From 22 October 2018 every purchaser of residential or lifestyle property- with or without a house – is required to complete a Residential Land Statement advising whether they need Overseas Investment Office (OIO) approval to buy the land.
The purchasers lawyer will usually be the one to file this Statement prior to settlement. However real estate agents and salespeople will be expected to query the citizenship and residency status of purchasers prior to drawing up an offer.
This is a significant change.
- New Zealanders are exempt from requiring OIO approval (but must still complete the Residential Land Statement).
- Australian and Singaporean citizens who live in NZ will also have an exemption under most circumstances.
- Overseas people wanting to buy residential or lifestyle property for their own personal use must meet certain criteria to be able to purchase
- In certain circumstances a Consent to buy is not required
- To be eligible a person must be ‘Ordinarily Resident’ in NZ including meaning: they have lived in NZ for at least the past 12 months, and within that period actually been here for 183 days or more; and hold a ‘Residents Visa’ – which is not the same as a Work Visa or Student Visa. If in doubt to your eligibility please seek advice from a Lawyer
- A person with a Permanent Residents Visa, but who has been absent from NZ for say the last 12 months – for whatever reason – does not qualify as ‘Ordinarily Resident’ and will require a Consent to purchase (consnet fee as of 2022 is $2040); if the purchase is to take place within their first 12 months of returning to NZ
- To be clear – buying a holiday home in NZ is unlikely to meet the criteria
OIO have a guideline of 10 working days to make a decision on a consent to purchase – if all the information required is incomplete on day one, things will get dragged out longer. Consent must received before bidding at Auction or going unconditional on a residential or lifestyle property. Such consent will usually last for 12 months (conditions apply)
Consequences of ignoring OIO consent
- If a purchaser requires OIO consent and enter into an agreement that does not include a clause saying it is conditional on OIO consent, they will be in breach of the Overseas Investment Act as soon as they enter into the agreement. You must complete the section on the front page of the Agreement for Sale and Purchase correctly. Retrospective consents are entirely at discretion of LINZ and penalties would also likely apply
- Any deposit paid may be forfeited and they could have action taken against them by the Vendor for any losses suffered.
- Settlement cannot take place until OIO approval is granted – this could expose the purchaser to penalty interest on delayed settlement if this runs beyond the date in the Agreement for Sale and Purchase
- If the Vendor and/or real estate person or advisers knew OIO consent was required, but entered into the deal anyway, they could also be liable for substantial civil penalties
Check if you need a Consent to buy here: NZ Overseas Investment Office
But don’t be put off, many overseas persons have successfully purchased and invested in Rural real estate.
A common way to enter the market is as a part-owner of a going concern farming operation – an Equity Partnership is the vehicle many have used for this purpose. Other forms of ownership and management structure can also be thought about.
If you wish to be kept informed of investments such as Equity Partnerships where you may participate, send us an email using the form on the sidebar of this page10