Proposed new restrictions on foreign buyers purchasing homes in New Zealand: a first look | Pitt & Moore, Lawyers in Nelson
Proposed new restrictions on foreign buyers purchasing homes in New Zealand: a first look
Foreign investment into New Zealand has been a hot topic, particularly during 2017, with a significant amount of focus on the New Zealand property market and increasing cost of housing.
On 25 October 2017, the new Prime Minister announced that by Christmas this year a Bill to stop foreign buyers from purchasing existing residential homes would go before Parliament.
What is the position right now?
The Overseas Investment Act 2005 already prevents “Overseas Persons” from purchasing “Sensitive Land” unless they first obtain consent from the Overseas Investment Office (a process I’m not going to describe here, other than to say that it is long and expensive).
“Sensitive Land” for this purpose currently includes a variety of classes of land, most notably:
- Non-urban land over 5 hectares (i.e. farm land);and
- Land that adjoins foreshore or seabed.
The term “Overseas Person” includes any person who isn’t either a NZ citizen or “Ordinarily Resident” in New Zealand. To be “Ordinarily Resident” in New Zealand a person needs to both hold a residence class visa and reside in NZ and have done so for at least 12 months. It also includes any company or other entity that is more than 25% owned or controlled by an “Overseas Person”.
So, some (very much simplified) examples, currently:
- If you are a NZ Citizen you can buy any property in NZ whether or not you currently live here.
- If you aren’t a NZ Citizen and don’t hold a residence class visa for NZ you can’t buy a farm, but you can buy most residential houses
- If you hold a residence class visa for NZ, but don’t yet live here (or have only just arrived) you can’t buy a farm, but you can buy most residential houses
- If you hold a residence class visa for NZ and have lived here for over a year you can buy any property in NZ
- A company which is owned more than 25% by an Overseas Person can’t buy a farm, but can buy most residential house.
What is going to change?
Detail is scarce at this stage, but from what we have been able to glean from the available public announcements it appears that the Government intend to:
Expand the definition of “Sensitive Land” so that it includes existing residential houses.
Alter what constitutes an “Overseas Person” in some, as of yet unspecified way; and
Exempt Australians from these new requirements.
Will you be affected?
Applying this to our above examples, it will mean that:
If you aren’t a NZ or Australian citizen and don’t hold a residence class visa for NZ you won’t be able to buy a farm or an existing residential house.
If you are a citizen of anywhere other than NZ and Australia but you hold a residence class visa for NZ, but you don’t yet live here (or have only just arrived) you won’t be able to buy a farm or an existing residential house.
We, like everybody else, await further clarification of the Government’s position with baited breath. The Government is no doubt going to have to walk a fine line between targeting the ‘overseas speculators’ that it is has publicly made clear it is looking to exclude while still encouraging foreign capital and highly skilled workers into our businesses and economy. The devil, as always, will be in the detail.
Talk to us
We understand the needs of foreign investors. We can help with all aspects of your New Zealand investment, including purchasing property, obtaining Overseas Investment Office consent, forming a company and assisting you to purchase shares in a company or its business and assets.
We can also assist with investment and business visas for those seeking to migrate to New Zealand and invest or operate their own business here. We don’t just advise on the visa requirements, we can ensure that you receive comprehensive legal advice as to all aspects, including asset protection, trusts, corporate governance, compliance and employment.
If you have any questions about foreign investment in New Zealand or investment and business visas, please contact us for professional legal advice that will give you peace of mind.