Posted by Deanna Clark on September 25 2020 in News

This is part one of a three-part guide to undertaking land transactions, land development and building and construction in New Zealand. This guide is intended to assist overseas people and persons inexperienced in these areas to provide general and high-level information. It is not intended to provide comprehensive information on all aspects of the relevant law or to a specific set of factual circumstances.

We have made every effort to ensure the accuracy of this publication, however, it should not be relied upon as a basis for making business decisions as circumstances, business conditions, government policy and interpretation of the law may change.

If you would like help with your business activities or have any questions in relation to the matters set out in this publication, please contact us.

This three-part guide comprises sections on the following subject matters:

  • Commercial and Residential Conveyancing
  • Land Development and Subdivision
  • Building and Construction
  1. Land Ownership and Land Title System

Land ownership in New Zealand is based on the Torrens land registration system, a public register of land ownership. Under this system, most parcels of land have their own titles showing dimensions and location of the land, and which record ownership details and other interests that affect the land. The purpose of including all of this information on the record of title is to put the public on notice of all interests which may affect the land. The Government guarantees the accuracy of records of title.

New Zealand has converted almost all titles, plans and instruments into an electronic format which is held at Land Information New Zealand (LINZ) and can be searched via its Landonline service, the electronic property registration system. This system allows real-time searching and electronic registration of all land title and surveying transactions. Records of title can be searched by various agencies for a nominal fee.

As a result of New Zealand’s electronic register and registration system, the process of purchasing land in New Zealand is relatively straightforward and time/cost effective.  

Under New Zealand law, buildings and other improvements permanently attached to the land form part of the land itself and pass with ownership of the land, unless the current owner and a purchaser agree otherwise.

Although the electronic registration system provides a convenient and streamlined approach to the completion of property transactions in New Zealand, there are high standards and other safeguards in place which must be followed to ensure that transactions are valid. This includes stringent proof of identity requirements, procedures for ensuring the persons involved have full capacity to enter the transaction and have provided proper instructions to their lawyer or conveyancer. Note that a lawyer or a registered conveyancer must be engaged to complete the settlement of a property transaction.

  1. Estates in Land

There are two main types of real property in New Zealand – freehold (also referred to as ‘fee simple’ property) and leasehold property. Other, less common estates include unit titles and cross leases.

Freehold / Fee Simple

A freehold / fee simple estate is the highest form of property ownership recognised in Zealand. It is typically not limited to any set period (with ownership terminating only if the current owner dies intestate and without any successors). This form of title is considered to have the greatest benefit to the owner in respect of its enjoyment and use. Owners of a fee simple estate can make any additions or alterations to the property (subject to other regulatory requirements) without the need for consent of neighbouring property owners.


A leasehold estate is an ownership of a temporary right to hold land subject to the terms of a lease, which is entered into between the landlord (owner of the land) and the tenant (owner of the leasehold interest in the land). This arrangement usually specifies the tenant’s right to occupy the property on certain terms, for a specified time and in consideration of the payment of rent.

Unit Titles

A unit title is also referred to as a “stratum estate” and relate to a part only of a development, often an apartment. The title includes a defined area of a building (such as an apartment within a tower block) and shared ownership of the common areas of the development (such as the lobbies, driveways, lifts etc.).

Cross Lease

A cross lease title refers to an arrangement where a number of people own an undivided share in the freehold land. The houses built on the land are then leased from the other landowners (typically for a period of 999 years). These have generally only been used for smaller residential flats or townhouse development and were very common in the second half of the 20th Century (similar developments are now more likely to use unit titles).

  1. Māori Land

Māori freehold land includes the remnants of land once held customarily by Māori, which covers approximately five per cent of New Zealand’s total land area. The Te Ture Whenua Māori Act 1993 (also known as the Māori Land Act 1993) is the guiding legislation in relation to Māori land.

Māori land is administered by the Māori Land Court and is subject to a range of unique restrictions and protections. Note that where land is designated as Māori Land, the Māori Land Court holds the relevant records and interests relating to that Land. A search of both LINZ and the Māori Land Court should be undertaken.

