Real Estate 2026 Comparisons

As with other Commonwealth jurisdictions, New Zealand (NZ) real estate law is governed by both common law and statutes. New Zealand uses the Torrens title system, which guarantees land ownership through government-backed registration. This eliminates the need to trace a property’s “chain of title.” As NZ does not operate a federal system, transfers of land interests are relatively simple and straightforward and are overseen by a single government entity: Land Information New Zealand (LINZ).

NZ has codified large sections of real estate law in the form of the Property Law Act 2007 (PLA) and the Land Transfer Act 2017. NZ has also developed its own body of common law, but courts often refer to decisions from other Commonwealth jurisdictions with similar legal systems, such as Australia, the United Kingdom and Canada.

The New Zealand commercial property market stabilised through 2025. Sales volumes have levelled out, although price growth remained modest and varied across regions.

Entering 2026, the market is showing signs of stability. Overall, current conditions point to a gradual recovery rather than a sharp uplift. The election year is also likely to contribute to a continued “wait and see” approach among buyers and investors.

Recent significant deals in 2025 and 2026 include:

• the sale of The Plaza Shopping Centre, Palmerston North to NZRPG for NZD118 million, a transaction on which Anderson Lloyd advised;
• the sale of the InterContinental Hotel (1 Queen Street), Auckland by Precinct Properties to Singapore-listed Hotel Properties Limited for NZD180 million, reflecting strong investor demand for premium hospitality assets; and
• the establishment of a joint venture between Tainui Group Holdings and Brookfield Asset Management in relation to the Ruakura Superhub, Hamilton (a large scale logistics and industrial precinct), with an initial acquisition of industrial assets valued at approximately NZD164 million.

In 2025, the government announced changes to the Overseas Investment Act 2005. The regime came into effect on 6 March 2026. The reforms aim to balance openness to investment with national safeguards. Screening has shifted to a targeted risk-based framework with faster approvals for lower-risk investments. Key changes include consolidation into a single national interest test and new consent pathways.

The government is undertaking resource management reform, including regulatory changes to national direction and new legislation that will replace the Resource Management Act 1991 (RMA). The policy direction includes increased national direction and greater use of standardised rules, more permitted activities and fewer consents, more limited public participation, a reduction in the scope of effects (with less focus on amenity-related controls on developments), imposition of environmental limits and potential compensation for landowners subject to significant planning restrictions. The replacement legislation is anticipated to pass into law in mid-2026 with full implementation by 2029.

The government is also progressing planning system reform through the introduction of the Planning Bill as part of the replacement for the RMA. The Bill establishes a new framework for land use and development, emphasising infrastructure and housing through more directive national policy. A key feature is the expanded role of central government through national instruments that set standardised rules for councils, reducing local variation. The regime aims to provide greater certainty while narrowing the scope of regulation. Transition is expected to occur over several years, with full implementation likely within 3–5 years.

The government has also signalled reform of the earthquake prone building regime through the Building (Earthquake prone Buildings) Amendment Bill. The Bill proposes a more proportionate, risk based framework focused on life safety outcomes, replacing the current system which is criticised as overly broad and costly. Regulation would target higher risk building types in medium and high seismic zones, with many lower risk buildings in low seismic zones (including Auckland and Northland) expected to fall outside the system. The reforms introduce more flexible, tiered mitigation requirements and aim to reduce barriers to seismic work. The Bill was introduced in December 2025 and is currently before the Transport and Infrastructure Select Committee, with no confirmed commencement date. Overall, the reforms signal a shift toward a more targeted and economically sustainable approach to seismic risk management in New Zealand.

The most common property rights are as follows:

• freehold – the highest form of ownership in NZ, which confers freehold ownership of the land, the airspace above and the ground below;
• leasehold – land is leased from a freehold owner or higher ranking leasehold owner and exclusive possession is conferred for the term of the lease;
• stratum/unit title – a freehold or leasehold estate with three-dimensional boundaries (meaning the land is limited in height and/or depth), which is usually used for apartment/high-rise developments; and
• composite/cross lease – a combination of freehold and leasehold estates comprised in one record of title.

Other rights in land that are commonly granted are set out in 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time.

The Land Transfer Act 2017 principally governs the transfer of title. Except for fraudulent transactions, once a transfer of title is registered, the new registered owner’s ownership is indefeasible against competing, non-registered interests.

All transferees and transferors of title must disclose tax identification numbers to LINZ, allowing the Inland Revenue Department to track ownership changes and tax liability.

No specific laws govern the transfer of any particular type of commercial real estate, although established norms and procedures are followed.

The transfer of title is usually effected by the solicitors acting for the transferee and the transferor registering an electronic transfer instrument with LINZ, which (in most cases) is instantaneously registered.

All transfers are registered on the property’s record of title; a historical version of the record of title, showing every transfer ever recorded by LINZ, can be searched online by the public for a small fee.

