Buying the House You Rent From Your Landlord in NZ | NZ Legal

You have rented the same place for a while now. You know which window sticks, where the sun lands in winter, and how long the hot water really lasts. Then your landlord mentions they are thinking of selling, and asks whether you would like first go at it.

This can be one of the best ways into a first home. No agent, no open homes, no one bidding against you, and no need to move. But a private sale between a landlord and a tenant carries risks an ordinary purchase does not, and nearly all of them come from the same place. Because you already live there, it is easy to assume you know the property.

Here is what to check, how to set up an offer you can still walk away from, what happens to your tenancy, and what it costs to have us act for you.

Living there is not the same as knowing the property

Renting a house teaches you about daily life in it. It tells you very little about:

• what is registered on the record of title (the official ownership record), including easements, covenants and any caveats
• what the council holds on file, including building consents that were issued but never signed off
• whether past building work was consented at all
• the condition of the roof space, the subfloor, the framing and the wiring
• for a unit, what the body corporate has planned and what it actually has in the bank

A tenant is rarely shown any of that, and your landlord has no obligation to volunteer most of it.

A private sale has fewer safety nets

The Real Estate Authority, the government agency that regulates real estate agents, is blunt about this. Buying privately means you are not covered by the Consumer Guarantees Act or the Fair Trading Act, unless the seller trades in property for a living. A private seller must tell you about known issues, but they are not bound by the agents’ code of conduct, and there is no agent to complain to. In the Authority’s words, “the onus is on you to do your due diligence well”.

There is a real upside, though. With no agent in the middle, nobody is drafting the agreement to suit the seller. In a private sale the buyer’s lawyer usually prepares it, so the contract can be built around protecting you from the first draft.

We use the standard ADLS/REINZ agreement, the form used for most property sales in New Zealand. It includes promises (called warranties) from the seller, for example that any work they had done which needed a building consent was consented and signed off. Some private sellers ask to strike these out. Talk to us before you agree to that, because they are some of the few protections a private sale gives you.

Agreeing a fair price

Your landlord saves real money by selling to you. There is no agent’s commission, no marketing campaign, and no empty weeks between tenants. That is a fair point to raise when you talk about price.

It also helps to know what the property is worth before you agree a number. A registered valuation gives you an independent figure, and your bank may ask for one anyway, especially on a private sale. Talk to your mortgage adviser or bank early about what they will need.

Before you sign: nothing to pay upfront

There is nothing to pay us until your agreement is signed. Before we start, we verify your identity (anti-money laundering law requires this before we can act for you) and send you our terms of engagement. Then we will:

• prepare the sale and purchase agreement with you, with the right conditions in it
• draft any specific clauses you need, for example covering repairs, your tenancy or a KiwiSaver deposit
• take your calls about the process as you work through it with your landlord

Preparing the agreement is part of our Stage 1 fee, which only becomes payable once the agreement is signed. If it never gets signed, you pay us nothing. Our buying property page explains how we handle a purchase from start to finish.

The conditions your offer needs

Even though you live there, your offer should still be conditional on the following. Each one is a door you can walk back out of if the property does not check out.

We explain each of these in more detail in what to include in your offer.

Why a LIM still matters when you already live there

A LIM (land information memorandum) is the council’s report on the property, and by law it must be issued within 10 working days of your application. It covers natural hazards, drains, rates owing, consents, notices and orders, and any weathertight homes claims notified to the council. None of that is visible from inside the house, however long you have lived there. Our guide to LIM reports covers what they show and what they miss.

Why a building inspection still matters

The expensive problems sit behind linings and under floors. An inspector gets into the roof space and under the house, and a good report tells you what they could not see as well as what they could. If you have ever wondered about a stain on a ceiling or a smell in a cupboard, this is where you find out what is behind it.

If you already know something needs fixing

Here is where living there works in your favour. You know the shower has been leaking for a year. You can raise it before you sign anything, rather than discovering it in an inspection report and trying to renegotiate from a weaker position.

There are two usual ways to deal with it. Either the price comes down to reflect the work, or the agreement requires your landlord to complete the repairs to a professional standard before settlement, with your building inspection confirming the work afterwards. We draft either approach.

If the inspection turns up something nobody knew about, we cover your options in building defects after an inspection.

Buying a unit? Body corporate disclosure has its own rules

If the place you rent is a unit title, the Unit Titles Act 2010 gives you disclosure rights that do not depend on anyone’s goodwill:

• Before you sign, the seller must give you a pre-contract disclosure statement.
• At least 5 working days before settlement, the seller must give you a pre-settlement disclosure statement, certified correct by the body corporate.
• If the seller finds out before settlement that either statement was wrong, or has become wrong, they must give you a correcting statement within 5 working days.
• If pre-contract disclosure is late, incomplete, inaccurate or never given, you can delay settlement, and in some cases cancel the agreement.

