5 March 2020
Welcome to the latest edition of PeriOIOidal. It’s been a busy start to the year across our work and the media have been paying attention, particularly to recent enforcement action. And while the focus is often on the OIO holding applicants to account, that is only a small part of what we do.
There are a minority of applicants and their advisors who flout the law, but most applicants are good investors making good investments in New Zealand. And like all countries, New Zealand needs overseas investment for economic growth - it makes up almost 40% of New Zealand’s economy. Our role as administrators of the Overseas Investment Act is to reinforce that it is a privilege for overseas people or companies to own or control sensitive New Zealand assets. We make sure that investors get consent when they should, give honest and complete information, and deliver on the commitments they make. And that’s good for New Zealand.
With that said, this edition of PeriOIOdical is a bit of a mix. We’ve of course included that enforcement media coverage, as well as a look at standing consents and some myths that needed busting on One Home to Live In.
Don’t forget to sign up to receive our decision summaries for OIO applications. Decision summaries for January have been released and are available on our website. We also encourage you to share the news from this newsletter with others too.
Ngā mihi nui,
Group Manager, Overseas Investment Office
Land Information New Zealand
This issue covers:
- Application templates update
- What you need to know about standing consents
- Busting myths about One Home to Live In
- OIO in the media
The OIO is refreshing its application templates. We have updated the look to align with the wider style for Land Information New Zealand and made small content changes so that we get the information we need to process applications efficiently. We’ve also included formatting controls so that we ensure they are completed in a consistent way.
Once testing is complete, these will be released for use. A user guide will be published alongside the new templates to help you adjust to them. We expect this to happen this month.
A standing consent is a form of pre-approval that allows trusted repeat investors to make multiple investments of an approved type - without having to apply for consent each time.
Standing consents are potentially available for some investments in forestry and residential land.
All investors are expected to attend a pre-application meeting with the OIO as it provides an important opportunity to discuss key matters including:
- how standing consents work
- the application assessment process
- the investor’s track record
- the types of investments the investor is planning to make, and
- the scope of standing consent the investor wishes to apply for.
This discussion will assist the investor in understanding whether a standing consent is appropriate for them and their investment plans. Read more about pre-application meetings here.
Standing consents do not cover existing transactions
Standing consents only cover future transactions. An investor cannot enter into an overseas investment transaction before a standing consent is granted and settle it afterwards under the new consent (refer s23A). Investors should also be aware that the Act defines ‘transaction’ broadly and can include informal agreements that precede a formal contract (refer s6).
The OIO recommends that applicants do not defer entering into transactions in anticipation of obtaining a standing consent. Rather, applicants should submit a one-off consent for the relevant transaction.
Read about other standing consents in the decision summary section.
While there are some restrictions on overseas people buying houses in New Zealand, certain overseas people can apply to the OIO for consent to buy a home to live in. The OIO busts the top 5 myths about the process for getting consent and explains what you need to do if you are from overseas and want to buy a home in New Zealand to live in.
1. I must wait until I buy a house before applying for consent.
You should get pre-approval from the OIO before purchasing your home. This ensures you have guaranteed consent to buy and you will then avoid potential penalties or the forced sale of the property in future. Consent takes 10 working days to be granted. You can still sign a sale and purchase agreement without consent, provided the agreement is conditional on consent being granted.
2. I won’t get consent because I haven’t lived in New Zealand for a full year.
If you are a New Zealand resident or have a permanent resident visa and have not lived in New Zealand, you can still get consent. Once consent is approved, it allows New Zealand residence class visa holders to purchase homes before they complete the full year of living in the country. The consent conditions will no longer apply once you become ordinarily resident.
For residential land, ‘ordinarily resident’ means you:
- have been living in New Zealand for at least 12 months (not visiting)
- have been present in New Zealand for at least 183 days of those 12 months
- currently hold a residence class visa
- are a tax resident.
3. My partner is a New Zealand resident, so I don’t need consent to buy.
If you are purchasing a property with your partner (a relationship property) and one or both of you are ordinarily resident, then you can buy the property together without consent. One person needs to be ordinarily resident and must satisfy all four criteria as above to purchase a relationship property without consent.
If only one person has a New Zealand residence class visa and they are not ordinarily resident yet, then they can apply for consent from the OIO to buy a home to live in.
If consent is approved, you can buy a relationship property.
‘Relationship property’ is defined in section 8 of the Property (Relationships) Act 1976. If you are unsure, you should seek legal advice.
4. It’s very expensive to apply for consent.
The cost of an application for one home to live in is $2,040. This cost includes processing the consent application and monitoring of consent conditions to ensure they are met.
The cost covers a minimum of 12-24 months of monitoring until conditions no longer apply.
5. I’ve lost out on a house, so my consent has lapsed.
Once consent is granted it is valid for one successful transaction to buy your home to live in. Consents last for 12 months so you can use the consent again for the next house you find if you lose out on one. Note that there are different types of consents for a variety of sensitive land. If you are unsure if the land you are looking at is residential only, or sensitive for other reasons, please talk to an expert who is familiar with the Overseas Investment Act 2005.
For more information, please see Information for buying or building one home to live in.
Q + A with Jack Tame: Overseas Investment Office ramps up its enforcement of foreign investment laws
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