Title insurance is used only rarely because the guaranteed title system produces title searches instantaneously. LINZ also issues guaranteed records of title, which allow a purchaser to bring a proceeding in court against the Crown to seek compensation under the Land Transfer Act 2017 if that purchaser suffers loss or damage as a result of an undisclosed interest being registered against the record of title during a certain period following the transaction, provided the purchaser obtains a guaranteed record of title within statutory time periods.

Due diligence will usually involve reviewing the following:

• record(s) of title and registered interests;
• leases, licences or other unregistered interests;
• relevant planning and zoning rules; and
• land information memorandum prepared by the local authority to identify:
1. contamination;
2. building issues;
3. enforcement action;
4. building and resource consents; and
5. other records, particularly in relation to utilities, ground conditions, environmental features, etc.

Purchasers often also undertake on-site inspections and tests, including building and geotechnical reports, seismic assessments, asbestos assessments, methamphetamine drug contamination/toxicology reports and obtaining valuations.

Most real estate transactions use a standard form sale-and-purchase agreement, particularly in the residential sector. Commercial contracts usually contain negotiated terms specific to the nature and use of the real estate.

Typical representations and warranties include the following:

• that the real estate and chattels will be unencumbered on completion;
• that certain chattels and the systems that provide basic services to the property (such as air conditioning, heating, cooling and security) are in reasonable working order;
• that certain chattels are in the same state of repair as at the date of the agreement;
• that no notices have been received from any local or central authority that affect the property;
• that the vendor has no knowledge or notice of any fact that might result in any legal proceedings being instituted by or against the vendor or purchaser in respect of the property;
• that there are no defaults under any lease;
• that the property will be vacant (where the property is sold with vacant possession);
• that there are no arrears of rates/taxes; and
• that all works undertaken by the vendor during the course of the vendor’s ownership of the property have all necessary consents.

Generally, aside from the warranties set out in the sale and purchase agreement, “caveat emptor” applies to most real estate transactions. However, there are certain statutory requirements that the vendors cannot contract out of.

Typically, warranty breaches or misrepresentations give rise only to claims for compensation and equitable set-off, which – if discovered and notified to the vendor pre-settlement – usually result in a reduction in the amount paid by the purchaser on settlement. The suffering party will not be able to cancel the contract as a result of a misrepresentation, unless the misrepresentation relates to an essential term of the agreement or substantially impacts the benefit or burden of the agreement.

Tax Law

An investor should seek tax advice from an accountant before buying real estate to ensure it structures its purchase, ownership and use of the property in the most advantageous way and avoids unexpected tax liability.

Overseas Investment Law

A foreign investor needs legal advice on whether it requires consent for its purchase under the Overseas Investment Act 2005.

Resource Management Law

An investor needs to consider whether it will need and be able to obtain, any consents or licences from relevant authorities for its specific use of a property. There may also be compliance requirements relating to contamination.

Building Standards

An investor needs to consider whether a building complies with the Building Act 2004. Commercial buildings and some residential and other buildings may require mandatory earthquake-strengthening under the Building Act 2004, which can be costly, time-consuming and disruptive to tenants. Refer to 1.3 Proposals for Reform regarding legislative reform to the earthquake-prone building (EPB) regime.

Property Law

An investor needs to ensure that their acquisition complies with NZ’s laws relating to real estate acquisitions.

The buyer of a real estate asset may be responsible for soil pollution or environmental contamination of a property even if they did not cause it. Buyers should review the lists of actual and potentially contaminated sites (known as HAIL) administered by regional councils for each region.

Buyers should review the district plans prepared by city or district councils and the regional plans and regional coastal plans prepared by regional councils to determine a property’s permitted uses.

Development agreements can be entered into with public authorities for a specific development to provide infrastructure and cover associated costs.

Governmental taking of land, condemnation, expropriation or compulsory purchase are possible under the Public Works Act 1981 (PWA), which gives central government and local authorities (Acquiring Authorities) the statutory authority to acquire private land for public works.

The Acquiring Authority may negotiate with private landowners to purchase the land and must pay compensation to the private landowner, which, together with the other terms of sale, will be negotiated between the parties. If the value of compensation cannot be agreed, the amount of compensation payable may be determined by the Land Valuation Tribunal. Once the compensation and other terms of sale are agreed, the parties sign a formal agreement and the land is transferred to the Acquiring Authority.

Where an agreement cannot be reached, the Acquiring Authority may compulsorily acquire the land. Every person who has any estate or interest in the land may object by appealing to the Environment Court. However, the right to object to compulsory acquisition only applies to the land being taken, not the amount of compensation.

The PWA is being reformed, with significant proposed amendments aimed at simplifying regulations, improving the acquisition process and creating new incentives for landowners to encourage engagement in the acquisition process. As part of the proposed amendments, Parliament has recently introduced the Public Works (Critical Infrastructure) Amendment Bill, which is intended to streamline the land acquisition process for certain critical infrastructure projects in NZ.

See 8.1 VAT and Sales Tax, 8.2 Mitigation of Tax Liability and 8.4 Income Tax Withholding for Foreign Investors regarding taxation on real estate transfers.