Your tenancy ends when the house becomes yours

The Residential Tenancies Act says a tenancy ends when the tenant acquires the landlord’s interest in the property. Put simply, you cannot be your own tenant, so your tenancy ends at settlement. If the purchase does not go ahead, your tenancy simply carries on.

What needs planning is everything around that moment. We set it out in the agreement, so nothing is left to a handshake:

• Rent. Rent stops on settlement day. Any rent you have paid beyond that should come back to you, most simply as a credit in the settlement figures.
• Bond. Your bond is held by Tenancy Services, not your landlord. Your landlord starts the refund online and you confirm it. Agree up front that the full bond comes back to you straight after settlement.
• Chattels. The agreement lists the chattels included in the sale, such as the oven and curtains. Make sure it lists only your landlord’s. You should not be paying for your own fridge.
• Notice already given. If your landlord has already given you notice to move out, tell us at the start, so a delayed settlement cannot leave you without a home.
• Other tenants. If a flatmate or anyone else on the tenancy agreement is not buying with you, talk to us early. Their position needs sorting out before settlement.

Your landlord needs their own lawyer

We act for you, not for both of you. Your landlord should get their own legal advice, and that matters to you because of your deposit.

With no agent involved, your deposit is usually paid into the trust account of your landlord’s lawyer, who holds it until the agreement allows it to be released. Never pay a deposit into your landlord’s personal bank account. We will confirm where and when to pay it.

Timing: from handshake to keys

Private sales often move faster than the paperwork behind them. These are the usual steps:

1. Step 1

   Agree the price and terms

   You and your landlord agree the deal. We verify your identity, then prepare the agreement. Nothing to pay at this point.

2. Step 2

   Sign the agreement

   Your conditional period starts and the Stage 1 fee falls due. If you are using KiwiSaver, apply for your withdrawal now.

3. Step 3

   Due diligence

   LIM, title, building inspection, body corporate documents if relevant, and your bank’s approval. We report back to you in plain English.

4. Step 4

   Go unconditional

   Once you are happy, the agreement goes unconditional and the deposit is usually paid. Arrange house insurance from settlement day: your bank needs proof before it releases your loan, and your contents cover as a tenant does not insure the house.

5. Step 5

   Settlement

   Loan documents signed, ownership transferred into your name, rent and bond squared up, and your tenancy ends. The keys are already in your hand.

KiwiSaver first home withdrawal

If you are using KiwiSaver towards the purchase, these are the rules that affect your dates:

• You must have been a KiwiSaver member for at least 3 years, and at least $1,000 has to stay in your account.
• You must intend to live in the property. It cannot be an investment property.
• You apply through your KiwiSaver provider, not Kāinga Ora, and approved funds are paid to your lawyer on or before settlement day, not to you.
• If you have owned property before, Kāinga Ora first has to decide whether you are a qualifying person. That takes extra time, so start it before you sign.

Apply as soon as the agreement is signed, because providers need time to process a withdrawal. If KiwiSaver is funding your deposit, tell us before we draft the agreement, so we can build in the clause that protects a KiwiSaver deposit and set a deposit date that works. We complete the lawyer’s part of the application at no extra cost.

What it costs to have us act for you

We split the work into two stages, so you only pay for the second once your purchase is actually going ahead.

These are a little higher than our standard purchase fees because on a private sale we prepare the agreement and handle the tenancy side (rent, bond and how your tenancy ends) as well as the purchase. There is also a one-off $50 + GST compliance fee for the identity checks anti-money laundering law requires, and disbursements at cost.

What we do in Stage 1

• Prepare the agreement and settle its terms with your landlord’s lawyer.
• Review the title, the LIM, any body corporate documents and anything else your landlord discloses, and report to you in writing, in plain English.
• Answer your bank’s legal questions.
• Help you negotiate repairs or a price reduction if the building inspection turns something up.
• Complete the lawyer’s part of your KiwiSaver withdrawal.
• Help you go unconditional once you are happy.

What we do in Stage 2

• Receive your loan documents from your bank and go through them with you.
• Prepare your tax statement and land transfer documents.
• Check the settlement statement, including the price, the split of rates, water and any body corporate levies, and the credit for rent paid in advance.
• Make sure your rent, bond and the end of your tenancy are dealt with as agreed.
• Handle settlement day with the banks and your landlord’s lawyer, transfer the property into your name and register your mortgage.

Other costs

Some costs go to other people rather than to us: the council’s LIM fee, your building inspector, a registered valuation if your bank needs one, and your bank’s own fees.

Ready to take the next step?

Buying the home you already live in should be the straightforward way into your first house, and when the agreement is set up properly, it is. If your landlord has offered you first go, talk to us before you agree a price or sign anything.

Call us on 09 522 8810 or send us a message, and we will usually get back to you the same working day.