Frequently Asked
questions

Yes - Australians are one of the few holders of foreign passports who are allowed to buy property in New Zealand.

No restrictions

Australians may need a local credit history to secure a loan in New Zealand, which could be a hurdle if they're new arrivals from Australia. Applying through Australian banks with New Zealand branches, or working with a mortgage broker, might ease the process. A significant initial deposit is often required, especially for investment properties. Loan approval for Australians may be contingent on their residential status in New Zealand and income source, with those based outside New Zealand possibly requiring Overseas Investment Office (OIO) clearance.

Typically, NZ banks provide a range of loan-to-value ratios (LVR) between 50% and 80%, with the specific rate contingent on variables like the type of property and its geographic placement. At present, due to a cautious approach to risk, they have a general preference for offering a 50% LVR universally. However, this may increase to 60% in city regions considered prime. In prosperous markets, the peak LVR generally does not surpass 65%.

Currently, there is a fixed interest rate of 6.89% for 12 months, lower than the advertised rate of 7.24% per annum. The interest rate for commercial property loans typically ranges from early 9% to late 9%, varying based on the level of risk involved. For the most current rates and options available, it's best to consult directly with financial institutions or a mortgage broker in New Zealand.

Lenders may charge a fee that amounts to 1% of the value of a commercial loan. Nevertheless, if the loan is partially secured by residential assets, this charge is not applicable to that part. In such cases, customers might be eligible for a cashback close to 0.8% on the residential segment of the loan. Should the bank not pay me a direct fee, my typical charge ranges from 0.85% to 1%. However, when the bank pays me for the portion of the loan secured by the residential property, I will only invoice the client for any shortfall that needs to be covered.

Equity from residential or commercial properties can indeed be leveraged to finance the acquisition of commercial real estate. Additionally, there is the potential to refinance commercial properties down the line. This would necessitate a fresh appraisal and the reevaluation of debt servicing capabilities with a prospective lending institution.

As a tax resident in New Zealand, you won't typically face taxation on the sale of commercial property. However, if the acquisition of the property was originally aimed at resale for a profit, commonly known as "flipping," or if certain conditions occur, such as a substantial increase in value due to rezoning or profits from development, the sale might be subject to tax. For more detailed information, it would be wise to seek advice from a tax consultant familiar with New Zealand's tax regulations.

In New Zealand, interest on loans for commercial properties is generally tax-deductible when the property is used to earn taxable income. This deductible expense is accounted for in the period in which the income is earned. However, it is worth noting that new rules limit deductions on residential property loans.

No Stamp duty is payable. One of the most significant benefits of investing in property within New Zealand is that buyers are not required to pay stamp duty on their purchase.

Yes, income tax is payable on profits in New Zealand. Additionally, these profits must be reported in Australia where further tax is levied. However, the tax paid in New Zealand may be credited against any tax liability with the Australian Taxation Office.

In New Zealand, there is no land tax levied on commercial or residential property. Instead, property owners may be subject to other forms of taxation, such as income tax on rental earnings or capital gains tax under certain circumstances. However, local council rates, which are based on property values, are applicable and serve a similar role to property taxes in other jurisdictions.

Yes (Buildings require consents to relative code and a BWOF (Building Warrant of Fitness)

1 to 15 years (highly dependent on the specific circumstances)

Natural disasters such as earthquakes, land subsidence, and flooding present risks for property investors. However, in New Zealand, the government offers insurance through the Earthquake Commission (EQC), which mitigates some of these risks for investors. It’s important to note that commercial buildings are generally required to undergo an earthquake rating assessment. Such assessments, referred to as Initial Evaluation Procedures (IEP), provide a building's New Building Standard (NBS) rating and outline any necessary improvements (along with their deadlines) to meet satisfactory safety levels. Properties with a low NBS rating may result in higher insurance premiums and potentially make it more challenging to secure tenants.

The operational expenses for commercial property typically include electricity, water, internet services, gas, local council rates, insurance premiums, and costs associated with obtaining and maintaining building warrants of fitness through regular reports and inspections. In the context of a lease agreement, these expenses may be transferable to the tenant, as is the case with triple net leases, which are an available option in New Zealand.

0.3 - 2% (location and zone effect council rates)

New Zealand presents considerable potential for enhanced returns via market rate appreciation or through the development of land.

When considering commercial property, key factors remain consistent across Australia and New Zealand. Rethink Investing offers a comprehensive service, including Property Strategists, Acquisition Specialists, and experts in Due Diligence and Management. Recognising the need for local expertise, we have a dedicated property acquisitions specialist in New Zealand with extensive knowledge and key relationships nationwide. Grant, our in-house expert, also contributes significantly to our operations, solidifying our presence as a New Zealand company.

Our Acquisitions Specialist in New Zealand has over a decade of experience in the domestic and international property sector. Starting his career in construction, he transitioned to client-side development management and personal property development, further enhancing his expertise by consulting on property acquisitions, conducting due diligence, and performing feasibility studies. Since joining Rethink New Zealand, he has leveraged his diverse property background to secure the best deals available in the country. Rethink Investing’s due diligence team has completed evaluations totaling over $4.65 billion. Currently, we are collaborating with local engineers and solicitors to ensure thorough due diligence is conducted.

Rethink NZ is Licensed under the REA Company: Agent: 20179805

Starting from the acquisition phase, our team identifies deals that pass initial screening. During due diligence, our experienced analysts meticulously evaluate all other aspects of the deal to ensure both its immediate viability and long-term potential. With a decade of experience in analysing business operations and leasing performance, our expertise seamlessly applies across both countries.

Typically, we aim for a minimum yield of 6%, but this can vary based on factors such as the investor's risk tolerance and financial considerations. Different locations and asset classes in New Zealand offer unique yield potentials. We determine the minimum yield by assessing geographical location, sector, risk appetite, and potential growth through rental increases. Although future yields cannot be guaranteed, we conduct thorough due diligence, including analysing market rental rates and targeting under-rented assets, to ensure optimal purchases.