Foreign Purchasers
The Overseas Investment Act 2005
New Zealand encourages foreign investment. Nevertheless, controls exist under the Overseas Investment Act 2005 (and the associated Overseas Investment Regulations 2005) ("Act") to require consent in respect of certain categories of investment in New Zealand by 'overseas persons'.
In regards to the purchase of land, the Act requires consent if a transaction will result in an 'overseas investment in sensitive land'.
Overseas Investment
An 'overseas investment in sensitive land' is an acquisition by an 'overseas person', or an 'associate' of an overseas person, of 'sensitive land'. It also includes an acquisition by an 'overseas person', or an 'associate' of an overseas person, of rights or interests in securities of a person (which in this context would include a company or other entity) who owns or controls sensitive land.
Overseas Person
An 'overseas person' is, in general terms, an individual who is not a New Zealand citizen or ordinarily resident in New Zealand. It also includes any company (or any partnership, unincorporated joint venture or other incorporated body of persons, any trust or any unit trust) that is incorporated or formed outside of New Zealand, or is a 25% or more subsidiary of any company (or other entity) incorporated or formed outside of New Zealand, or any company (or other entity) in which an overseas person holds 25% or more of any class of its shares, or has the power to control 25% or more of the companyís governing body, or has the right to exercise 25% or more of the voting power.
Sensitive Land
Land is 'sensitive land' if it comes under Schedule 1 of the Act. Generally, this includes all non-urban land exceeding 5 hectares, land exceeding 0.4 hectares on certain specified islands and land that is or includes or adjoins the foreshore, seabed, bed of a lake, conservation land, reserves etc and exceeds 0.4 hectares. The interest acquired must be a freehold estate or a lease, or any other interest, for a term of three years or more.
Consent Criteria
The criteria for assessing whether or not to grant consent for an overseas investment in sensitive land are all of the following:- the overseas person has the business experience and acumen relevant to the investment;
- the overseas person has demonstrated financial commitment to the investment;
- the overseas person is of good character;
- the overseas person is not of the kind referred to in section 7(1) of the Immigration Act 1987 (which refers to people who have committed serious offences or who are suspected terrorists);
- either:
- the overseas person is a New Zealand citizen, ordinarily resident in New Zealand or
- intending to reside in New Zealand indefinitely; or
- the overseas investment will, or is likely to, benefit New Zealand (or any part of it or a group of New Zealanders) and, if the land includes non-urban and exceeding 5 hectares, the benefit will be, or is likely to be, substantial and identifiable.
- if the land is or includes farm land, the farm land has been offered on the open market in accordance with the Regulations.
The factors relevant to assessing whether or not an overseas investment in sensitive land will benefit New Zealand are specified in the Act.
Foreshore, Seabed, Riverbed or Lakebed
If the land is or includes foreshore, seabed, riverbed or lakebed, the land must be offered to the Crown in accordance with the Act.
Applications
All applications are made in the form of a letter to the Overseas Investment Office ('OIO') and generally need to be accompanied by an investment plan. There is an application fee payable to the OIO on application. Applications generally take 8 to 14 weeks to be processed (but can vary depending on the type of application and the workload of the OIO).
General
The definition of 'sensitive land' is surprisingly broad in its scope. If you are or may be an overseas person then specific legal advice should be sought before any contract to purchase property is signed. A transaction for which consent is required and has been given effect to without consent may be cancelled by a party to the transaction (who is not required to obtain consent) or the Court on application of the OIO. The Act also creates various offences for non-compliance.
Further information can be obtained from the OIO website: www.oio.linz.govt.nz
Contact
Ministry of Foreign Affairs and Trade
Private Bag 18 901
Wellington
www.mft.govt.nz
Tradenz Investment Services
PO Box 10341
Wellington
www.tradenz.govt.nz
The New Zealand Government welcomes overseas investment.
Check out www.oic.govt.nz/invest/property.htm or www.oic.govt.nz/faq.htm to answer all your questions.
For Mortgage Calculations - click on our finance calculator