The buyer and seller usually pay their own transaction costs, although in larger deals involving significant pre-contract due diligence, a seller may offer to pay all or some of a buyer’s due diligence costs if the transaction does not proceed.

The Overseas Investment Act 2005 (OIA) and Overseas Investment Regulations 2005 restrict “overseas persons” from acquiring certain real estate in NZ without first obtaining consent from the Overseas Investment Office (OIO). The concept of “sensitive land” is central to the regime and in broad terms consent from the OIO is required for acquisitions involving the following types of land:

• all land that has a property category of “residential” or “lifestyle” (as assessed by the local/territorial authority) – noting that there are limited exemptions for Australian and Singaporean purchasers;
• rural land over five hectares;
• the foreshore or seabed; and
• various other classes of land, including in some instances land that adjoins “sensitive land”.

The consent requirement applies not only to freehold acquisitions of interests in land but also to other interests in land, including options to purchase and leases where the term (including renewal rights) exceeds prescribed thresholds (a total term of three years or more for residential land and a total term of ten years or more for other sensitive, but not residential, land). Certain interests, such as easements, are generally excluded.

In addition, the Minister of Finance has powers to assess whether a potential overseas investment will be contrary to NZ’s national interest under a national interest assessment. This assessment is mandatory for certain overseas investments that relate to strategically important businesses (such as businesses involved in military equipment, ports, airports, telecommunication providers, media business, etc) or where the investment may post a risk to national security/public order, could give disproportionate access or control to a foreign government, could give significant market power to an overseas person or otherwise is inconsistent with government objectives.

Refer to 1.3 Proposals for Reform for reforms that have been made to the overseas investment regime.

Acquisitions of commercial real estate are generally financed in the loan market, using either bilateral secured loans or, for larger transactions, syndicated secured loans.

The principal providers of commercial real estate finance are the main Australian trading banks or their NZ subsidiaries; however, foreign banks and domestic and foreign credit funds are increasingly active participants in the market.

The larger institutional holders of real estate also access domestic and international capital markets to fund their acquisitions.

A commercial real estate investor financing the acquisition or development of real estate will typically grant the following security:

• a registered mortgage over the record of title for the real estate asset; and/or
• all-asset security given under a general security agreement, over all of its real and personal property – to the extent the security is over personal property, it will be registered on NZ’s online Personal Property Securities Register.

If the borrower is a special-purpose vehicle, the financier may also take specific security over the borrower’s shares.

A foreign lender taking security over real estate that is classified as “sensitive land” under the OIA will be subject to the consent regime set out in that Act. However, the OIA provides for an exception from this regime (applicable to most ordinary-course secured lending arrangements).

Nominal registration fees apply to registrations of mortgages on title and on the Personal Property Securities Register. No taxes or stamp duties are payable in respect of the granting or enforcement of security.

NZ has a “financial assistance” regime under the Companies Act 1993 (CA), which regulates the ability of a company to give financial assistance to a person for the purpose of or in connection with, the acquisition of shares issued or to be issued by the company or its holding company (whether directly or indirectly). A company may give such financial assistance if, prior to the assistance being given:

• the company’s directors sign a certificate as to the solvency of the company (on both a balance sheet and a liquidity basis) immediately after the giving of the financial assistance; and
• the financial assistance is approved by the shareholders of the company (either by special resolution or unanimous assent).

The PLA requires certain formalities to be met before a lender can enforce its registered mortgage over real estate against the defaulting borrower.

Following a default, it is common for a lender to appoint a receiver to assume control of the real estate with a view to realisation. Other than entering into a deed of appointment with the receiver, the lender is not subject to any specific formal requirements in making that appointment. However, where a lender proposes to exercise its power of sale or otherwise enforce the mortgage directly, the lender must first comply with the requirements under the PLA, including serving a notice on the borrower (and any other parties with a registered or notified interest) specifying the default and allowing the prescribed statutory period for remedy, unless an exception applies.

In realising an asset under a security, the security holder or its receiver owes certain persons (including the grantor, any guarantors and certain other creditors of the grantor) a duty (of “reasonable care” in the case of the security holder) to obtain the best price reasonably obtainable at the time of sale.

A lender may agree to subordinate an existing secured debt owed to it to any other debt. This is achieved by way of a subordination deed. The contractual subordination of security is usually registered by way of priority instrument on title (for mortgages) or on the Personal Property Securities Register (for general/specific security interests over personal property).

A lender holding security should not become personally liable under environmental laws, as long as said lender does not enter into possession of or otherwise assume control over, the relevant real estate.

Validly created security interests granted by a borrower in favour of a lender will remain effective if the borrower becomes insolvent or enters into voluntary administration or liquidation.

However, if a company is unable to pay its due debts immediately after the company granted a security interest and the charge was given within the six months (or, in the case of a related party, two years) prior to the commencement of the borrower’s liquidation, there is a risk that in certain circumstances, the security may be voidable by the liquidator.

There are no such rules, regulations or requirements at the time of writing, with respect to taxes on loans in New Zealand.

Land use, development, design and construction in New Zealand are governed by a layered framework of legislation and planning instruments.

