The PeriOIOdical - December 2017

19 December 2017

Nau mai haere mai

Welcome

Kia ora

There’s nothing like finishing a year with a bang!

You will be aware that the change in Government has resulted in changes to New Zealand’s overseas investment regime.

The first change to be implemented is the new Ministerial Directive letter.  The directive came into effect on 15 December. You can find out more details about what the new directive involves below.

We have also been involved in the development of policy and legislation to implement changes for overseas people acquiring residential property. A key focus for us now is developing the operational policy, systems, processes and guidance to implement this new policy, including setting up how a person may make an application to buy a residential property where they meet the relevant criteria. We will be recruiting new staff to help us do this.

At the same time we continue to receive and assess applications. We have had a number of applications come in over the last few weeks, we assume a number of you are clearing your desks before Christmas!

We want to hold workshops early in the new year (late February is our current plan) to talk through these changes and how we are implementing them. The dates remain tentative at this time and will be influenced by the implementation date for the residential ban. We’ll keep you posted.

I would like to take this opportunity to wish you all a restful break over the holiday period and I look forward to meeting many of you at the upcoming workshops.

 

Lisa Barrett
Deputy Chief Executive, Policy and Overseas Investment

 

This issue covers:

Ban on Foreign Speculators

Ministerial Directive Letter

Applications

Enforcement

Quick Updates

The Overseas Investment Office

 

Ban on Foreign Speculators

The Government has introduced legislation to ban overseas speculators from buying New Zealand’s residential property. The first reading of the Overseas Investment Amendment Bill should take place today and then it is likely to be sent to a Select Committee for consideration early next year.

The Bill extends the definition of sensitive land to include residential land. This will mean, for practical purposes, that overseas persons will not be able to buy residential property unless they will live on them, are either increasing the number of dwellings and then selling them, or converting the land to another use and are able to show that this will have wider benefits to the country.

Holders of New Zealand permanent resident visas will be exempt if they have been living here for at least 12 months, and have been present in the country for at least 183 days in the past 12 months.

Residential land will be all properties classified as either “residential” or “lifestyle” for rating valuation purposes under the Rating Valuations Rules, which are issued by the Valuer-General. A property’s classification is available from various property-information websites.

New Zealand and Australian citizens will be exempt from the regime, irrespective of where they live.

Anyone who has an interest in this change should read the Bill and are encouraged to make submissions to the Select Committee.

You can read more about the Overseas Investment Amendment Bill on the Treasury’s website.

Ministerial Directive Letter

The Minister of Finance issued a new Ministerial Directive Letter to the OIO on 28 November 2017. The letter directs the OIO on the Government’s policy approach to overseas investment in sensitive New Zealand assets and the relative importance of benefit factors for different types of overseas investment, as well as other matters.

The new Ministerial Directive Letter is available on our website. In summary the key changes are:

  • replacing the ‘large farm’ with a broader directive that relates to ‘rural land’ being all non-urban land larger than 5 hectares other than ‘forest land;
  • introducing a new forest land directive focusing on domestic processing and advancing Government strategies;
  • setting the expectation that overseas people intending to reside in New Zealand move here within 12 months and become ordinarily resident here within 24 months; and
  • making sponsorship and donations of low relative importance.

The new Directive Letter came into force on 15 December 2017 and applies to all applications being assessed at that time and any new applications received.

The Ministerial Directive Letter raises the bar for certain types of overseas investments and will influence the way the OIO assesses affected applications. It is important that applicants and their lawyers read the letter including the policy sections that outline the concerns that the Government is seeking to address through the new directives.

Applications

Template changes

We would also like to remind you to follow the guidance and instructions included on the templates. Doing so will mean all the information we require will be provided, in a format that facilitates assessment of applications.

Updates to our application templates have been made and are now available. The key changes are:

  • the removal of content relating to the old ‘large farm’ directive
  • Updates addressing the new directives on ‘rural land’, ‘forest land’ and residency based applications
  • the requirement to inform the OIO of all pre-consent arrangements
  • clarification that the Quality Assurance process will not commence until key documents have been received.

New variation and exemption application templates are in the pipeline and will be released in the near future.

PDFs of the forms with tracked changes, so you can see what has changed, are available in the Attachments section at the bottom of this page.

