New rules about an overseas person acquiring land in New Zealand came into force in October 2018, as a result of the Overseas Investment Amendment Act 2018 (OIA). Are you or your property caught by these rules?
Buying a property?
If you are a New Zealand Citizen, New Zealand Resident (who is ordinarily resident in New Zealand) or a New Zealand Owned company or trust, you are typically able to acquire any type of land within New Zealand. If you are a New Zealand residence visa class holder you must reside in New Zealand with the intention of residing in New Zealand indefinitely, having done so for the immediately preceding 12 months.
If you do not meet these criteria, you may not be able to purchase certain types of land in New Zealand without obtaining consent. For a helpful summary please see below:
Can I invest in property in New Zealand?
Selling a property to overseas buyers?
As long as your residential, lifestyle block or farm (over five hectares) is not owned by a company or a trust, then you are only affected by the new rules if you sell or transfer your property to an overseas person.
The situation is different if your property is owned by a company or a trust, because it is not just a “sale” to an overseas person that is caught.
Your trust or company has trustees/shareholders that are New Zealand or Australian citizens/companies (or other citizens that hold residence class visas and live here). There are three trustees or shareholders. An overseas person becomes a trustee. For example, this could be a grandchild born of a New Zealand citizen but not born in New Zealand and not an Australian citizen. Children of citizens by descent (i.e. not born in New Zealand) have to apply to be New Zealand citizens. It is not automatic. Assuming they have not applied for citizenship, the trust/company is now an “overseas person”.
When a change is made on the title, in the case of a trustee change, your lawyer will need to certify the Act is being complied with. A trust can become an overseas person if one quarter of the beneficiates of the trust are overseas people as well.
In contrast, if you own your property in person, the overseas people can acquire your land under your will without getting consent.
How do I find out the classification of the property I am selling or buying?
Is your property classed as residential, lifestyle, a historic place, sensitive land, or adjoining sensitive land? Council does have this information, but does not include it on the rates assessment, so you have to ask for it. This information is also available online from QV.co.nz. Unless your property is commercial, you are probably subject to the new rules.
Similar Australian rules do not apply to New Zealand citizens, so that is why we have returned the favour and these new rules do not apply to Australian citizens, wherever they live. Singaporean citizens buying residential land do not need consent.
There is significant cost involved in obtaining consent for an overseas person, and the process can take time. It is important that the overseas status of a buyer is established at the time of entering into a Sale and Purchase Agreement, as it will typically become a condition of the Agreement that the buyer needs to obtain consent.
If you think these rules might impact you and your current situation, you’d like to obtain consent or would like further advice, please contact our property team.
This article was first published in February 2018 and updated in July 2019.