Overseas Investment Amendment Bill – what the new legislation means for 2018
The Overseas Investment Amendment Bill banning foreigners from purchasing certain residential homes has now been introduced in New Zealand.
When passed into law, expected to be February 2018, the Bill will implement new restrictions on the sale of homes and land to overseas people.
What land it applies to
The definition of ‘residential land’ incudes all properties classified as ‘residential’ or ‘lifestyle’ for rating valuation purposes. Previously, restrictions only applied to ‘sensitive land’ – now, residential land is classified as sensitive land in the Act.
Who it applies to
Under the Act, you are considered an overseas person if you are not a New Zealand citizen nor ordinarily resident in New Zealand. If you hold a permanent resident visa and have been residing in New Zealand for at least a year and were present in New Zealand for at least 183 days in the last year, you are not classified as an overseas person. It was thought Australians would be exempt but there is no evidence of this yet. However, Singaporeans may be exempt as the new legislation breaches an existing trade agreement between the two countries.
Are there exemptions?
Yes, there are three key scenarios in which an overseas person will be allowed to buy residential land after applying for consent:
- If they will be developing the land and adding to New Zealand’s housing supply. They will be assessed under the ‘Increase in housing test’.
- If they will convert the land to other use and can show that this will benefit the country – the ‘Benefit to New Zealand test’.
- If they hold a residence class visa and can show their commitment to permanently reside in New Zealand. They will be assessed using the ‘Commitment to New Zealand test’.
When will it start applying?
The legislation will only affect transactions entered into after the Bill is passed into law which is likely to be February 2018 at the earliest. It will not have retrospective effect so overseas people who are already owners of residential land will not be affected.
If you’d like to speak to a real estate agent to further understand the new implications of overseas investment in New Zealand, click here to contact us.
And keep an eye out for our 2018 market report at the end of January in which we’ll go into more detail about the effects of new government legislation on the Otago property market.
To read the full legislation, click here.