Chapman Tripp - Resource Library - Doing Business in New Zealand


Contents

	Introduction
	About Chapman Tripp
	Why do business in New Zealand?
	Overview
		Geography Climate People Government Legal system Currency Infrastructure Business conditions Holidays Living in New Zealand Cost of living
	Economy
		Major industries Markets Trade agreements Economic position Economic policies
	Starting up business
		Type of business Corporate structure options Branch or subsidiary? Government consents
	Immigration
		Entry requirements Temporary employment for foreign nationals New Zealand residence Immigration policy Returning residents' visa
	Buying and developing land and property
		Title Contracts for sale and purchase of land Resource Management Act and district plans The Building Act 1991 Barriers to buying land Maori land claims
	Taxation
		Overview Income tax Goods and Services Tax Import duties Rates Other taxes
	Finance
		Reserve Bank Financial institutions Financial markets Raising finance Repatriation of funds
	Regulations affecting business
		The Commerce Act The Fair Trading Act
	Intellectual property
	Labour and employment
		Employment Relations Act Working conditions

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Buying and developing land and property

Title

New Zealand uses the Torrens land registration system under which most parcels of land have their own titles showing dimensions and location, and recording ownership and other interests affecting the land. The Government guarantees the accuracy of titles, which can be searched by the public for a nominal fee.

The attraction of the Torrens system is that dealings can be conducted in reliance on a single title, rather than on a succession of title deeds. Some land owned by the Crown does not yet have title issued.

New Zealand has converted almost all titles, plans and instruments into an electronic format allowing real-time searching and electronic registration of certain simple conveyancing transactions. All land title and survey transactions will be subject to compulsory e-registration from July 2008.

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.

Contracts for sale and purchase of land

To be enforceable under New Zealand law, a contract for the sale and purchase of land must be in writing and signed by the parties involved or their authorised agents.

Once signed, an agreement for sale and purchase becomes legally binding on all parties. It can, however, be made subject to conditions which protect the seller or buyer. Common conditions are:

	the buyer raising finance
	the buyer being satisfied with valuation, local authority information relating to the land, engineering reports and building reports
	the buyer being satisfied with the title.

Where a real estate agent is engaged by a seller to effect a sale, commission is payable by the seller, typically at a rate of 4% of the purchase price up to NZ$250,000 and 2% thereafter.

Resource Management Act and district plans

The Resource Management Act 1991 is New Zealand’s principal statute relating to the use of land, water, minerals, the coast, air and physical resources. The Act aims to promote “sustainable management of physical and natural resources” with all decisions under the Act subject to this aim. The Act also seeks to maintain and enhance New Zealand’s “clean, green” image.

The Resource Management Act has major implications for industrial projects and property developments. A new development may require a number of consents under the Act before it can go ahead.

Controls on development are administered by locally elected government authorities and are expressed through a range of publicly notified plans. These include regional plans, regional coastal plans and district plans. Plans set out rules for activities in various locations or “zones”. Any party seeking a consent to proceed with a development must follow the procedures set out in the relevant plan, and this may involve public participation through the public notification of the consent application.

The Building Act 2004

This Act is designed to regulate and control building work and the use of buildings. Every new building and most substantial alterations or additions to existing buildings will require a building consent. On completion of works a code compliance certificate will issue provided compliance with the building consent has been satisfied. Allied to the Building Act is the building code, which sets criteria to ensure that all buildings are safe, sanitary and have adequate means of escape and, in the case of publicly accessible buildings, have access and facilities for disabled persons. To the extent that they do not already comply, existing buildings which are altered may require upgrading in order to comply with the above criteria as nearly as is reasonably practicable, and new provisions have ensured that many buildings considered earthquake prone may be required to be upgraded. The Act also imposes restrictions upon occupation of a building where public areas of that building are subject to building works for which a code compliance certificate has not yet issued.

Barriers to buying land

In general, there are few restrictions on the purchase of land in New Zealand unless that land is deemed ‘sensitive land’ under the Overseas Investment Act 2005. Where the purchaser is an overseas person or organisation a consent is required from the Ministers who administer that Act if the area of land being acquired is non-urban land of greater than five hectares, or includes the foreshore or seabed. Any other land of greater than 0.4 hectares may also require consent in certain circumstances (eg. if the land is held for conservation purposes, or if the land is or includes a registered historic place or area).

Consent is also required in certain other circumstances where land is deemed ‘sensitive land’ under the Act by reason of its proximity to existing sensitive land (depending on the size and location of the land in relation to bodies of water, reserves, historic or heritage areas, and off-shore islands).

One further category of land that overseas investors in New Zealand must be aware of is ‘special land’. Special land is the foreshore, seabed, riverbed or lake. If an investor wishes to acquire any land that is ‘sensitive land’ and that land includes ‘special land’ that special land must be offered to the Crown by the overseas investor.
Advertising requirements also exist for sales of farm land.

Maori land claims

Land claims by Maori, the indigenous people of New Zealand, are governed by the Treaty of Waitangi Act 1975. Under the Act, grievances are heard by the Waitangi Tribunal which can then make recommendations to the Government regarding the resolution of those grievances.

The Government agency that manages treaty settlements is the Office of Treaty Settlements.

Recommendations made for the return of land to Maori are generally applicable only in respect to land owned by the Government or state-owned enterprises. Privately owned land is not subject to return to Maori ownership unless the title to the land has previously been endorsed to that effect.

Buying and developing land and property section last updated May 2007