  1. Sale and Purchase of Land

Subject to any requirement for Overseas Investment Office consent (discussed in part 3 below) there are no restrictions on who can purchase land in New Zealand.

Agreement for Sale and Purchase

An agreement for sale and purchase is the legal document typically prepared by the vendor’s solicitor or real estate agent. The agreement sets out the details, terms, and conditions of a sale. All agreements for the sale and purchase of land must be in writing and signed by the parties or their representatives.

Many agreements for the sale and purchase of land are recorded on standard form documentation. The current form is the 10th Edition ADLS/REINZ Agreement for Sale and Purchase of Real Estate.

The general law of contract applies once a sale and purchase agreement has been entered into between the parties. Once the parties enter into an agreement to sell and purchase land, the purchaser’s offer becomes legally binding between the parties. The seller cannot (without breaching the contract) then accept a higher offer from another purchaser following entry into this agreement. However, conditions for the benefit of either party can be included in an agreement.

Given the binding nature of a sale and purchase agreement, it is recommended that a lawyer review the terms of the agreement prior to the parties signing the agreement. As noted above, a lawyer or a registered conveyancer must be engaged to complete the settlement of a property transaction.


It is usual for a purchaser to pay a deposit, typically 10% of the purchase price, to the seller’s agent. The deposit is then released to the seller when the agreement becomes unconditional.


An agreement for sale and purchase of land may be subject to general or specific conditions which can benefit either party. The conditions must be satisfied for the agreement to become unconditional. Common conditions include building inspection, record of title investigation, resource management issues and financing. If these conditions are unable to be satisfied within a specified time, the agreement can be avoided by either party, with the purchaser’s deposit typically being returned. These types of conditions vary markedly depending on whether the land is to be used for a residential or commercial purpose. The party with the benefit of the condition must use its best endeavours to satisfy that condition, unless the agreement permits otherwise.

Overseas Person

The purchaser will typically warrant to the seller in the agreement for sale and purchase whether they are, or are not, an overseas person. If the purchaser is an overseas person, it is the purchaser’s duty to ensure the agreement is conditional upon consent from the Overseas Investment Office being obtained. The process for consent is addressed further in part 5.

IRD Number

Tax information, including the purchaser’s taxpayer identification number (commonly referred to as an IRD Number) must be submitted to LINZ upon registration of a transfer of property. The application and issue of an IRD number can take some time to complete. It is recommended that the application be commenced well in advance of completing the transfer.

Anti-money Laundering and Countering Financing of Terrorism Laws

Lawyers must now comply with laws relating to anti-money laundering and countering financing of terrorism. In accordance with these laws, lawyers are required to carry out customer due diligence on their clients and the persons acting on their client’s behalf. This includes a requirement for the client to provide certain information in order to confirm and verify the identity and address of the client. And, in some cases the client will also be required to provide verified details of their source of their funds and/or wealth.

  1. Overseas Investment Regime

Investments by overseas persons in New Zealand are regulated by the Overseas Investment Act 2005 and the Overseas Investment Regulations 2005. These rules and regulations have been introduced to ensure that sensitive New Zealand assets (particularly land and now including residential property) are protected. Certain transactions by overseas persons will require the consent of the Overseas Investment Office (OIO).

The OIO is the New Zealand government agency responsible for administering and overseeing this regime and is responsible for assessing applications from overseas persons who intend on making substantial investments in New Zealand.

Note that the Overseas Investment scheme is currently under review with a view to simplifying the process for obtaining consent, lessening restrictions over land adjoining sensitive land and introducing a national interest test.

Commercial Properties

Generally, overseas persons are not required to apply for consent to purchase commercial properties in New Zealand. However, if:

  1. the value of, or consideration to be paid for the commercial property exceeds NZ$100 million (either alone or together with other assets to be acquired); and/or
  2. the commercial property is situated on, or adjoins “sensitive land”, then consent will be required.

