With the introduction of a new government comes changes to policies, regulations and laws, including an amendment to the Overseas Investment Act 2005 (the Act). The amendment requires every foreign purchaser to obtain consent from the Overseas Investment Office to purchase residential property in New Zealand, unless they fall under one of the exemptions. The amendment is aimed at restricting foreign investment in the residential market under the premise that it is a privilege for overseas persons to hold New Zealand land.
Every foreign purchaser of New Zealand residential land will need to sign an overseas investment office residential land statement (OIO statement) declaring their residency status and the capacity in which they are signing the statement (for example as a trustee of a trust, or director of a company). The OIO statement will need to be provided to the purchaser’s solicitor to complete the land transaction.
An OIO statement is only required for the purchase of residential land, although this can include large lifestyle blocks. Additionally, the purchase of certain types of land, including farm land and commercial properties, may also require consent under the Act.
While there is no obligation on sellers to complete a similar OIO statement, it is important for sellers to ensure that this part of the agreement for sale and purchase (agreement) has been completed.
If the purchaser signs the agreement but does not have the necessary consent, and is not exempt from requiring consent, there may be a delay in the settlement date until the consent is obtained. If consent is unable to be obtained at all, the agreement may be cancelled.
In the current housing market, more property owners are selling their current property and using the same settlement funds to purchase a new property. A delay in settlement or a cancelled agreement is likely to cause difficulties in financing these types of deals.
Am I Exempt from the OIO?
New Zealand citizens are exempt from the OIO consent process and not required to obtain consent to purchase residential land in New Zealand.
Every purchaser who is ‘ordinarily resident in New Zealand’ as defined in the Act and has a residence class visa is also exempt. There are also exemptions for Australian and Singaporean citizens.
If you are unsure about whether you need to complete an OIO statement or if you need assistance in determining which exemption you qualify for under the Act, seek advice from your solicitor before entering into an agreement.
Alice Nunn is an Associate in the Private Client Team at Norris Ward McKinnon. You can contact Alice at [email protected]
Tia Faiaoga is a Solicitor in the Private Client Team at Norris Ward McKinnon. You can contact Tia at [email protected]