approach and they choose to do all their searching and due diligence using real-estate websites like www.realestate.co.nz or www.trademe.co.nz/property. Our preference is that people never buy a property that they or someone independent to the agent selling the property has not personally inspected.
While some people may have access to friends or family that are willing to do a lot of running around for them, for other people living outside NZ there are many benefits to using a buyers agent. A buyers agent, like the following one who covers the Queenstown and Wanaka area, will short list properties for you based on the selection criteria you have specified. They will physically inspect the property and checkout the neighbourhood and street the property is on.
4. Negotiate Purchase Agreement and Complete Settlement
Once you have negotiated a contract to purchase your home, you will then need to undertake the various inspections and approvals that were a condition of your offer. These might include :
Building Inspection Report (generally focused on the structural integrity of the property)
Finance Approval – it is good practice that no matter how confident you are in your ability to obtain finance, that your offer should always be subject to obtaining finance approval.
Once you have completed all the conditional requirements of your contract, you can then advise the Sellers Agent that the contract is now unconditional and that you will be proceeding to settlement*.
* The purpose of this site is to provide general information only. Before proceeding with any financial decision you should always seek appropriate legal and financial advice from your solicitor and financial adviser.
5. Obtain a Chattel Depreciation Report & Hire a Property Manager
Essentially, a chattel depreciation is a tax deduction you can claim that represents the loss in value of the fittings of your property during the course of the year. Depending on the age, style and size of your property it may be possible to obtain in the order of $2000 to $7,000 per year in depreciation tax deductions.
The best time to get a depreciation report is as soon as you purchase a property. In order to claim chattel tax deductions you will require a depreciation schedule prepared by a licensed quantity surveyor.
Like with most large financial decisions, it pays to get guidance and advice from those that specialises in their field. Speaking with a great NZ Insurance Broker can help you gain comfort that you have your risks appropriately covered. We prefer working with independent insurance advisers as we feel they can provide better choice, value and impartial advice because they are not employed by any one insurance company. Feel free to ask us if you require a referral to a local insurance adviser to discuss your required personal insurances or business insurances.
You will also require a property manager to look after your new asset. They will source tenants and manage your property on your behalf. This will normally cost around 8-10% of your rental income.