New Laws Affecting Real Estate
Since the start of the year, two new laws have required some extra paperwork for sellers and buyers of real estate.
One, which affects buyers specifically, is the Overseas Investment Amendment Act 2018. This law requires all buyers to meet the requirements of the new law. That is, when offering on existing land or buildings, such as residential dwellings, they must declare they meet the requirements of the Act. Basically, all non-New Zealand citizens or residents are no longer allowed to buy existing residential property. There are exemptions for Australians and citizens from Singapore. Real estate sales people will ask buyers to sign a declaration when buying that they meet the requirements of the new law. If buyers are in doubt about their eligibility, they should check with their lawyer.
The other legislation, the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Act 2017 puts in place “Phase 2” of New Zealand’s AML/CFT laws. The Amendment extends the current AML/CFT Act to cover more businesses, including real estate agents and conveyancers; many lawyers and accountants; some businesses that deal in expensive goods; and betting on sports and racing. The law is designed to prevent money laundering by terrorists, drug cartels and the like.
From now on, sellers listing property are required to provide evidential proof of identity (a certified copy of a passport or driver’s licence is acceptable) and proof of residential address (for example, a utility bill or bank statement). If listing in person, the seller need only show their passport or driver’s licence and the salesperson will copy it and other documents for their records (usually by photographing it and later certifying). At Nidd Realty, we are using a specially designed app which means all documentation is held electronically in a third-party, secure database. This should lessen any privacy concerns. For sellers listing remotely, copies of documentation need to be certified by a lawyer, justice of the peace or similar.
A Rising Market – For How Long?
I’m often asked, “How long will the Dunedin property market keep rising?”. The same question was asked this time last year and the response 12 months later is much the same (see my newsletter What Will 2018 Hold? Feb 2018. See Blogs What Will 2018 Hold?).
Rising markets in Dunedin have tended to last 4-7 years since at least 1970. We are now three years and a few months into the current pattern. Interest rates continue to be low and the forecast is for them to remain so at least another 12 months. Demand for property, especially in the range to $500,000, is strong, outstripping the historically low number of current listings (less than 300). Just a few years ago listings were double and triple this number this time of year. Expect prices to rise till at least the end of the year. When the uplift ends, prices are likely to adjust only slightly, then level off for a few years – that is, if the pattern of the past 50 years is followed.