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Changes to Overseas Investment Act

3 September 2018

Changes for overseas persons purchasing residential land are imminent.

The Overseas Investment Amendment Bill (OIA Bill) passed its final reading in Parliament on 15 August 2018. It is likely to come into force soon: in or around October 2018.

The OIA Bill introduces a new category of sensitive land, which overseas persons will require Overseas Investment Office (OIO) consent to purchase. This new category of sensitive land is “residential land”. And, residential land is defined as land that has a property category of residential or lifestyle in the relevant district rating valuation roll.

The changes to the Overseas Investment Act 2005 (OIA) will, therefore, affect the purchase by overseas persons of bare (undeveloped) land, vacant residential sections, residential apartments, townhouses, or standalone dwellings, including those in unit title developments.

In respect of existing unit title developments, in most cases, an overseas person will require consent from the OIO to purchase an existing residential unit.

Whether the acquisition of a residential development site or buying a residential unit off the plans is caught by the OIA Bill will require case by case analysis. Exemptions to the requirement to obtain consent are limited to where land is only sensitive because it is residential land, and not for any other reason, and the overseas person is acquiring:
• residential tenancies of less than 5 years
• dwellings in large apartment developments that are bought off the plans; or
• hotel units that are bought and leased back to the hotel letting pool.

Where an overseas person wishes to acquire residential land that is not otherwise sensitive, consent will only be granted if the OIO is satisfied that one or more of the following statutory tests have been met:
• commitment to reside in New Zealand
• increased housing
• non-residential use
• incidental residential use; or
• benefit to New Zealand.

Where an overseas person wishes to acquire residential land that is also sensitive for other reasons, consent will only be granted if the OIO is satisfied that one or more of the following statutory tests have been met:
• ordinarily resident in New Zealand;
• commitment to reside in New Zealand; or
• benefit to New Zealand.

For further advice as to how the changes to the Overseas Investment Act may affect you, please contact Deirdre Norris or Vicki Toan.

Matter Advised On

We have recently advised bodies corporate, unit owners, and body corporate managers on the following matters:
• redevelopment under section 68 of the Unit Titles Act 2010
• amendments to operational rules
• rights and obligations of bodies corporate in respect of the earthquake-prone building provisions of the Building Act 2004
• ground leases
• unit title disputes; and
• recovery of unpaid levies.