We’ll get right to it — changes for overseas buyers have taken effect. Here’s the low down on what it means for you.
What qualifies an overseas buyer
The rules apply to any buyer who is not:
- A New Zealand, Australian, or Singaporean citizen
- Ordinarily a resident in NZ (meaning they must have a Residence class visa, lived in NZ for the past 12 months and have been physically present for at least 183 days, and be tax resident).
In theory, if you don’t meet these criteria you’re not “banned” outright from buying property in New Zealand — you just need to go through the cumbersome OIO consent process. In practice, the OIO process will likely rule most/all overseas buyers out of the market.
The rules apply to all residential or lifestyle properties under the District Valuation Role. This is essentially any house, flat, or lifestyle block.
We await with interest to see what the new rules do to the commercial property market.
The apartment exemptions
When the rules were originally announced, questions were asked on how new apartment developments would get off the ground. As such, changes to the rules were introduced to allow:
- Developments commenced before 22 October 2018 to be sold with no restrictions to overseas buyers.
- Developments commenced after 22 October 2018 to be sold to overseas buyers up to a maximum of 60% of the units in the development — those buyers will not be able to live in the property themselves.
Each developer affected by these rules will need to make specific applications to the OIO for their particular development. There are specific rules around the requirements for these developments, such as the size of each unit, and the number of units in each development.
As with the impact on commercial property, it will be interesting to see what the new rules mean for the size, quality, and quantity of new developments coming to market.
Residential Land Statements
When a purchaser is completing a transaction, they will be required to complete a Residential Land Statement. These will generally be signed with their solicitor at the same time as their A&I forms.
This will require us as solicitors to check if:
- The purchaser is eligible to buy land under the new rules
- If they’re not, then to confirm if an exemption applies or if they have OIO consent
- They’re completing the statement for themselves, and if not, to ensure that the person they’re buying the property for is eligible to buy the property.
What you should do
In our view, it is NOT your role as an agent to determine whether a purchaser is eligible to buy land in New Zealand. However, you should explore whether purchasers need consent or not. This means having conversations with potential purchasers about how these rules impact them, and advising them to take their own specific legal advice.
If there’s no time to get advice, purchasers should make the agreement conditional on consent being granted. The standard ADLS agreement has an inbuilt OIA consent condition (clause 10.4). The purchaser will need to circle “yes” to the “OIA Consent Required” condition on the front page of the agreement and then insert a date by which consent must be obtained. LINZ have suggested four weeks as an appropriate time frame.
We’re always happy to assist with this. If you ever have any questions on a vendor or purchaser’s situation, please contact us on 04 390 1213 or email [email protected], [email protected]vexlegal.co.nz or [email protected]. We’re happy to help.