Wealth Mentor

NZ Property Investing Glossary

Plain-English definitions of 49 terms New Zealand property investors actually use — each answer-first, with the current rules and official sources.

AuctionAn auction is an unconditional sale method — the winning bid is binding immediately, so al… Body corporateA body corporate is the collective entity of all unit owners in a unit-title development (… Break feeA break fee is what a bank charges to exit a fixed-rate mortgage early — compensating the … Bright-line testThe bright-line test is an income-tax rule that taxes the profit on a residential property… BRRRR (buy, renovate, rent, refinance, repeat)BRRRR is a strategy where you buy under-value, renovate to lift the value, rent it out, re… Building consentBuilding consent is council approval that construction work complies with the Building Cod… Buying off the planBuying off the plan means signing an unconditional agreement to buy a property before it&#… Capital growthCapital growth is the increase in a property's value over time — the other half of to… Chattels valuationA chattels valuation itemises a rental property's depreciable assets — carpets, curta… Code compliance certificate (CCC)A CCC is the council's confirmation that consented building work was completed in lin… CovenantA land covenant is a registered restriction on how a property can be used or built on — co… Cross-collateralisationCross-collateralisation is when one loan (or lender) is secured against more than one of y… Cross-leaseA cross-lease title means you co-own the underlying land with your neighbours and lease yo… DTI (debt-to-income ratio)DTI compares your total debt to your gross annual income. Since July 2024, NZ banks can le… Due diligenceDue diligence is the investigation you do before an offer goes unconditional — building in… EasementAn easement is a registered right for someone else to use part of your land — most commonl… EquityEquity is the difference between what your property is worth and what you owe on it — the … Fee simple (freehold)Fee simple — freehold — is the most complete form of property ownership in NZ: you own the… Going unconditionalAn offer goes unconditional when all conditions (finance, inspections, due diligence) are … Gross yieldGross yield is annual rent divided by purchase price, before any expenses. A $600 per week… GuarantorA guarantor is someone — usually family — who pledges their own property or income as addi… Healthy Homes StandardsThe Healthy Homes Standards are minimum legal requirements for NZ rental properties coveri… Home and incomeA home and income is a property with a second self-contained dwelling — you live in one an… Interest deductibilityInterest deductibility is the ability to claim mortgage interest on a rental property as a… Interest-only loanAn interest-only loan is one where you pay only the interest for a set period — nothing of… LeaseholdLeasehold means you own the building but lease the land underneath, paying ground rent to … LIM reportA LIM (Land Information Memorandum) is a council report on everything the council knows ab… Look-through company (LTC)An LTC is a New Zealand company structure whose income and losses pass directly through to… LVR (loan-to-value ratio)LVR is the size of your mortgage as a percentage of the property's value. New Zealand… Minor dwellingA minor dwelling is a smaller secondary home on the same title as a main house — a consent… Mortgagee saleA mortgagee sale is when a lender sells a property after the borrower defaults — sold as-i… Negative gearingA property is negatively geared when its expenses (interest, rates, insurance, maintenance… Net yieldNet yield is annual rent minus operating expenses (rates, insurance, management, maintenan… Positive gearing (cashflow-positive)A property is positively geared when rental income exceeds all expenses — it pays you to o… RatesRates are the annual property taxes charged by your local and regional council, based on y… Rating valuation (RV/CV/GV)The rating valuation — also called RV, CV, or GV — is the council's periodic valuatio… Registered valuationA registered valuation is a formal market valuation by a registered valuer — the document … Rental appraisalA rental appraisal is a property manager's written estimate of what a property should… Resource consentResource consent is council permission to use or develop land in ways the district plan do… Revolving credit / offset facilityRevolving credit and offset facilities let your savings and income reduce the mortgage bal… Ring-fencing of rental lossesRing-fencing means residential rental losses can generally only be offset against resident… Sale and purchase agreementThe sale and purchase agreement is the binding contract for buying NZ property — usually t… Servicing test rateThe test rate is the higher interest rate banks use to assess whether you can afford a loa… SettlementSettlement is the day ownership legally transfers — your lawyer pays the balance, the titl… SubdivisionSubdivision is splitting one parcel of land into two or more titles — one of the main ways… Tender and deadline saleTender and deadline sales are no-price marketing methods where buyers submit offers by a s… Unit titleUnit title is the ownership structure for most NZ apartments and many townhouses — you own… Useable equityUseable equity is the portion of your property's value you can actually borrow agains… Vendor financeVendor finance is when the seller leaves part of the purchase price in the deal as a loan …

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