We have recently been required to straighten out issues that arose due to misunderstandings by the purchaser and land agent in respect to requirements under the Overseas Investment Act for purchasers of residential property.
It is a timely reminder for those looking to buy a residential property in New Zealand to revisit the requirements under the Overseas Investment Act 2005 (Act).
Not everyone is entitled to purchase land here in New Zealand, particularly if you are an ‘overseas person’ which has the meaning set out in section 7 of the Act.
If you are not a current New Zealand citizen or an Australian or Singaporean citizen buying residential land then all of the following must be satisfied otherwise consent is required from the Overseas Investment Office (OIO):
- You hold a New Zealand residence class visa or are an Australian or Singaporean Permanent Resident buying residential land; and
- You have been residing in New Zealand for at least the immediately preceding 12 months; and
- You are a tax resident in New Zealand; and
- You have been present in New Zealand for 183 days or more in the immediately preceding 12 months.
The date from which the immediately preceding 12 months starts from is the date from which you have acquired the equitable interest in the New Zealand land being either the date of the Contract if it is unconditional, or the date on which all of the conditions of Contract have been either waived or satisfied.
If you do not have consent, then you are in breach of the Act.
Consent must be applied for before you enter into any contract including a conditional contract, unless the contract expressly requires it is subject to consent under the Act. Whilst there is an ability to apply for consent retrospectively there is no guarantee consent will be given. Be aware that penalties can be applied here and although the OIO has the discretion to not impose a penalty, this discretion is rarely exercised.
If you are considering moving to New Zealand and are looking to buy a house to live in as your main home, we would suggest that you apply for OIO pre-approval to buy a property to avoid finding yourself in a situation that may be both stressful and costly. Pre-approval consent lasts up to a year.
We note that there are some exemptions to the consent requirements, including the spouse or partner exemption, however the purpose of this blog is to provide a general overview. Our main advice here is ‘buyer beware’ and if in doubt do not sign any contract without taking legal advice. The consequences could be costly.
If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry Law who normally advises you, or alternatively contact:
Karen Eason
03 4703228
The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this publication, Farry Law does not accept liability for any errors it may contain.