Overseas Investment Act 2018
Unless you have been living under a rock, you would probably have heard that the current Labour government has introduced changes to the Overseas Investment Act (OIA) that restrict certain overseas buyers of property in New Zealand. This has been done by classifying all residential land as “sensitive land” in the OIA and these changes came into effect on 22 October 2018.
If you are a New Zealand citizen most of the below will not apply to you directly but you may want to gain a better understanding of how the act could affect potential buyers who do not hold New Zealand citizenship.
Am I an overseas person?
You are considered an overseas person if you are not a New Zealand citizen, or ‘ordinarily resident’ in New Zealand (To be considered ordinarily resident you must have a Residence class visa, have lived in New Zealand for the past 12 months, have been present in New Zealand for at least 183 days of the past 12 months, and be a tax resident). A company or a trust can also be an overseas person.
There are some exceptions for citizens of Australian and Singaporean, but anyone who is not a New Zealand citizen or ‘ordinarily resident’ in New Zealand, is considered an overseas person.
Residence class visa holders as well as Australian and Singaporean permanent residents that are not ordinarily resident in NZ can apply to the Overseas Investment Office for consent to buy one home to live in.
Do all properties in New Zealand need consent to purchase?
The overseas investment legislation affects sales that include sensitive land, this includes residential and lifestyle land. This means that most New Zealand land is included in this category but there are different rules depending on the type of land. You need to be aware that sale timeframes may be affected if you need to obtain consent. If you are an overseas person planning an investment, seek assistance from a professional adviser as early as possible to help ensure a smooth transaction.
How do I know if land is sensitive and requires consent?
Sensitive land is determined by the types of land and area thresholds detailed in the legislation. Land that is categorised as residential or lifestyle in the District Valuation Roll is sensitive. You can ask the local council if a particular piece of land is sensitive. For other land, you will need to read and understand the legislation to determine if land is sensitive. Sometimes determining sensitive land is quite straightforward, however often significant legal and land expertise can be required required, particularly if there are any nearby waterways.
What if my spouse or partner is a New Zealand resident – Do I need consent?
No, you are exempt from the requirement for consent as an overseas person if your spouse or partner is a New Zealand citizen or ordinarily resident in New Zealand, and:
- the securities or rights or interests to be acquired are or will be relationship property (as defined in the Property (Relationships) Act 1976).
- the overseas person acquires property as a result of division of relationship property.
Find out if your partner is considered ordinarily resident (for land that is sensitive, but not residential).
I’m planning to buy a personal residence or holiday home in New Zealand. Do I need consent?
Yes, if you are considered an overseas person and the land is considered sensitive. However, if you can demonstrate your intention to reside in New Zealand indefinitely, then you may be eligible for consent without satisfying the benefit to New Zealand criterion.
I’m an Australian resident. Do I need consent?
Yes, if you are neither a New Zealand citizen or resident, then you are considered an overseas person. Australian citizens and the holders of a current Australian permanent residence visa or current Australian resident return visa will normally be eligible for consent on this concessional basis.
Note that Australian residents migrating to New Zealand will normally be granted a New Zealand residence visa on arrival.
How do I apply for consent?
All applications can be made online. The application templates and the online form can be found on each of our consent type information pages on the LINZ (Land Information New Zealand) website. We would recommend seeking legal advice for assistance with this.
If I am an overseas person, how can I obtain consent?
Overseas persons can obtain consent to buy residential land (that is not otherwise sensitive) in certain situations:
- Increasing housing on residential land test – if they would be developing the land and adding to New Zealand’s housing supply;
- If they would use the land for non-residential purposes or a residential purpose relating to a core business purpose; or
- Commitment to reside in New Zealand test – if they hold an appropriate visa (i.e. New Zealand resident visa or Australian or Singaporean citizens and permanent residents) and could show they have committed to reside in New Zealand.
The Eligibility Flowchart at the bottom of the page will help you figure out whether you need to apply for consent from the Overseas Investment Office.
If you would like to discuss the implications of the amendment and how it might affect you, pop in to see us or call one of our experienced sales team. All of our sales team have been trained in the implications of the OIA and if there’s anything that we don’t know, we’ll be able to put you in touch with a legal expert.