View the updated application templates

Pre-consent arrangements

In our August 2017 edition of the PeriOIOdical we raised concerns that some applicants were entering into short term arrangements to obtain control over sensitive land in advance of obtaining consent.  These arrangements can be risky and may be seen as an attempt to defeat, avoid or circumvent the Act (see section 43).  Perhaps even more importantly, at least for people wishing to get consent, is that such arrangements can impact on the counter-factual analysis and which could have a negative impact on an application. 

We have updated our application templates to require disclosure of all pre-consent arrangements.  We have also updated our pre-acceptance quality assurance (QA) processes so that applications containing pre-consent arrangements are referred to our enforcement team for review.  Our QA process will be placed on hold while an initial view is formed on whether there has been a breach of the Act. 

Applicants should avoid entering into such arrangements in advance of consent.  We recommend that you contact us if you are unsure whether a proposed arrangement is likely to raise concerns.  Obtaining access for due diligence purposes, or advancing a resource consent application, is unlikely to raise concerns.

Reminder to supply originals of all Statutory Declarations

Applicants must provide the original executed versions of all statutory declarations as soon as they receive them. While copies can be supplied in advance of receiving the originals they are not a substitute for them.  Not supplying originals can delay the approval process.

Conditions

As part of our continuing quality programme, we’re taking a good look at the way we select and record the conditions that apply to consents.

We want to make sure they:

  • secure the most important benefits overseas investors bring for New Zealand, and
  • are written in a way that is clear and effective.  This helps consent holders to understand and meet the conditions.

Look out for more information over the coming months.

Enforcement

Whisper Creek Golf Resort Ltd

Conditions of consent required the consent holder (Whisper Creek) to develop a golf resort but it did not do so, and it was therefore required to dispose of the land. The property has now been sold.

Warning – Incorrect Legal Advice

Some people will have seen that the Office issued a warning to a practitioner (Russell Mawhinney) in relation to incorrect legal advice on the Overseas Investment Act. We take this opportunity to remind practitioners when dealing with people who are not New Zealand citizens, who are buying land, to fully familiarise themselves with the requirements of the Act. 

Orange Lakes (NZ) Ltd

The Overseas Investment Office is aware that allegations have been made in relation to Matt Lauer and that he is no longer working for NBC News in the USA.

We are discussing this with his representative, who proactively raised the situation with us, and are seeking further information.

Matt and Annette Lauer, through the company Orange Lakes (NZ) Ltd, received Overseas Investment Act consent to purchase the lease for Hunter Valley Station in Wanaka in February 2017.

This is a good time to remind consent holders to raise any change in their situation that might impact on a consent holder’s good character with us.

Quick updates

Legal Reference Group

We recently held the inaugural meeting of our Legal Reference Group (LRG). This small group of experienced Overseas Investment Act lawyers, were invited to meet with us.

The LRG provides a free and frank forum to discuss issues of relevance, but it is not a decision-making body. The LRG provides feedback to the Overseas Investment Office on:

  • Ways to improve the efficiency and effectiveness of the assessment process;
  • Policy and process improvements proposed by the OIO or the Treasury; and
  • Communication and information exchange on technical or other matters relevant to the OIO’s work and planning processes (e.g. PeriOIOdical, templates, website content, trends and investment environment).

Individual applications are not discussed in these meetings.

A key point of discussion at the first meeting was the development of improved consent conditions. We outlined some of this work earlier in this newsletter.

Release of November decision summaries

Decision summaries for decisions made in November will be released on our website on 15 January.

Decisions summaries will then continue to be published on or about the last working day of each month.

The Overseas Investment Office

Current management structure is:

Lisa Barrett

Deputy Chief Executive Policy and Overseas Investment

Jenna Reid

Manager Applications

Lizzie Barone

Manager Applications

Kirsty Millard

Manager Enforcement

Anna Wilson-Farrell

Manager Operational Policy

 

Anna Wilson-Farrell

Anna is the newest addition to our management team, and is the Manager Operational Policy.

Anna has extensive policy and management experience having spent many years in a variety of senior roles at the Ministry of Justice, including as a Policy Manager within the Criminal Justice group. Anna has led the implementation of legislation and projects in District Courts.

As well as holding a Masters in Criminal Justice, Anna completed a Postgraduate Certificate in Public Policy this year.