Overseas Investment – All fine, or in line for a fine?

Pursuant to the Overseas Investment Act 2005 (“Act”), “overseas persons” cannot purchase “sensitive land” in New Zealand without the consent of the Overseas Investment Office (“OIO”).

“Overseas persons” is a term defined in the Act and could include an individual, trust, or company.

The definition of “sensitive land” was dramatically widened in scope in October 2018 by the Overseas Investment Amendment Act 2018 to include residential land of any size (subject to specific exemptions). Sensitive land also includes large rural properties, land on islands, land adjoining the foreshore, and conservation land.

Pathways to Consent

The OIO may grant consent to an overseas person to acquire sensitive land. The main tests the OIO use when granting consents are:

  • “Benefit to New Zealand test”;

For residential land only:

  • “Commitment to reside in New Zealand test”
  • “Increased housing test”
  • “Non-residential use test”, where residential land is to be converted for non-residential use
  • “Incidental residential use test”, where residential land will have a residential use incidental to a relevant business use.

Conditions may be imposed by the OIO in respect of any consent granted. For example, under the increased housing test, the overseas person cannot reside on the residential land and the interest in the residential land must be sold within a certain time frame.

OIO powers

The OIO has information-gathering and enforcement powers in order to enforce the restrictions. If land is transacted in breach of the restrictions, the OIO could order the disposal of the land, and/or the persons involved could be imprisoned and/or subject to significant fines.

The OIA has significant implications for anyone who comes within the definition of “overseas person” and is looking to purchase land in NZ. If you are interested in further information on how the Act impacts you, your family or your business, please contact us.