Amendments to the Overseas Investment Act
This article was written by Tom Appleton.
The Overseas Investment Amendment Bill recently passed its third reading of the house, and will bring into law amendments to the Overseas Investment Act 2005. The amendments will take effect in late October 2018. The main intention is to restrict the ability of overseas buyers, not ordinarily resident in New Zealand, from purchasing residential land in New Zealand.
One of the key amendments is the addition of residential land to the definition of “Sensitive Land” contained in Schedule 1 to the Act. Consequently a person who does not satisfy the “ordinarily resident in New Zealand” test contained in section 6 of the Act, will have to apply to the Overseas Investment Office for consent to purchase residential land in New Zealand.
New Zealand citizens living overseas retain the ability to purchase sensitive land. However in order to satisfy the “ordinarily resident in New Zealand” test, an overseas buyer must:
- Hold a resident class visa; and
- Have been residing in New Zealand for at least the immediately preceding 12 months; and
- Be tax resident in New Zealand; and
- Have been present in New Zealand for 183 days or more in total in the immediately preceding 12 months.
Due to existing free trade agreements, overseas buyers from Australia and Singapore will enjoy the same rights as New Zealand citizens when purchasing residential land.
Developers will be able to apply for an exemption in relation to large multi storey apartment buildings of 20 or more units. Large scale developments often rely on pre-sales to raise capital and satisfy lenders that a project is feasible. At the select committee stage, it was submitted that restricting overseas buyers as a source of pre-sales would stymie this type of development. Developers will be able to apply for an exemption to sell a percentage of the units to overseas buyers “off the plans”, without the need for Overseas Investment Office consent. There will be no requirement for overseas buyers to on-sell the unit once it has been completed, however they will not be able to occupy it themselves.
If you have any queries, or are an overseas person needing help with purchasing residential land, please contact one of our specialist property teams.