26 August 2019
Kia ora koutou
If you’ve seen the news recently you may have noticed stories about the OIO taking enforcement action against people and companies that have broken the rules for overseas investment
We know most investors want to do the right thing, however some have shown little regard for their legal obligations.
Investigations into unlawful activity typically take many months, sometimes years, to complete. Our enforcement team has had a busy few months with a number of big cases coming to an end.
On 4 July 2019, the High Court ordered $2.95 million in penalties against the overseas owners of two rural properties at Warkworth, north of Auckland, for buying these without consent.
Then a few days later on 8 July 2019, the High Court ordered the maximum civil penalty of $300,000, plus costs and disbursements of $288,000 against overseas-owned BCH Investments for buying five hectares of Auckland land without OIO approval.
More recently the OIO ordered overseas investors to sell a historic Waikato hotel complex after they failed to follow through with an agreed redevelopment.
These cases show the importance of people complying with our overseas investment laws.
It is the OIO’s role to ensure responsible overseas investment for a prosperous New Zealand, this includes ensuring there are genuine benefits for New Zealanders from the consents we grant.
Meeting the rules allows high quality overseas investment to strengthen New Zealand’s economy, while ensuring overseas investors care for New Zealand’s unique natural resources and provide a fair playing field for our businesses.
In recent years the OIO has really stepped-up its efforts to enforce the law and we will continue to step-in and take action when we need to.
Taking enforcement action ensures fair treatment for everybody that does comply, as well as ensuring that those who do not comply are held to account. It also gives the New Zealand public confidence in the integrity of the overseas investment regime.
More information about enforcing the Overseas Investment Act is on our website.
As always, if you have any feedback or questions please don’t hesitate to get in touch with me by email.
Ngā mihi nui,
Group Manager, Overseas Investment Office
Land Information New Zealand
This issue covers:
- Have your say!
- Reminder about confidentiality requests
- OIO approves 67 applications to buy homes
- Making the ‘home to live in’ process easier to navigate
- Leaseholds count too!
- Why are some decisions delegated?
- Speeding up statutory declarations
- Review of investment rules continues
- What happens if we have concerns about your application?
We want to hear from you about how we can improve our processes and make them easier for applicants.
If you’ve lodged an application or interacted with the OIO over the past year we would like you to complete a short survey about your experience.
In future, we will be sending out a link to the survey with every decision so we can get regular feedback on how we’re doing.
It should take between 5-10 minutes for each application, and your answers will be kept completely private. For those of you that have had many dealings with us over the past 12 months it’s okay to just pick one application to do the survey on.
Click here to do the survey. Your answers will help us understand where we have information and education gaps, and where can improve investors, lawyers, and vendors’ experiences. It will also help us track our performance over time.
If you have any questions about the survey, please email us.
We’ve noticed some recent OIO applications have included quite big confidentiality requests.
This has included a request to keep all information about an application confidential indefinitely, and one for us to contact the applicant before consulting with any third parties.
It’s important to remember the OIO is subject to the Official Information Act (OIA) so we can’t agree to indefinite confidentiality. However, if we do receive an OIA request our usual practice, where possible, is to let an applicant know before we release any information.
When we need to consult with a third party about an application we don’t usually contact an applicant beforehand. This is in line with the Overseas Investment Act, which gives us the ability to consult with anybody who might have relevant information.
We may also share information with other agencies during the application process.
Between April and June this year we approved 67 applications from permanent residents to buy a home to live in.
Since October 2018, most overseas people have not been entitled to buy a home to live in. This includes people with temporary visas, such as student, work and tourist visas. However, overseas people with New Zealand residency can apply for consent to buy a home.
The decline in overseas people buying homes shows the impact of the changes.
There will always be some overseas people who are entitled to buy homes. If they have a residency visa, they need to apply to the OIO for consent. People from Australia or Singapore can buy homes to live in without consent because of New Zealand’s free trade agreements with these countries.
We’ve also started matching applications, and an individual’s visa status with property transfer data. This has again highlighted the high number of compliant applicants.
We will continue working with other agencies to share information, so we can ensure people are complying with their consent conditions and the law.
Lately we’ve been doing a bunch of work to make our ‘home to live in’ processes easier for applicants to navigate.
This has included using customer feedback, and data from our website and the enquiries we receive, to put together a list of what we can improve.
We have implemented a few changes to date, including:
- Making the ‘home to live in’ application form and information on our website more user friendly.
- Increasing the time in which house purchases have to be reported from four to six weeks from settlement.
We are always looking for new ideas, so please get in touch if you have any thoughts.
It doesn’t matter if it’s freehold or leasehold – if an overseas investor wants to attain an interest in sensitive land they need consent.
The OIO has recently come across cases where people have failed to get consent when obtaining leasehold interests in sensitive land.
Remember, the Overseas Investment Act covers leasehold agreements with terms of three years or more, including rights of renewal.
Applicants should be particularly wary of:
- Entering into license agreements that actually grant exclusive possession and are therefore leases.
- Entering into lease agreements for land less than 0.4 ha but are on specified islands listed in Schedule One where there is no minimum land threshold.
- Becoming overseas persons due to shareholding changes.
If you’re not sure or have any questions, we’re here to help.
You may have noticed some overseas investment applications are decided by the Overseas Investment Office and others by Government Ministers.
In October 2018 when the new legislation came in, the OIO received a new Designation and Delegation letter (PDF 3MB) from the Government. This letter gives the OIO the power to make decisions under delegation from the Ministers in certain circumstances.
This includes when no sensitive land or fishing quota is involved, when the purchase price for land is less than $2 million, and when all of the land involved is urban land.
However, Ministers can ‘call in’ any delegated decision and make it themselves if they choose.
When sensitive land applications are not delegated to the OIO or are called in, they are decided by Associate Minister of Finance David Clark and Minister for Land Information Eugenie Sage.
We provide the Ministers with our assessment, however, it is for the Ministers to decide whether or not to grant consent.
More information about delegated powers is available on our website.
For a large number of applications there is a lag at the end of the process due to a delay in the OIO receiving statutory declarations from applicants.
Half of all applicants take two weeks or longer to provide statutory declarations at the end of the application process, and nearly a quarter of applicants take more than a month.
To speed up the process and make life easier for applicants we have started accepting scanned copies of statutory declarations in most cases.
This means most applicants don’t have to send the OIO the original copies of statutory declarations, which has slowed down the process in the past. However, applicants must keep the originals on file and provide them to us if we ask.
We may still require original statutory declarations in a small number of cases.
It’s important to remember if applicants take too long to provide information or documents, then applications may lapse.
We hope to make more changes soon to improve the statutory declaration process. We will keep you updated.
The Treasury is continuing its second phase of review of New Zealand’s overseas investment laws.
The review will aim to streamline processes for overseas investment and adequately protect sensitive assets, including land.
Public consultation was held earlier in the year and legislation to implement any changes is expected to be completed by 2020.
We want to be upfront about the process we follow when an application looks like it might be declined.
If we have concerns about an investment we send the applicant a letter stating why we think the application doesn’t currently meet the criteria and may be declined.
It’s important applicant’s take these letters seriously as they are an opportunity for an applicant to address any concerns we have.
Applicant’s should restrict their responses to clarifying our understanding as we expect all applicants to put their best foot forward when submitting their applications.
Changes to the nature of the investment plan should be made by way of a new application. For example, a change to a proposed investment from a kiwifruit orchard to a horse stud would require a new application.
After this we will make our recommendation to the decision maker. We are unlikely to contact an applicant again before a decision is made.
During the next few months we will put more information about this process, including frequently asked questions and examples, on our website.
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