Tompkins Wake
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Yes, if certain criteria are met. New Zealand regulates the acquisition of property and interests in property by Overseas Persons. Overseas Persons (as defined in the Overseas Investment Act 2005 (‘OIA’)) must obtain consent to purchase or obtain an interest in sensitive land. What comprises sensitive land is complicated, determined by type and area and is set out in the OIA, but includes without limitation, most islands, over certain minimum threshholds of foreshore, seabed, conservation land and land of particular significance to Maori. It also includes land adjacent to such land. Consent is also required if the value of the asset/s exceeds $NZ100 million.
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. 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 35% deposit.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
OIA consent application fees are around $NZ22,500 to $NZ49,000 plus legal fees of around $NZ50,000 to $NZ75,000.
Goods and Services Tax (‘GST’) may be payable. The current rate is 15%. Most residential property sales are not subject to GST (unless the property is being sold by a developer). Commercial transactions will usually be zero rated for GST where the property is, and will continue to be, used as part of an ongoing business.
There will also be Council fees if a Land Information Memorandum is requested (these are recommended for purchasers) and Land Information New Zealand registration fees. For single title properties, Council and LINZ fees are likely to be in the $NZ hundreds.
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 government levies rates on all land owners. Most commercial leases will pass the cost of these rates on to the tenant.
Rental income attracts income tax. Companies’ tax rate is 28% and trusts pay 33%.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
There are not a large number of incentives or subsidies in New Zealand. We have only two tiers of government – the central government and local councils. The main areas of incentives in New Zealand are grants in the technology and export development areas through our central government. There are also research and development tax incentives through our Inland Revenue Department. From a regional development point of view, a number of local councils have grants.
There are no specific tax breaks other than usual tax planning. New Zealand has no capital gains tax, stamp duty or inheritance tax. Although the new Labour Government has established a tax working group to study the introduction of a capital gains tax.
How is the ownership of Real Estate evidenced in your jurisdiction?
Use of the Torrens land transfer registration system is compulsory. Legal interests in land can only be created by registration under the Land Transfer Act 1952.
The register of titles in New Zealand is the basis of our title system, maintaining a current public record of legal ownership of land.
The concept of indefeasibility protects the registered proprietor 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 proprietors in obtaining the title.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
No, it is not possible to keep the identity of owners of real estate confidential. Ownership is a matter of public record through the land registry.
Note that it may not be apparent if entities holding interests in land are doing so as trustees. If so, there is no public register that can be used to identify the trust or its beneficiaries.
Ownership of companies registered in New Zealand is publically available online free of charge through: https://companies-register.companiesoffice.govt.nz/help-centre/getting-support-to-use-the-companies-register/searching-the-companies-register/. From July 2018 lawyers and conveyancers will have to comply with ‘know your client’ anti-money laundering laws.