In our March Newsletter, we discussed the Government’s plan to introduce an amendment to the Overseas Investment Act. This amendment has passed through Parliament and it came into force on 22 October 2018.
The main thrust of the amendment remains the same. It changes the definition of sensitive land to include all properties classified as ‘residential’ or ‘lifestyle’. This means that any sale of residential property to an overseas buyer will require Overseas Investment Office (OIO) approval. There are some exceptions, for example, OIO approval will not be required if the sensitive land transaction involves:
OIO consent is not required if the transaction does not involve an overseas person. In order for an individual to NOT be deemed an overseas person and therefore NOT have to attain OIO approval that individual must:
Citizens of Australia and Singapore will also not require consent and will be treated as if they are New Zealand citizens, reflecting New Zealand’s long standing trade relationships with these countries.
A legal entity, such as a company or trust, will be regarded as an overseas entity if 25% or more of the directors or trustees are overseas persons.
Overseas persons are not blocked from buying residential land completely. They can obtain OIO consent if they can prove their investment is a ‘benefit to New Zealand’. This will be decided on a case by case basis.
While there has been much said about how the amendment applies to overseas persons, it also has broader implications to all purchasers of residential land. From now on every purchaser will be required to complete a Residential Land Statement confirming their eligibility to buy. This applies to everyone, not just overseas persons. This statement is obtained by the purchaser’s lawyer before the purchase is completed.
If the purchaser’s lawyer does not obtain a Residential Land Statement, they may be personally liable for a fine of up to $20,000. If the OIO decides that a transaction contravenes the Act, they can request the purchaser dispose of the property.
This amendment will not just affect overseas purchasers. Its scope is wide and will affect all residential land transactions, therefore it pays to become familiar with these new Overseas Investment requirements. If you or someone you know may have OIO concerns please do not hesitate to contact us
Partner Sarah Manning (DDI 03 343 8456 / email@example.com) or
Solicitor Joshua Hitchcock (DDI 03 343 8588 / firstname.lastname@example.org).