The primary statute is currently the Resource Management Act 1991 (RMA). It establishes a hierarchy of planning documents prepared and administered largely by local authorities, including:

• national policy statements and national environmental standards set by central government;
• regional policy statements, regional plans and regional coastal plans prepared by regional councils and unitary authorities; and
• district plans prepared by city and district councils.

While the rules vary between regions and districts, the overall regulatory framework is similar. District plans are the key instruments controlling land use. They divide land into zones, identify overlays and special features such as heritage items and set rules on permitted activities, building location, density, height and use. Rules identify whether resource consent is required to undertake specific activities within a zone or overlay or in the location of a special feature.

The Building Act 2004 and the Building Code regulate design, construction methods and building performance. A building consent from the relevant local authority is required before construction starts and councils inspect and certify compliance on completion.

Local authorities are the main decision makers, regulators and enforcement bodies under the RMA. However:

• nationally significant projects can be referred to a Board of Inquiry or the Environment Court; and
• some projects may proceed under the Fast-Track Approvals Act 2024, which established a streamlined consenting pathway for infrastructure and development projects considered to deliver significant regional or national benefits.

The RMA legislation is to be replaced by mid 2026. Refer to 1.3 Proposals for Reform.

Development rights are typically obtained through resource consent under the RMA and building consent under the Building Act.

The applicable district or regional plan rules govern whether resource consent is required for an activity. Consented activities are classified across a spectrum, from controlled to non-complying, with increasing scrutiny and technical input required at the upper end.

The resource consent process generally includes:

• application lodgement and potential requests for further information;
• a decision on notification;
• if notified, submissions from affected parties or the public;
• a hearing in some cases, usually before an independent commissioner; and
• a decision with conditions.

Third party participation depends on notification status:

• non-notified: no third party involvement;
• limited notified: only identified affected parties may submit; or
• publicly notified: any person may submit.

Applicants and submitters have a right of appeal to the Environment Court on the merits of the decision. There are also objection rights for certain procedural decisions such as fees.

Development is largely controlled by consent conditions, although for large or infrastructure-heavy projects, developers may also enter into agreements with councils or service providers, for cost sharing or servicing arrangements.

Compliance is enforced through several mechanisms under the RMA:

• infringement notices with financial penalties;
• abatement notices issued by council officers;
• enforcement orders issued by the Environment Court; and
• criminal prosecution for serious breaches.

In practice, local authorities typically engage with developers directly regarding any potential RMA breaches before taking any formal enforcement action.

Common entities include the following:

• limited liability companies incorporated in NZ;
• companies incorporated outside of NZ and registered in NZ;
• limited partnerships;
• trusts (including real estate investment trusts/listed property trusts); and
• property syndicates.

NZ Incorporated Companies

NZ companies can choose whether to adopt a constitution (which, if adopted, must be made publicly available). The constitution and shareholder agreement (if applicable) typically set out:

• the mechanics of issuing and transferring shares;
• the relationship between shareholders and the company; and
• how the directors manage the company.
• If no constitution is adopted, the default provisions of the CA will apply.

Companies Incorporated Outside of NZ and Registered in NZ

The CA does not generally apply to overseas companies, but it applies where it refers specifically to “an overseas company”. As such, the constitution of an overseas company will usually reflect the position taken in its home jurisdiction.

Limited Partnerships

NZ limited partnerships are governed by the Limited Partnerships Act 2008. Limited partnerships are a form of partnership involving general partners (who manage the partnership and are, together with the partnership itself, liable for the debts and liabilities of the partnership) and limited partners (who do not take part in the management of the partnership but are liable to the extent of their capital contribution to the partnership). Every limited partnership must have a written partnership agreement – this establishes the limited partnership and governs the partnership.

Trusts

A trust is an entity established by a person (the settlor) to transfer legal ownership of assets, including real estate, to other persons (the trustees) to hold the assets on trust for the benefit of persons selected by the settlor (the beneficiaries). Trusts are not publicly registered entities, except for registered charitable trusts. There are various types of trusts, including the following:

• family trusts;
• business or investment trusts;
• charitable trusts; and
• testamentary trusts.

Trusts are governed by the terms of the trust deed that establishes the trust and by the Trusts Act 2019, which came into effect on 30 January 2021. Much of the Trusts Act 2019 restates and codifies existing statute and case law, although it introduces new obligations on trustees, particularly regarding record keeping and the presumption that trust information is disclosed to the trust’s beneficiaries.

Real Estate Investment Trusts/Listed Property Trusts

There are approximately nine listed property trusts (LPTs) in NZ, each specialising in different sectors. LPTs are publicly traded on the NZ Stock Exchange and are regulated in a similar manner to listed companies. Shares in LPTs can be bought and sold relatively easily and the entry level price point is relatively low (NZD5,000). LPTs allow investors to invest in property without investing a substantial amount of capital.

