New Residents - Pathways to Overseas Investment Consent

Monday 21 May 2018

In the previous article, I have explained who is exempt from seeking Overseas Investment Consent under the Overseas Investment Amendment Bill 2017.

Under the current Overseas Investment Act, all applicants for consent must satisfy core criteria (“known as the Investor Test”). The tests relates to the investor’s business experience and acumen, financial commitment and good character and whether the investor will be ineligible for a visa.

Under the Amendment Bill, for residential land, the application will also have to meet one of the following requirements:

1. The transaction is or will be likely to benefit New Zealand. Such benefit is assessed by reference to 21 factors set out by law, or
2. The “qualifying individual” demonstrates their “commitment to New Zealand”, or
3. The overseas person must meet or is likely to meet increased residential use and on-sale outcomes.

Commitment to New Zealand pathway under (2) above is the most accessible pathway for a new resident who has been granted a NZ residence class visa but not yet obtained permanent residence. Such resident will be a “qualifying individual”.

In order to be granted consent, the visa holder must provide a declaration that they intend to be present in New Zealand for at least 183 days in each 12 month period from the date of consent. They must also be tax resident in New Zealand within 12 months from the date of consent, and will continue to be tax resident while they own the relevant land.

Consent will be granted under this pathway only if the Ministers are satisfied that the qualifying individual will occupy their home as their main home or residence in New Zealand.

Applicants under this pathway will not be subject to the “Investor Test” criteria if the residential land is not “sensitive land” for reasons other than it is residential land.

The other two pathways, i.e. benefit to New Zealand and increased housing on residential land will be more difficult to meet. We are happy to explore those pathways with clients if, for some reason, they are unable to meet the commitment to New Zealand pathway.

The Associate Minister of Finance, David Parker, has also indicated that further changes are coming and the Act will be redrafted in the next year. Those changes would restrict the number of people who will qualify for consent. However, it is expected that for those who qualify, approval will be granted faster.

Articles on this website are for general information only. If you require specific advice, please contact us.