Buying in NZ from Australia

[Ian (WA)]

All,

Seeking input from brokers or those in the know.

How do I manage to purchase in NZ while I am based in Aust?

Finance I believe has to be sourced from NZ institutions going on a comment from a broker I know i.e. she cannot arrange finance through an institution here in Aust, nor can she act as the broker.....is this correct?

The other query I have is if I supply some funds for deposit from within Aust., is there a tax impost on the difference in exchange rate?

Thanks for help in advance.

Cheers, Ian.

 

[MarkB]

How do I manage to purchase in NZ while I am based in Aust?

If you don't plan on coming over at all (or even if you do) you'll need (at the very least) a NZ solicitor for your end of the deal. It's possible that whatever solicitor you engage will be prepared to co-ordinate whatever due-diligence you need (LIM reports [a review of the council file], builders inspections, etc). It's a certainty that they'll charge you for the time it takes to arrange it.

Waaaaay back in the year.... actually it doesn't matter when it was.... a few years back I bought a property near Mackay whilst based in Sydney. Yes I had a lawyer in Mackay, but my running around was done by a local property manager who was an absolute champion and never gave me a bum steer. So I was lucky. btw, I've never travelled past Brisbane.

Where in NZ are you looking to buy?

Finance I believe has to be sourced from NZ institutions going on a comment from a broker I know i.e. she cannot arrange finance through an institution here in Aust, nor can she act as the broker.....is this correct?

Yes, I believe that is correct.

The other query I have is if I supply some funds for deposit from within Aust., is there a tax impost on the difference in exchange rate?

I don't know why you would.

When you send money from one country to another you're not actually making any income or profit that can be taxed. You're just swapping your apples for someone else's oranges (which happen to be at a different cost).

If you start trading back and forth, eg. AUD > NZD > AUD, and then you make a buck - then you *might* have something that is taxable (an acct could advise).

 

[Ian (WA)]

G'day Mark,

Thanks for the reply. I should apologise & clear the matter up a tad.

I was actually at work and a colleague was talking with me about him wanting to buy in NZ for his retirement in a couple of years. I also put him onto my mortgage broker and she fed back to him the information from her perspective.

He spoke to me about this today so I told him I'd put something onto the forum to seek clarification, so I should have written my post in that manner; apologies for not doing so.

As a side issue he also mentioned he was not having much joy in getting help from Westpac over this matter and indeed he was struggling with erroneous or no information.

He is looking at an apartment (manged in a letting pool) in Bay of Islands....he's not worried about the property as a performing investment as it is going to be his preferred retirement residence (he is a Kiwi and is well aware of property market & location etc.).

He is struggling to get information on how he can 'finance' it all while based here in WA. This coupled with being unsure how to actually go through the purchasing process is frustrating him.

The comment about tax on exchange rate if he sends money from Australia to assist in funding any purchase apparently came from a 'friend' and was unqualified.

So any information we can gather for him will be appreciated.

Cheers, Ian.

 

[MarkB]

He is struggling to get information on how he can 'finance' it all while based here in WA. This coupled with being unsure how to actually go through the purchasing process is frustrating him.

So he wants like a checklist?

 

[MarkB]

Based on my experiences in NZ....

He will need (at the very least):

- a lawyer
- a mortgage broker

Find a property he likes, make an offer (price / deposit [if applicable] / conditions / settlement date).

The offer is in writing on a standard form of document (save for the clauses which are added in), and can probably be done via fax or scanned documents. The offer will be subject to conditions (eg. finance to the satisfaction of the purchaser / suitable builders report / LIM / due diligence*).

* I'm not a lawyer, but the "due diligence" clause is, in my experience, the mother of all clauses as it means you can walk away for ANY reason. Probably a very good idea for someone buying NZ property from offshore.

All your clauses are subject to confirmation (and this is specified in the clauses themselves). They are written to be either confirmed within X working days, or X days (both are taken from the date the contract was countersigned in it's final form by BOTH parties), or on a "by x date" basis.

So you make an offer, sign some contract papers, make sure your clauses are in and to your satisfaction -> and then the REA will ask you for the name of your lawyer. Your lawyer will be sent the contract and then he / she will liaise with you regarding whether or not you wish to confirm the contract (or clauses of the contract) by whatever date [as required].