Property Syndicates

Investors can also invest in property syndicates, which are proportionate ownership schemes that usually involve purchasing a single property. The minimum investment is usually around NZD50,000 and, in return, the investor is entitled to a share of the returns generated from the property. The property is normally managed by a professional management company and generates higher returns than other real estate investments, due to the higher level of risk involved. A syndicate is usually set up as a company, with the shares in that company held on trust for the investors.

Refer to 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity.

Other than the legal and/or administrative costs involved with establishing an entity and its governing documents, there are generally no minimum capital requirements to establish real estate investment entities, noting that:

• to establish a trust, there must be capital settled into the trust (but this can be a nominal amount); and
• a company must not trade while insolvent.

NZ Companies

NZ incorporated companies must have a physical address in NZ and at least one director who lives in NZ or lives in Australia and is a director of a company incorporated in Australia.

The company’s business and affairs must be managed by the board of the company or under its direction or supervision. However, certain matters require approval by a majority of 75% of the votes of shareholders entitled to vote. Directors must also comply with certain directorial duties.

Companies listed on the NZ Stock Exchange and listed property trusts are subject to the relevant governance requirements set out in the listing rules.

Overseas Companies Registered in NZ

Overseas companies that are carrying on business in NZ must be registered on the Companies Office register.

An application to register an overseas company in NZ must include a physical address of the company’s place of business in NZ and the details of one or more persons resident or incorporated in NZ who are authorised to accept service in NZ of documents on behalf of the overseas company.

Only certain requirements of the CA apply to overseas companies.

Limited Partnerships

A person may not be both a general partner and a limited partner of the same limited partnership. Limited partners are prohibited from taking part in the management of the partnership; however, certain “safe harbour activities” are permitted.

Every limited partnership must have a partnership agreement.

Trusts

There are wide-ranging duties on trustees. The Trusts Act 2019 sets out mandatory duties that apply to all trustees and default duties, which may be contracted out of or modified in the trust deed. In general terms, trustees must act in good faith for the benefit of the beneficiaries and in accordance with the terms of the trust.

The administration of charitable trusts is governed by the Charitable Trusts Act 1957 and all charitable trusts must be registered on the charities register.

NZ Incorporated Companies

The costs associated with operating a company depend on several factors, such as the size of the business, the nature of the real estate it owns and the complexity of its business operations. All companies must file an annual return. NZ incorporated companies are generally relatively easy to establish and maintain and costs are usually not high.

Overseas Companies Registered in NZ

Overseas companies are required to complete an online annual return and may be required to prepare, audit and file (publicly) their financial statements, depending on the scale of the business. As such, maintenance and accounting compliance costs are minimal.

Limited Partnerships

The ongoing maintenance and accounting compliance requirements are similar to those of NZ incorporated companies.

Trusts

The trustees are required to file an annual income tax return and to prepare financial accounts (where required) if the trust earns income. As such, maintenance and accounting compliance requirements are likely to be nominal.

The types of arrangements recognised by law whereby a person, company or other organisation can occupy and use real estate for a limited period of time, without buying it outright, are as follows.

• Lease – this is considered to be the most preferable property right short of a freehold/fee simple interest, given that one of its main features is a right to exclusive possession of the relevant land.
• Licence – a licence is a contractual right only (ie, it does not confer equitable rights) to occupy or use a property and cannot confer exclusive possession (otherwise it may be held to be a lease) and is therefore usually a right to use a property in common with others (eg, the landlord/fee simple owner and their invitees).
• Easements – an easement is a right to use a third party’s land on a non-exclusive basis or a right to restrict a landowner from using their land in a particular way. NZ law only recognises certain types of easements.
• Profits à prendre – a profit à prendre (profit) confers a right on a party to take things naturally occurring on the land, such as timber, soil or minerals.

The most commonly used form of lease is The Law Association of NZ (previously known as the Auckland District Law Society) form.

The Property Council of NZ also produces specific leases for office, retail and industrial premises.

It is not uncommon for large landlords or tenants to develop their own form of lease, usually based on these lease forms.

Rents and lease terms are freely negotiable.

The term of a lease usually depends on the size of the premises let. Smaller tenancies typically have terms of less than five years, with one or two rights of renewal of similar terms. Larger tenancies typically have longer terms and more frequent renewals for longer periods.

Day-to-day repair and maintenance of the premises is usually the tenant’s responsibility, while landlords are usually responsible for structural maintenance and keeping the building weatherproof.

Rent is typically paid monthly.

Many leases contain a provision entitling a tenant to a fair abatement of rent if they are unable to access the premises; however, a large number of leases are silent on this point or only allow such abatement if the landlord’s insurance covers the situation (which is not usually the case for a pandemic).

Rent will typically be subject to rent reviews during the term of a lease.

The most common way of reviewing the rent is through one or a combination of the following methods:

• adjusting the rent by reference to changes to the Consumer Price Index (or a similar index that measures inflation);
• increasing the rent by a fixed percentage annually; or
• adjusting the rent to reflect the market rent.

For index-based or fixed rent increases, the landlord typically calculates the rent and the tenant is then notified of the new rent.

