New rules apply when selling property to an overseas purchaserPosted on October 24, 2018 in Property (Tags: Residential Land, Overseas Investment, Property Law)
The sale of residential land in New Zealand to an Overseas Person will require consent from the Overseas Investment Office unless an exemption applies. Transactions already under contract are not affected.
A purchaser will now have to give a certificate stating that they are eligible to buy residential land. There is an easy assessment tool available on the New Zealand Now website which enables purchasers to self-assess their eligibility. If ineligible, there is an opportunity for a purchaser to make an application for consent to purchase residential land for a fee of $2,040.00. Faster processing times apply to these requests than to other applications for consent under the Act with the Overseas Investment Office indicating they will be processed within 10 working days.
Generally speaking, a person will be eligible to purchase residential land if they are ordinarily resident in New Zealand which means that they:
- Hold a Resident’s Class visa;
- Have been in New Zealand for at least 183 days in the past 12 months;
- Have been resident for at least 12 months;
- Are a tax resident.
Where the purchaser is eligible to purchase the land, their lawyer will not be authorised to register the transfer of ownership until the purchaser has signed the residential land statement. It will be interesting to see whether the Legislation has the desired effect of freeing up more residential property for New Zealanders to purchase.
There are some specific provisions in the Overseas Investment legislation which apply to residential property developers and, in particular, exemptions available for them. These provisions only apply to land intended to be used for multi-storey buildings of a least 20 residential dwellings. In order to qualify, the Ministers approving exemptions must be satisfied that at least 20 new residential dwellings will be or are likely to be completed within five years and pre-sales must be entered into by the parties for the acquisition of one or more of the new dwellings before the expiry of the five year period. Exemption certificates are not an option for developers who are merely subdividing, or for buildings that are not multi-storey, so will only be an option for a very small number of residential property developers. There are some minimum requirements which the developer would have to meet in order to qualify for an exemption certificate which focus on the developer’s previous record and the consent status of the development.
There is a further exemption available for hotel units acquired and leased back for hotel use. Where there are 20 or more hotel units, this exemption is available and will apply to different types of hotel development, not just high rise. One qualification is that the purchaser of such a hotel development cannot occupy the unit for more than 30 days in each year and the unit must be managed and used for general purposes operating the hotel for the balance of the year.
Estate agents will need to be aware of the new requirements when taking enquiries for residential property. Purchasers with a New Zealand, Australian or Singaporean passport are straight-forward but purchasers relying on residency are more complicated. Where the purchaser is to be a company or trust, further investigation will need to be made around the ownership or control of those entities.