This is NOT legal advice - but until such time as you have gone "unconditional' (you have confirmed all your clauses) you are not legally obligated to complete the purchase.

So lets say you make an offer:

• Mark_B (or nominated entity) [the purchaser]
• $100,000 purchase price
• $5,000 deposit
• settlement on Friday 16 November (usually a Friday, it can be quicker, but 4 to 6 weeks fairly std)
• finance clause 15 working days
• LIM 10 working days
• Builders report 10 working days
• due diligence 15 working days

(The actual clauses themselves are properly worded of course)

So lets say it is all counter-signed, etc (the vendor has accepted your offer) - at that point the contract is sent to your lawyer and you start working through your conditions (arranging finance with your MB / arranging a LIM through your lawyer / arranging a builders report, etc). And, as each is met to your satisfaction (eg. you get a firm offer of finance that you are happy with) then you can confirm each clause.

Bearing in mind though that (as above) clauses might have different dates for confirmation.

So lets say it is all hunky dory and good to go - you are all confirmed and then you just prepare for settlement. Probably not much for the purchaser to do except make sure that any money they are required to pay is in NZ in advance. Settlement is usually electronic in NZ and lawyers do it on your behalf.

You'll recieve a copy of a settlement statement from your lawyer which details what you paid, what their bill was, where the funds came from (eg. Finance from Westpac NZ, etc).

That's basically the process in NZ.

A couple of things to be aware of:

- arranging finance *could* be tricky so probably best to line up a MB and ask them to look at your situation and give you (a) a list of what information you need to provide, (b) some idea of what you can actually buy, (c) what the offer of finance might look like, and (d) how long it might take to get it all confirmed. No point in having a 15 working day finance clause if you know it will take yoi 20 working days to get your ducks in a row.

- deposits aren't required under NZ law, so don't feel obligated to offer one. But it can help make your offer more attractive.

- a cash offer (one with no clauses that need to be confirmed) is obviously very attractive, but a risky proposition unless you actually have the cash to hand or a very very firm offer of finance. Really not worth the risk imho.

- If you do make an offer subject to various clauses (which is what you will do), the vendor might counter-offer and put in what is known as a "cash clause". A "cash clause" is a clause in a contract that says that if the vendor receives a cash offer (no conditions) that they are happy to accept - that you have x amount of days (maybe 5 or so) to confirm all your clauses - or else the deal is off.

So the cash clause will be (for example) a "5 working day cash clause". So even if your contract was only signed 2 days ago and it had a 15 working day finance clause - if the cash clause is activated it means your 15 working days is now about 7 working days.

But, again, he needs a lawyer and a MB.

 

[Mick C]

All,

Seeking input from brokers or those in the know.

How do I manage to purchase in NZ while I am based in Aust?

Finance I believe has to be sourced from NZ institutions going on a comment from a broker I know i.e. she cannot arrange finance through an institution here in Aust, nor can she act as the broker.....is this correct?

The other query I have is if I supply some funds for deposit from within Aust., is there a tax impost on the difference in exchange rate?

Thanks for help in advance.

Cheers, Ian.

NZ residential can purchase Aus res - under standard terms.

However for an Aus/NZ res to purchase an NZ property- the banker/broker need to have the license and agreement with the NZ lenders - Aus lenders will not take o/s security....some won't even touch anything in TAS let alone NZ ..lol

I have only dealt with 1 broker in Aus that has a dual licences and agreement with the ANZ bank ( Aus and NZ) Mary O' Brien- feel free to give her a buzz...

Mary O' Brien
PO Box 998 Baulkham Hills NSW 1755 AUSTRALIA
T: 0061 2 96205559 I F: 00612 9838 7602 I M: 0061 404 234517
E: [email protected]

Regards
Michael

 

[Ian (WA)]

G'day Mark & Mick,

Thanks for the detailed info gents.....much appreciated.

Have fed this all back to my colleague and he is wrapt with the feedback.

I've given him a quick orientation around this forum also, so he might even be at home on his 12th Vodka quietly reading away!!

Cheers,

Ian.