For market rent reviews, usually either party may initiate the review by notifying the other party of its proposed market rent. If the party receiving a market rent review notice disputes the proposed rent and the parties cannot reach agreement, the rent is usually determined by registered valuer(s) or arbitration.

NZ’s VAT equivalent (Goods and Services Tax – GST) is payable on rent and any other payments made by a tenant under a lease.

A tenant is typically required to pay a deposit of one or two months’ rent as advance rent when signing a lease agreement.

Each party usually pays its own legal costs of negotiating the lease.

Each tenant is commonly required to pay for a proportion of the maintenance and repair of common areas.

It is not unusual for each tenancy within a property to have a separate meter for various utilities, meaning that costs can be directly attributed to a particular tenancy. Where there are not separate meters or this is impractical, each tenant is usually required to pay the landlord a proportion of the total costs.

NZ does not have a specific real estate tax. The closest equivalent would be local council “rates” which are annual fees charged by the council on property to fund community infrastructure and services. The tenant typically reimburses the landlord for the rates.

The tenant typically pays the costs of the landlord’s insurance.

The policy usually covers events that cause damage and destruction to the building(s) by fire, flood, explosion, lightning, storm, earthquake and volcanic activity on a full replacement and reinstatement basis or indemnity to full insurable value. Landlords will often also obtain insurance for loss of rents for set periods (eg, 12 months).

Leases usually contain restrictions on the tenant’s use of the real estate.

Various laws and/or regulations will also apply, depending on the use (eg, the sale of alcohol requires permits to be obtained).

The tenant is usually permitted to alter or improve the demised premises with the prior written consent of the landlord. The tenant is usually required to produce plans and specifications for the proposed alterations for the landlord’s review and approval. When undergoing building work, the tenant may also be required to obtain a building consent and code compliance certificate pursuant to the Building Act 2004. The tenant is also typically required to provide copies of the building consent and code compliance certificates to the landlord.

Landlords of residential tenancies must comply with a number of specific laws and regulations, including:

• the Residential Tenancies Act 1986 (as amended by the Residential Tenancies Amendment Act 2019) (RTA);
• the Residential Tenancies (Healthy Homes Standards) Regulations 2019 (Healthy Homes); and
• the Residential Tenancies (Smoke Alarms and Insulation) Regulations 2016 (RTSAI Regulations).

All residential tenancies are governed by the RTA, which outlines the rights and obligations of a landlord and tenant. It also requires landlords and tenants to enter into a written tenancy agreement that outlines the terms and conditions of the tenancy. The Healthy Homes standards outline the minimum requirements for a residential tenancy to ensure landlords let properties that are habitable. The RTSAI Regulations require landlords to ensure that residential tenancies are warm, dry and safe.

No specific regulations or laws apply to leases for the real estate categories of industrial, offices, retail or hotels; all commercial leases are governed by the PLA.

Parties must also comply with obligations under the Health and Safety at Work Act 2015 and other approved standards in relation to any commercial premises.

Leases commonly provide that the lease is immediately terminable upon the event of a tenant’s insolvency; however, there is no statutory legislation deeming this to be the case. Where a tenant is insolvent, they may be able to disclaim a lease, depending on the winding-up process adopted (effectively bringing it to an end).

The PLA implies in every lease that if the landlord permits the tenant to remain in occupation of the premises after the expiry or earlier termination of the lease, the occupation is deemed a periodic tenancy on the same terms as the lease. Either party may terminate it by giving written notice (often 20 working days).

A landlord should communicate clearly with the tenant to ensure they leave on the lease expiry date. If necessary, the landlord may need to serve formal notice of the expiry date. After the expiry date, the landlord is entitled to enter the premises and change the locks if needed.

A tenant is typically permitted to assign or sub-lease (in whole or in part) their leasehold interest to a third party, if they obtain the landlord’s prior consent in writing and satisfy a number of standard conditions, including the following:

• the tenant can prove that the proposed assignee is respectable and responsible and has the financial resources to meet the tenant’s commitments under the lease;
• all rent and other moneys due under the lease are paid;
• the assignee signs a deed of covenant in favour of the landlord;
• appropriate guarantees are provided by the assignee; and
• the tenant pays the landlord’s costs.

Where a tenant is a company (which is not listed on the main board of a public stock exchange in NZ or Australia), it is also standard for a lease to provide that any change to the shareholding that results in a change in the effective management or control of the company will require the prior written consent of the landlord.

The following events typically give the landlord and the tenant a right to terminate the lease (under general contract terms and any applicable legislation).

• Where the tenant is in default under the lease and fails to remedy the default after receiving notice from the landlord to do so. The most common reason for default is the tenant’s failure to pay rent or outgoings.
• Where the premises are totally destroyed or so damaged that they are untenantable or require demolition or reconstruction. If the premises are only partially destroyed, a lease may also be terminated where the landlord cannot obtain a permit or consent to repair the damage to the premises or where the insurance moneys received for the damage are inadequate to repair or reinstate the premises.
• If the tenant is unable to access the premises for a specified period (usually nine months) or if it can be established with reasonable certainty that access will not be able to be granted during the specified period.