Overseas persons may also lease commercial properties in New Zealand without consent unless:

  1. the commercial property is situated on, or adjoins “sensitive land”; and/or
  2. the lease is for a term of three years or more.

Residential Land

Following recent changes to the overseas investment regime, overseas persons wishing to purchase residential land in New Zealand will generally require consent from the OIO. There are relatively broad exclusions for Australian and Singaporean citizens. And, there are more specific exclusions where an overseas person is acquiring residential land with the intention of development and selling housing on that land (see below for further information in this regard).

Residential land is land that has a property category of residential or lifestyle in the relevant district valuation roll. An overseas person may be able to obtain consent to acquire residential land if they can satisfy one of the following three tests:

  1. Commitment to New Zealand – The overseas person must hold an appropriate visa status and show that they are committed to residing in New Zealand. Consent will be subject to mandatory conditions that the overseas person occupy the property as their main home or divest the investment within 12 months of the acquisition or from the date on which the overseas person no longer qualifies under this test.
  2. Increased housing on residential land – The overseas person must develop the land and add to New Zealand’s residential housing supply. Any consent granted under this exception will be conditional upon the investor developing the land and on-selling within a specified period or constructing or extending the operation of long-term accommodation facility.
  3. Benefit to New Zealand – The overseas person must intend to convert the land to another use and be able to demonstrate that such use of the land will have wider benefits to the country. Conditions will be imposed on any such consent such that either the investor must sell the land within a specified period and/or the investor must not use the land for residential purposes or for long-term accommodation purposes while it remains the owner.

Please contact us if you consider that you may require OIO approval in respect of any proposed transaction.

  1. Leasing

Leases of land for a term of more than 1 year must be in writing and signed by the parties or their representatives (as a lease is an interest in land). The parties will include the landlord (the owner of the land), the tenant (the owner of the leasehold interest in the land) and, in some cases, a guarantor of the tenant’s obligations contained in the lease.

Leases are not typically registered at LINZ.

Commercial Leases

The rights and obligations of a landlord and tenant are provided for in the Property Law Act 2007 and are implied by law into all commercial leases. A commercial lease typically has two components:

  1. Agreement to Lease: a preliminary document, commonly prepared by a lawyer or a commercial real estate agent, that contains the basic terms agreed between the landlord and tenant; and
  2. Deed of Lease: typically prepared by a lawyer in accordance with the terms and conditions agreed between the parties in the Agreement to Lease. It is the Deed of Lease that establishes the tenant’s leasehold interest in the land (and buildings). Although, note that pursuant to the Property Law Act 2007, a lease is deemed to include an agreement to lease. Therefore, even if the Deed of Lease has not been signed by the parties, the lease will be binding on the parties pursuant to the agreement to lease.

Once the Agreement to Lease has been signed, both landlord and tenant are committed to the lease arrangement with limited options for exit.

The terms of each lease are negotiated between the landlord and the tenant. However, many parties will use one of the standard form commercial leases prepared by the Property Council of New Zealand or the Auckland District Law Society as a base document. Generally, commercial leases will include provisions relating to:

  1. Rent and Outgoings: The tenant must pay rent and all of, or a contribution towards, various outgoings (sometimes called property or operating expenses).
  2. Term: Most commercial leases are for a period of years and often include rights of renewal.  Note however that in New Zealand there are no statutory rights allowing tenants to extend or renew the term of the lease beyond the term of the lease. Any right of renewal agreed between the parties must be recorded in a lease document.
  3. Rent Review: Often the rent will be reviewed at specified intervals during the term of the lease. The mechanism for determining the new rent will be included in the terms of the lease and will usually be either by way of fixed increases, reviewed to the market rent or linked to increases in the Consumer Prices Index (or there may be a combination of some or all of these).
  4. Assignment/Subletting: In some cases, the lease may contain the ability for the tenant to transfer (or “assign”) its interest in the lease to a third party, subject to certain conditions being met. The conditions will likely include a requirement to obtain landlord’s consent. In most cases, the original tenant and its guarantors (if any) will remain liable under the lease until the expiry of the term. The lease may also contain the ability for the tenant to sublet all or part of the premises to a third party (again, subject to certain conditions being met).

