Late last week the Government introduced the Overseas Investment Amendment Bill into Parliament, the main focus of which is to bring "residential land" within the ambit of the Overseas Investment Act 2005, in accordance with previous Government announcements.
The Bill is expected to be read for the first time before Christmas and sent to select committee for review. When passed into law, the new rules would apply from the 10th day after the law receives Royal assent, meaning that land purchased before that date would not be subject to the new rules. Currently, the Bill is expected to be passed early in 2018.
The Bill is aimed at ensuring that overseas persons (defined as persons who are neither a New Zealand citizen nor ordinarily resident in New Zealand) will generally not be able to buy existing houses or other pieces of residential land. To give effect to this "residential land" will be added as a new category of sensitive land requiring OIO approval. Residential land will be defined by reference to a property's rating status, and will cover land classified as "residential" and "lifestyle" for rating purposes.
Overseas persons will be able to buy sensitive land that is residential land in certain situations. These are:
- if they will be developing the land and adding to New Zealand's housing supply; or
- if they will convert the land to another use (e.g. a business) and are able to demonstrate this would have wider benefits to the country; or
- if they have an appropriate visa status and can show they have committed to reside in New Zealand (the criteria for this will be defined through regulations).
Conditions will be imposed if an overseas person purchases residential land utilising one of these exemptions, for example, if an overseas person purchases residential land for development, they will be required to on-sell the new houses that they build.
As currently drafted the Bill appears to provide that migrants who hold residence (as opposed to work) visas will be able to buy sensitive land provided they have lived in New Zealand for 12 months. However, migrants who have applied under the investor categories are not required to have lived in New Zealand for 12 months.
In addition, the Bill enhances the information-gathering and enforcement powers of the Overseas Investment Office, including by providing for civil liability for those involved in a breach of the legislation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.