Are you looking to purchase property as a first home buyer?
We can help guide you through the process and ensure things go smoothly – contact property law expert, Jennifer Edwards today.
17 May, 2017 | Jennifer Edwards
When purchasing any property you should do your homework on the property by obtaining a LIM report from the local Council, obtaining a builders report on the dwelling and have the property tested for methamphetamine by a reputable registered testing company.
If you will not be living in the property yourself, even though you are a first home buyer the financing requirements are the same as that of a residential investor, you usually need a deposit of 40% of the purchase price.
You cannot withdraw your KiwiSaver or apply for a Housing NZ Home Start Grant as the requirements are that you must live in the property for at least 6 months following settlement. Be aware that once you purchase a property in your personal name you will not be able to withdraw your KiwiSaver later on to purchase your own home as you will now qualify as a previous home owner.
Your obligations as a residential landlord are covered by the Residential Tenancies Act and the Residential Tenancies (Smoke Alarms and Insulation) Regulations. The 2016 Regulations stipulate minimum levels of insulation, and a requirement for smoke alarms (Please read our article on this here). It is a good idea to make sure you are aware of your obligations before you buy, so that you can take into consideration any alterations you will need to make in order to rent the property out. For example you should check the celling and underfloor for appropriate insulation. It would be a good idea to appoint a local property manager to take care of the tenancy.
There may be tax advantages to having a trust or company own the property (rather than owning it in your own name). We suggest you find yourself a good accountant who can advise you on your best options for ownership to make the most of your investment. If you do decide on a Trust or Company you will need to get it organised in advance before you buy. Don’t forget to register the entity with the IRD!
As the property is an investment and you will not be living in it, if you sell the property within 5 years and you make a profit, you will be taxed on that profit. Read more about the Bright-line test
Your local lawyer can carry out the conveyancing and help you through the entire process. You do not need a lawyer in the city you are purchasing in.
18 September, 2013 | Jennifer Edwards
24 June, 2015 | Jennifer Edwards