Leases are not required to be registered on the record of title to be valid or legally binding. It is recommended that a lease should be signed as a deed to ensure certainty around enforceability. Leases are not typically registered due to the costs involved in undertaking a survey of the premises.

A tenant may be forced to leave the premises if they are in default of the lease terms. The PLA sets out the minimum legal process that must be followed before a commercial tenant can be evicted and the lease formally terminated.

The PLA requires that notice must first be served on a tenant, setting out the essential details concerning the default. It must be properly served in accordance with the requirements of the PLA.

The period to remedy the breach must not be less than ten working days in the case of failure to pay rent (rent must be in arrears by at least ten days to serve notice) or a timeframe that is reasonable in the circumstances for a breach of any other covenant. Tenants may apply to the courts for relief against termination of a lease and are often successful if there is no detriment to the landlord.

An authority may acquire a leasehold estate pursuant to the PWA. The relevant authority must comply with the procedures in the PWA. It may acquire the leasehold estate by negotiation or compulsorily. The timeframe involved will depend on the length of negotiations with the landlord and tenant. Compensation is payable by the relevant authority and is not limited to the value of the land taken. Compensation may also be paid for permanent depreciation in the value of any retained land (injurious affection), damage to any land or disturbance resulting from the acquisition, including business loss resulting from relocation.

In NZ, there is no statutory cap on damages that can be recovered from a commercial lease, so long as the landlord has taken reasonable steps to mitigate their losses. Damages can include loss of rent until the premises are re-let, reinstatement or “make-good” costs for the premises and associated costs such as legal fees, enforcement costs and agent fees.

The most common form of security for a commercial lease is a bank guarantee from a registered bank (usually a NZ bank). Landlords also commonly accept parent company guarantee or director/shareholder guarantees or a cash bond.

Under the RTA, residential landlords can require a cash bond of up to four weeks’ rent, which is held by the independent body Tenancy Services.

The most common pricing structures for construction contracts are:

• Lump-sum contracts, which involve a fixed price for a defined scope of work. This price can change if the owner alters the design/works or if unexpected circumstances arise.
• Measure and value contracts, which include a schedule of prices agreed at the outset (for example, a rate per unit of work). The amount payable is determined by measuring the work completed and applying the agreed rates.
• Cost-reimbursement contracts, where the owner pays the contractor its net costs, plus an agreed margin. This pricing structure provides less cost certainty and control for the owner.

Alliances and other forms of collaborative contracting, which involve shared risk and reward between the owner and contractor, are rarer but increasingly used on major projects to promote commercial pragmatism.

The primary contract models used to allocate design and construction risk are as follows.

Build-Only

The contractor is only responsible for its construction methodology. Design risk sits with the owner (who usually allocates it to architects, engineers or other consultants under a separate contract).

Design and Build

The contractor is responsible for both the design and construction of the works. Engineering, procurement and construction management (EPCM) contracts where a head contractor project manages a set of specialist contractors and consultants are less common in NZ. Alliancing contracts, which share the risks of design and construction, are also rare and usually limited to larger projects with higher degrees of risk and uncertainty.

Cost overruns are one of the most significant risks on a construction project. The contract’s variation regime defines the circumstances in which a contractor is entitled to claim additional payment.

Cross-indemnities are commonly used to allocate key risks that are within a party’s control, including:

• damage to property (usually insurable);
• injury to persons (subject to the Accident Compensation Act 2001 and the Health and Safety at Work Act 2015); and
• infringement of intellectual property rights.

Each party typically provides a range of contractual warranties, with the owner warranting the accuracy and completeness of the information it has provided and the contractor warranting its performance and the quality of the works.

Some warranties are implied by statute into certain types of contracts (for instance, consumer contracts). Relevant statutes include:

• the Building Act 2004 which requires all residential building work to be carried out properly and competently;
• the Consumer Guarantees Act 1993 which requires services for consumers to be performed with reasonable care and skill; and
• the Fair Trading Act 1986 which prohibits misleading or deceptive conduct or false representations.

New Zealand is considering a shift to proportionate liability, which would allocate liability based on each party’s share of responsibility.

Parties commonly exclude liability for loss of profits, revenue, goodwill and indirect or consequential losses. Such exclusions are not typically included by default in standard construction contracts and must be expressly agreed.

Contractors and consultants may seek to limit their liability under the contract and this is an option in some NZ standard form contracts. Consultants almost invariably cap their liability at or below the level of their professional indemnity insurance, while contractor caps are increasingly used and operate alongside the fault-based, proportionate liability regime.

The law prohibits limiting or excluding some forms of liability, such as statutory penalties or losses arising from fraud or criminal conduct.

The Limitation Act 2010 and the Building Act 2004 operate together to limit the time in which civil proceedings can be brought, providing contractors with a defence where a claim is made outside the applicable limitation periods. This is generally:

• six years from the act or omission; or
• three years from the date of late knowledge (ie, three years from the date they discovered or should have reasonably discovered defects).

The Building Act also imposes a long-stop, meaning a civil claim cannot be brought more than 10 years after the relevant act or omission occurred.

