09 Oct ARE YOU ELIGIBLE? PURCHASING OF PROPERTY IN NZ BY “OVERSEAS PERSONS”
THE OVERSEAS INVESTMENT ACT 2005
With so many families or investors from other countries wishing to purchase or invest in properties in New Zealand, and the government or people of New Zealand not always benefitting from that, the New Zealand government introduced the Overseas Investment Act in 2005. The Act recognises that it is a privilege for overseas investors to own sensitive land in New Zealand or to make significant investments in New Zealand businesses by requiring them to get consent before giving effect to a transaction. It requires the Overseas Investment Office (OIO) to assess whether New Zealand would benefit from the proposed overseas investment.
In October 2018 the Act was amended to restrict certain overseas persons (“foreign buyers”) from buying “sensitive land”. The definition of sensitive land under the Act has been extended to include residential and lifestyle land, in other words residential property. People who hold New Zealand residence-class visas (including residency visas with conditions), but don’t live here will be able to apply to the OIO for consent to buy a home. Those who hold temporary visas, such as visitor, student, working holiday, or work visas, generally won’t be able to buy.
“Overseas person” means all individuals who are not New Zealand citizens nor ordinarily resident in New Zealand. Foreign nationals who hold a residence class visa must have lived in New Zealand for at least 12 months and show an intention to reside in New Zealand indefinitely before they cease to be an overseas person under the Act. “Overseas person”’ may also mean companies, trusts, partnerships and other corporate entities as defined in s(7)(2) of the Act. We not intend to deal with this topic in detail in this article.
Associates of overseas persons are also subject to the Act, including New Zealand citizens and those people who ordinarily reside here. For example, an overseas person cannot avoid the provisions and or requirements of the Act by directing a New Zealand business partner to acquire sensitive land.
An “overseas person” with a New Zealand spouse can purchase sensitive land without consent, provided that the land will be “relationship property” as defined by the Property (Relationships) Act 1976.
Failure to get consent can lead to an investor having to sell their interest or having a transaction cancelled. There may also be criminal consequences (up to a year in prison or a fine of $300,000) or civil penalties, which could lead to any profit being stripped.
For more details and or advice on your eligibility to purchase a property in NZ, contact Christo Lingenfelder at +64 06 769 8054.
B.Proc (University of Pretoria), Dip. Insolvency Law
Cert. adv. Labour Law, Int. Gen. Cert. H&S (UK)
+64 6 769 8054
CL@rmy.co.nz | https://www.rmylegal.co.nz/team/christo-lingenfelder/