19 February 2020
The owners of three properties in Twizel will have to sell-up after they failed to seek consent from the Overseas Investment Office (OIO).
Vanessa Horne, Group Manager for the OIO, says a group of overseas investors bought the three properties, which total 327 hectares, between 2014 and 2017.
“The buyers should have sought consent from the OIO as the land is considered sensitive under the Overseas Investment Act,” says Ms Horne. The land is sensitive because it is rural and each property is greater than five hectares.
“The OIO investigated the purchase of the land and found the investors bypassed our overseas investment rules due to incorrect legal advice. We recognise this was an inadvertent mistake on their part and in December 2018 the OIO reached a settlement agreement with the investors.”
The settlement agreement required the investors to dispose of two of the properties:
- 61.4585 hectares of land at the Junction of State Highway 8 (Tekapo-Twizel Road) and State Highway 80; and
- 246.1899 hectares of land at Tekapo-Twizel Highway.
In March 2019 - as part of their settlement agreement - the investors applied to the OIO for a retrospective consent to retain ownership of other land - 19 hectares of land at 4587 and 4589 State Highway 8, Tekapo-Twizel Road.
“The applicant bought the land in 2015 and did not start any development – it had proposed building an observatory, wedding chapel and subdividing 60 to 80 residential lots for holiday homes.
“On 8 January 2020, the OIO declined the application for a retrospective consent. We were not satisfied the benefit to New Zealand would be substantial and identifiable. The OIO had concerns about the applicant’s business plan, their ability to successfully implement the proposed developments, given the lack of progress, and their consideration of how the developments would be undertaken or operated in practice,” says Ms Horne.
This case shows the importance of overseas investors following the rules, getting good legal advice and making sure they get approval from the OIO, she says.
“The OIO will continue to take action against investors that don’t comply with their obligations under the Overseas Investment Act,” says Ms Horne.
Each parcel of land is owned by a different company, but the shareholders involved in the three companies are linked. The parcels of land are:
- 246.1899 hectares of land at Tekapo-Twizel Highway. It was owned by Twizel Development Limited before being sold to a third party in June 2019. No capital gain was made.
- 61.4585 hectares of land at the junction of State Highway 8 (Tekapo-Twizel Road) and State Highway 80. It was owned by Pukaki Garden Limited. It is currently under offer.
- 19 hectares of land at 4587 and 4589 State Highway 8, Tekapo-Twizel Road. It was owned by Lake Pukaki Development Limited. The OIO has declined a retrospective consent to retain ownership of this property. The owners must now dispose of it.
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