Contract Completion Period

Contractors are typically required to complete the works within a specified number of working days

Allowing for Extensions of Time

Most contracts include provisions allowing this period to be extended if agreed delay events arise. If the contract does not have an extension mechanism and the owner causes delay, the ‘prevention principle’ operates to extend the completion period by a ‘reasonable time’. Because this creates uncertainty, contracts should include clear extension-of-time mechanisms.

Consequences of Delay

If the contractor fails to finish within the completion period, the owner may claim damages for delay-related losses. Many contracts pre-agree daily costs for liquidated damages. Liquidated damages cannot be enforced if they amount to a penalty. In New Zealand, a clause is only considered a penalty if it is disproportionate to the innocent party’s legitimate commercial interests in performance.

Owners commonly require contractors to provide security such as bonds, retentions and guarantees to ensure the works are properly completed.

In limited circumstances, a contractor may retain materials in its possession under a lien. However, to avoid delays caused by payment disputes, commercial contracts typically prevent contractors or designers from exercising lien rights or placing any encumbrance over project materials.

Contractors can protect their security interests in materials more effectively by registering financing statements on the Personal Property Security Register (PPSR). If a financing statement is registered incorrectly, owners can have it amended or removed through the change-demand process under the Personal Property Securities Act 1999.

To comply with the Building Act 2004, owners must obtain a code-compliance certificate (CCC) from the appropriate territorial authority before a building can be sold or occupied by the public. In some instances, an owner can obtain a certificate for public use (CPU) to allow public access before obtaining a CCC.

Owners of buildings with specified systems such as sprinklers, fire alarms and lifts must maintain a compliance schedule and file an annual building warrant of fitness confirming the systems have been maintained and continue to function properly.

Value added tax in NZ is known as goods and services tax (or GST) and is levied under the Goods and Services Tax Act 1985. The standard rate for GST is 15% of the acquisition price. Real estate transactions in NZ are subject to the GST regime, however, there is a compulsory zero rating regime applicable to most commercial real estate transactions where GST is charged at zero per cent provided certain criteria are met (both parties are registered for GST, the property is acquired with the intention of using it for taxable supplies and the land is not intended to be a principal place of residence of the purchaser). Where GST is payable, the vendor pays it but would usually charge it to the purchaser as an addition to the purchase price.

No transfer or recordation tax or stamp duty is payable on real estate transactions in NZ, aside from nominal LINZ registration fees, so this is not an issue.

Local councils in all areas of NZ charge annual rates on land within their respective jurisdictions, which are usually assessed by reference to the value of the land. Additional rates are also charged for commercial properties and hotel operators. Rates are payable on all land, except certain land used for public, charitable or religious purposes.

While rates are the property owner’s responsibility, they are generally passed on to commercial tenants.

Where a non-NZ tax resident receives passive income (including interest, dividends or royalties) from a NZ tax resident, non-resident withholding tax (NRWT) must be deducted by the payor. The rates at which NRWT is deducted depend on the terms of any double tax agreement in place between NZ and the non-resident’s country. If no double tax agreement is in place, the default NRWT rates are 15% for interest and royalties and 30% for dividends.

The general position in NZ is that any income received from leasing a property to a tenant will be taxed as ordinary income of the recipient. For companies, rental income is added to the company’s annual tax return.

NZ companies are subject to a flat income tax rate of 28%. Individuals are subject to marginal income tax rates, the highest of which is 39% for income over NZD180,000 per annum.

GST is also payable on non-residential rents, at a rate of 15%. This is almost always paid by the tenant to the landlord, who then accounts to Inland Revenue for the GST received.

In general, capital gains made when disposing of property are tax-free in NZ. However, there are a number of exceptions that give rise to the taxation of capital gains, including:

• where a person buys a property with the intention of resale; or
• where a person buys and sells a residential property within two years (noting that there are exemptions, including in relation to the main family home).

In each case, any gain will be taxed at the person’s marginal tax rate.

Commercial property owners can depreciate certain fixtures, fittings and chattels but not the land and buildings themselves. Typically, in a commercial leasing scenario, because tenants own the fit-out, landlords have little scope to claim depreciation.

Those losses incurred on a landlord’s residential rental properties (both in NZ and worldwide) are ring-fenced to the landlord’s property portfolio. The losses are not permanently lost, but are instead “quarantined” and can be carried forward and offset against any future income derived from residential rental property (noting that there are exemptions, including in relation to the main family home).

From 1 April 2025 onwards, 100% of the interest costs incurred in relation to residential property can be claimed as a tax deduction (subject to specific requirements).

While there are tax benefits in terms of deductions and depreciation, the main tax benefits from owning real estate are the tax-free capital gains. Landowners also benefit from a reduction in the “bright-line” period, such that if they sell their residential property after owning it for two years, they are not required to pay tax on the profit resulting from the sale of their house. Tax deductions may be claimed for a variety of expenses incurred in connection with the generation of rental income. Such deductions include repair and maintenance costs and interest costs on finance used.