Find out about buying lease-back units in hotels or lodges as an investment in New Zealand.

About this investment option

Developers or hotel operators sometimes sell individual hotel rooms, or other premises that are used to provide temporary lodging to the public (TLTP), to help fund the construction of a development or provide capital. Overseas persons can buy or lease individual units that are leased-back to the developer or hotel company without the need for consent, but there are some limitations.

Overseas person

The need for consent

You can buy a TLTP premises without consent if:

  • the land on which the development or hotel is built is classed as ‘sensitive’ only because it is residential land, and
  • the hotel being built, or already operating, has 20 or more units (or 20 more units are being constructed).

Conditions

  • You cannot live in the TLTP premises
  • You can only occupy, reserve, or use the TLTP premises for up to 30 days in each year
  • You must lease back the TLTP premises for the development’s use on the remaining days, and
  • When this lease ends, you have 12 months to either renew it or sell the TLTP premises.

TLTP premises on ‘otherwise sensitive’ land

You cannot buy a TLTP premises that is built on land that is classed as ‘sensitive’ for reasons other than being residential land. This includes land that is rural or next to a lake, river, reserve or sea bed.

Identifying sensitive land

Failing to meet requirements

If you buy a TLTP premises but do not meet the rules outlined above, you may face significant penalties, including having to sell the property.

A New Zealander cannot buy a TLTP premises on behalf of an overseas person to avoid these requirements.

Investing on behalf of an overseas person

Legislation

The provisions covering whether overseas people can buy TLTP premises can be found in the Overseas Investment Act 2005 at Schedule 3, clause 5, ‘Certain units acquired and leased back’. 

Overseas Investment Act 2005, Schedule 3 clause 5 (as amended by section 35 of the Overseas Amendment Act 2021)

Last Updated: 5 July 2021