Land area thresholds
A land area threshold is used to determine whether a particular block of land and the adjoining land are sensitive.
In most cases, the land area will be the area described in the computer register (title) of the land being acquired. There may be exceptions to this in situations involving leases, subdivisions, multi-story buildings and unit-titled land/common areas.
Overseas Investment Act 2005, Schedule 1; Tables 1 and 2
Land
Land includes the physical aspects above and below the ground, as well as the intangible rights capable of existing in land. These include rights to airspace, to such height as is necessary for the ordinary use and enjoyment of the land and the structures upon it. This principle has been extended to modern forms of landholding, such as the stratum estate (unit titles), and the subsoil (subject to statutory restrictions).
‘Interest’ is defined in section 6(1) of the Act as including a legal or equitable interest. A licence, i.e. permission to be on the land, is not an interest in land. However, if a licence gives a person exclusive possession of the land by allowing the occupier to use and enjoy the property to the exclusion of strangers, the licence will be deemed to be a lease, even if it is not described as such by the parties. See: Fatac Limited (in Liquidation) v IRD, CA227/01, 23 September 2002. A mining permit is not an interest in land: see section 92(1) of the Crown Minerals Act 1991.
Non-urban land
Consent is needed for any overseas investment that relates to sensitive land, which includes non-urban land of 5 hectares or more. Non-urban land is defined in the Act as:
- farm land, and
- any land other than land that is both in an urban area and used for commercial, industrial or residential purposes.
If land is farm land, it is non-urban land. The definition of farm land is discussed in Farm land.
Assessments to determine if land is non-urban when the land is located on the outskirts of a town or industrial area where land transitions from urban to non-urban will depend on the nature and use of the property at the time (or intended time) of the transaction.
We also consider the intention behind the zoning of the land, what is permitted under the zoning and what the nature and use of the land is. Land in a transitional zone, such as land described as ‘rural residential’, ‘countryside living’ or ‘future urban’ is still likely to be non-urban.
Factors we consider point to land being non-urban include the following:
- If the types of activities allowed or carried out on the land fall within the farm land definition
- If the zoning indicates land is rural, or if the zoning is intended to control the transition from rural to urban and protect the current rural or lifestyle features – such as the size of the blocks of land and/or the rural character of the area – even though it may become future urban
- The land rating categorisation, such as if it is zoned ‘farm and lifestyle’ or something similar
- If utility services – such as reticulated water and/or street lighting – to the property or near-by areas are limited.
When assessing these areas, we consider what the land, and neighbouring land, is used for. For instance, if the land is used to graze animals or for horticultural purposes, or where there are large green spaces around the property, it is likely to be non-urban.
We take account of the type of roading to or near the property, including speed limits, and services – such as whether it is a rural delivery address).
Use the following diagramto help determine if land is non-urban land.
Identifying whether land is ‘in an urban area’
‘Urban’ is defined as “of, pertaining to, or constituting a city or town; occurring in or characteristic of a city or town”. A similar definition is “of or relating to a city or town; not rural”.
In the majority of cases, an urban area will be characterised by:
- high population density
- small land holdings (regularly less than 0.4 hectares), and
- zoning that is compatible with high density commercial, industrial and/or residential activity.
District plans and aerial photographs are the most effective tools for assessing urban area status.
Identifying whether land is used for ‘commercial, industrial or residential purposes’
The land must be used for commercial, industrial or residential purposes and must be zoned accordingly in the relevant operative district plan.
Farm land
See Farm land
Farm land advertising
Exempted interests
Consent is not required to acquire interests in sensitive land that are exempted interests. Exempted interests are defined in section 6(1) of the Act as meaning an easement or a profit à prendre that is not a regulated profit à prendre (i.e. a forestry right or other profit à prendre if the area of land covered by the profit à prendre is or will be used exclusively or principally for that purpose). A profit à prendre that is not a forestry right is not a regulated profit à prendre if it consists only of rights to take any mineral or is of a class stated in regulations to not be treated as a regulated profit à prendre.
Consent is also not required to acquire certain other interests in land, such as the acquisition of any interest in land for a term of ten years or less. Schedule 1A of the Act sets out the method for calculating the term of an interest in leasehold land.
Land that is sensitive adjoining land relating to a collective group of Māori
Land and reserves that adjoins land owned by a collective group of Māori is considered sensitive. To meet our requirements under the Overseas Investment Regulations, we maintain a register of this land. This register will be published here in late July 2021. Please contact us for advice if you have a query about a specific property before it is published.
Contact the Overseas Investment Office
Land held under the Unit Titles Act 2010
When determining whether land under the Unit Titles Act 2010 comes within the thresholds in Schedule 1 of the Act, calculation of the land area should be based on:
- the area of the particular unit (including both principal and accessory units) being purchased by an overseas person, and
- the area of all the common property in the development.
Under section 54(2) of the Unit Titles Act 2010, the owners of all the units are beneficially entitled to the common property as tenants in common in shares proportional to the ownership interest in their respective unit.
However, the total area of common property must be included when calculating the area of land, not a percentage based on the unit owner’s entitlement, as the owner will have (indirectly, but beneficially) an undivided share in the common property. Each unit title includes an interest in the unit(s) and the share in the common property. Conceptually, the interests cannot be split.
