Friday 24 August 2018
The Overseas Investment Amendment Bill which restricts the ability of non-New Zealand residents to buy residential land was passed on 15 August 2018.
The relevant provisions which restrict non-New Zealand residents from buying properties in NZ will most likely come into force on 22 October 2018.
Based on the above, any non-resident who wishes to buy a residential property in NZ must settle by 21 October 2018 at the latest if they wish to avoid applying for consent from the Overseas Investment Office.
Certain amendments were introduced in the final reading of the Bill prior to its passing. The amendments allow certain holders of Residence visas to buy residential properties in NZ without applying for consent. Previously only those who hold Permanent Residence visas would qualify. The Residence Visa holder must meet the following requirements:
The Bill was also changed to allow for developers of large multi storey apartment buildings with 20 or more units to apply for an exemption. The exemption will allow them to sell a percentage of units to overseas buyers off the plans without the need for those overseas buyers to obtain consent or be required to on-sell once the unit is completed. However, the overseas buyers will not be allowed to occupy the units themselves. Regulations will set a limit on the percentage of units per development which could be sold in this way.
Overseas buyers building or investing in large residential developments of at least 20 dwellings are not required to on-sell once construction is complete, if the dwellings are maintained as rental properties or a shared equity development or sold under a rent-to-buy model.
New amendments allow residential tenancies of up to 5 years over residential land to be made to non-New Zealand residents without any consent. Similarly, periodic leases i.e. residential tenancies which have no fixed term will not be covered by the Overseas Investment Act.
The Overseas Investment Act’s “benefit to NZ” test is the main criterion for obtaining consent from the Overseas Investment Office. New amendments provide for a streamlined approval path for businesses to purchase residential land for non-residential purposes. However there will be conditions to ensure that the land will be used for the purposes for which it was purchased.
Previously the Act provides for lawyers to certify that to the best of their knowledge, a purchaser would not contravene the Act. The responsibility was put on the lawyer rather than the purchaser. New amendments require the purchaser provide their lawyer a statement as to whether the transaction requires consent under the Act. If such statement was not provided, or if the lawyer has reasonable grounds to doubt the accuracy of the statement, the lawyer would not be allowed to complete transfer of the property. These changes shift the responsibility from the lawyer back to the purchaser.
In summary, the area of Overseas Investments has become more complicated with residential land being subject to this regime from late October. There are still some investment opportunities available for overseas buyers. Any buyer who is not a NZ permanent resident or citizen should seek legal advice before buying a residential property.
24 August 2018
This article is for general use only. Advice should be sought for specific circumstances. Please consult Teresa Chan at Teresa Chan Law Limited, Level 3, Westpac Building, 106 George Street, Dunedin 9016, ph. 477 1069, or email email@example.comKEYWORDS: Overseas Investment, Overseas Buyers, Residential properties, Investment