Why international buyers are focusing on New Zealand
New Zealand property attracts very strong international investment for a variety of reasons:
Straightforward Land Title System
New Zealand has an easily understood land title system based on the Torrens system of Land Registration. The Land Transfer Act 1952 provides for a public register of land and transactions may be conducted in reliance on the register.
With its well-developed legal and trading systems, New Zealand provides a strong diversification option for property investors internationally in a balanced service, rural and manufacturing economy, in which many major international corporates are already invested.
New Zealand is a constitutional monarchy with a stable, democratically elected parliamentary government.
Stable Banking Sector
Banks have strong buffers of capital and liquidity. These have increased substantially in the past ten years in response to increased regulatory requirements. Bank resilience will be tested in the coming months as loan losses rise materially from current low levels.
The Reserve Bank undertakes stress tests to understand banks’ ability to absorb losses. While there remains considerable uncertainty about the economic outlook, stress tests suggest that banks can withstand a broad range of adverse economic scenarios while retaining sufficient capital to continue lending.
Reserve Bank of New Zealand: Financial Stability Report, May 2020
Overseas Investment Office
The Overseas Investment Office administers New Zealand’s overseas investment laws. Overseas investors will require consent to acquire sensitive New Zealand assets. Overseas investors must get consent when New Zealand’s overseas investment rules require them to and must keep the commitments they make when they apply for consent. For more information go to linz.govt.nz/overseas-investment
Corruption-Free, ‘Clean Green’ Image
New Zealand has a legal system like Great Britain, Australia, and Canada. It does not have the added complication of separate state and federal laws. The judiciary is completely independent of Parliament. The political and legal systems are free from corruption and there is no civil unrest. The attractiveness of New Zealand as a place to live and work is becoming a key factor in sparking international investor interest. As many countries experience internal economic strife and uncertainty, investors are looking to New Zealand as a safe haven for both investment and lifestyle.
No Stamp Duty or Capital Gains Tax
A passive offshore investor does not pay any stamp duty on purchase or capital gains tax in New Zealand on any profit made on the sale of a property.
At the time of writing, the New Zealand dollar was trading at approximately 72 cents against the United States dollar, slightly below the ten-year average of 74 cents. Against the Australian Dollar the local currency is trading at approximately 93 cents which is ahead of its ten-year average of 86 cents. On a Trade Weighted Index (TWI) basis, the New Zealand dollar is around 72.2.