If either:
- the common property; or
- the unit(s)
includes or adjoins land that is sensitive under Schedule 1 of the Act, and the relevant area thresholds are exceeded, then the requirement for consent provisions of the Act will be triggered if the proposed purchaser is an overseas person.
Example 1:
- Land parcels 1, 2 and 3 are each 0.3 hectares and the three principal units in an industrial unit titled development.
- Land parcel 4, the common property, is 0.15 hectares. Land parcels 1, 2 and 3 adjoin conservation land. The conservation land exceeds 0.4ha.
- O, an overseas person, proposes to acquire an interest in land parcels 2 and 4.
Result:
- Land parcel 2 adjoins conservation land.
- The area threshold for land adjoining conservation land is 0.4 hectares.
- Parcels 2 and 4 are collectively 0.45 hectares.
- Land parcel 2 is sensitive and consent is required.
Example 2
- Each unit in a 5-storey apartment complex is 100 square metres.
- The common property for the apartment complex is a recreation area (park) of 0.2 hectares.
- The park adjoins the marine and coastal area.
- O, an overseas person, proposes to acquire an interest in a single unit (Unit A) and the park in the apartment complex. Unit A does not physically adjoin the park.
Result:
- The area threshold for land adjoining the marine and coastal area is 0.2 hectares.
- Unit A and the park are collectively 0.21 hectares.
- The park is sensitive and consent is required.
Associated land
Associated land is defined in section 8(4) of the Act. Associated land is land owned or controlled by an applicant which adjoins, or is on the same island, and is, or will be owned or controlled by, the applicant or an associate. Adjoining is defined as "touching or contiguous”, which means sharing a common boundary.
Overseas Investment Act 2005, s8
You may need to aggregate associated land to determine whether land exceeds the area thresholds in Table 1 and Table 2 of Schedule 1 of the Act. However, the method for aggregating varies for each table.
Table 1
Only aggregate the areas of associated land that that are of the same type.
For example:
- Land parcel 1 is 0.3 hectares and includes a historic place
- Land parcel 2 is 0.3 hectares and includes a reserve
- Land parcels 1 and 2 adjoin each other
- O, an overseas person, proposes to acquire land parcels 1 and 2.
Result:
Land parcels 1 and 2 are associated land under section 8(4).
- For the purposes of Schedule 1 of the Act, land parcel 1's type is ‘land subject to a heritage order, or a requirement for a heritage order, under the Resource Management Act 1991 or by Heritage New Zealand Pouhere Taonga under the Heritage New Zealand Pouhere Taonga Act 2014’.
- For the purposes of the Schedule 1 of the Act, land parcel 2's type is ‘land that a district plan or proposed district plan under the Resource Management Act 1991 provides is to be used as a reserve, as a public park, for recreation purposes, or as open space.
- The areas of land parcels 1 and 2 are not aggregated under Table 1 of Schedule 1 because they are not of the same type. Neither land parcel 1 nor land parcel 2 exceeds the threshold for their type. No consent is required.
Table 2
Aggregate the areas of all associated land.
For example:
- Land parcel 1 is 0.3 hectares and adjoins a 10ha reserve under the Reserves Act 1977 that is administered by the Department of Conservation.
- Land parcel 2 is 0.3 hectares and adjoins land parcel 1.
- O, an overseas person, proposes to acquire land parcels 1 and 2.
Result:
- Land parcels 1 and 2 are associated land.
- The areas of land parcels 1 and 2 must be aggregated. Land parcels 1 and 2 are collectively 0.6 hectares. The area threshold for land adjoining a reserve under the Reserves Act 1977 that is administered by the Department of Conservation is 0.4 hectares.
- Consent is required.
Leases – area of land
In the case of a lease, the relevant area will be the leased area. If the leased area is less than the area of the fee simple title from which the lease derives, it will also be necessary to determine whether the leased portion of the land is sensitive (as opposed to the fee simple portion).
For example:
- Land parcel 1 is 1 hectare. Land parcel 1 adjoins land held for conservation purposes that exceeds 0.4 hectares.
Result:
- Land parcel 1 exceeds 0.4 hectares and adjoins land held for conservation purposes that exceeds 0.4 hectares
- Land parcel 1 is sensitive
- Consent is required
Variation:
- O proposes to lease a 0.42-hectare portion of land parcel 1 (“land parcel 2”)
Result:
- Land parcel 2 does not adjoin the conservation land.
- Land parcel 2 is not sensitive.
- No consent is required.
Subdivisions
If land is acquired under a proposed subdivision, the relevant area is the area of land that will ultimately be acquired by the overseas investor.
Multi-story buildings
The area of the land is determined by the total footprint of the area being bought or leased. In cases where the footprint of one floor extends beyond another, the extended footprint of the areas needs to be identified. The footprint of any leased or owned common areas – including tenancies in common and body corporate common areas – should also be included. It is not necessary to include licenced areas or other areas in which the investor will have no interest.
To be sensitive, the area being acquired, i.e. the footprint established above, must include land listed in Table 1 of Part 1 of Schedule 1 of the Act or adjoin land in Table 2, and exceed the relevant area threshold.