Let’s look at the current legislation governing investment by overseas buyers in New Zealand: The Overseas Investment Act 2005.
Until the new law comes into force – foreigners must obtain consent from the Overseas Investment Office (the OIO), before they buy, or take an interest in, “sensitive land”.
The most common form of sensitive land is non-urban land over five hectares, or land that adjoins a foreshore, lake bed, a reserve or Department of Conservation land.
Leases of, or other interests in, sensitive land lasting three or more years also require OIO approval (this has now been extended to five years under the new Bill).
Overseas buyers must further satisfy the OIO that they:
If the land isn’t deemed to be sensitive, OIO consent isn’t needed and a person from overseas can buy the property, as normal.
What’s important to note first is that the new rules will not apply to contracts entered into before the new law comes into force. Nor will it stop those “ordinarily resident in New Zealand” from buying residential property, provided that they can show they call New Zealand home, which means the person:
Australians and Singaporeans will be exempt due to free-trade agreements, but will still face screening by the OIO. The new rules that will apply to Australians and Singaporeans have not yet been released.
Companies registered outside of New Zealand, and any that are at least 25 percent foreign owned, will still be treated as "overseas persons" and need OIO approval to buy residential land, if an individual would.
The biggest change to be aware of under the incoming rules is that the definition of “sensitive land” is extended to include “residential land”. This means that virtually all residential property purchases by non-resident buyers will require some form of OIO consent (and this is not a fast or low-cost process).
In order to obtain that consent, an overseas person will need to satisfy one of the following tests (which are less onerous than the Benefit Test under the current Act):
Land Information New Zealand has started to release the new consent forms for the OIO changes coming into force on 22 October.
The new forms and further information on applying for consent are available on the LINZ website- https://www.linz.govt.nz/overseas-investment.
LINZ has prepared the attached simple information sheet on who will be required to obtain consent under the new rules.