It is important to obtain legal advice on the form of the lease and the rights and obligations contained within it. The financial, and other obligations, can be significant for both the landlord and tenant (and any guarantor of a tenant), particularly given that the term of the lease may be for a number of years (during which the obligations will continue, including that to pay rent).

Residential Leases

Residential leases are governed by the Residential Tenancies Act 1986 and the Residential Tenancies (Healthy Homes Standards) Regulations 2019. These acts outline the rights and responsibilities of landlords and tenants once they have agreed to a tenancy, including ensuring that the rental home is a lawful premises for residential use, that it is insured, and that the property is kept reasonably clean and tidy.

From 1 July 2019, the healthy homes standards also require landlords to keep records from 1 July 2019 that show compliance with the standards, including the requirement to provide evidence of the Building Code compliance certificate and receipts from building practitioners.

Periodic and Fixed-term Tenancies

There are two types of tenancies – periodic and fixed-term. Periodic tenancies last until either the landlord or tenant gives the required notice, whereas fixed-term tenancies last until the date specified in the tenancy agreement. A fixed-term tenancy can be extended, a new tenancy agreement entered, or the tenancy terminated by either party providing written notice to the other. If neither party provides the requisite notice, the tenancy will automatically become a periodic tenancy at the end of the term.

  1. Taxation

The principal means of taxation in New Zealand are income tax (including withholding tax) and goods and services tax. Taxation is a specialist area and this guide is intended to highlight and provide a brief discussion of taxation as it relates to land and land transactions only.

There is no stamp duty payable on the transfer of land.

Capital Gains

There is no general capital gains tax in New Zealand, although certain gains made on capital assets can be brought within the income tax net. This is generally where the assets form part of an income generating activity, such as the subdivision of land or assets acquired with an intention of resale at a profit.

Bright-line Test

The bright-line test is used to determine whether income derived from the sale of residential land will incur taxation consequences. This bright-line test does not apply to commercial land. Any residential land purchased in New Zealand from 29 March 2018 and sold within five years may have its sale revenue taxed. However, if the sale is captured by the bright-line test, the vendor may claim deductions for costs incurred in the business of making a capital gain.

Exemptions apply if the residential land is the main home of the seller, is transferred as part of an inheritance, transferred as part of a role as an executor/administrator of a deceased estate, or is transferred pursuant to a relationship property agreement.

Where the person selling a property that is captured by the bright-line test is an offshore person, a withholding tax called Residential Land Withholding Tax will apply. This is an interim tax that will be withheld at source and returned to the Inland Revenue Department. The offshore person will then need to file a tax return to confirm the final tax payable on the transaction.

Goods and Services Tax

Goods and services tax is charged at 15% on the supply of most goods and services in New Zealand. Those making supplies in New Zealand are required to register for goods and services tax if they carry on a taxable activity (which is similar to the concept of a business, but wider in scope).

Certain land transactions (provided they satisfy specified conditions) will fall within the ‘compulsory zero-rated’ GST scheme. In those circumstances, GST will be charged at 0% on the relevant land transaction.

The rental of residential properties is exempt from GST. You cannot charge (or claim GST) on rental of residential accommodation.

  1. Public Works Act

The Public Works Act 1981 enables the Crown and local authorities to compulsorily acquire land for public work. Public work includes public infrastructure and services such as roading, railways, electricity and works for other infrastructure networks. If land is acquired for public work, the landowner is entitled to full compensation which is based on registered valuations of the land.

If you would like more information regarding the above, or have any questions, please contact us.

Richard Hatch | Partner
t +64 9 300 8761 |

Deanna Clark | Special Counsel
t +64 9 300 8751 |

Aidan Tattley | Solicitor
t +64 9 379 0655 |

This paper gives a general overview of the topics covered and is not intended to be relied upon as legal advice.