The Overseas Investment Amendment Bill (Bill) was passed by Parliament on 15 August 2018 and will come into force in late October 2018. This note summaries the key changes the Bill makes to the Overseas Investment Act 2005 (Act).
Background to NZ's overseas investment regime
The overseas investment regime established by the Act regulates investments by “overseas persons” in New Zealand significant business assets, certain types of sensitive land (including farm land), and fishing quota.
The regime is a consenting regime, rather than a prohibition. The regime governs who needs to obtain consent, when consent is required, and the process for obtaining consent.
The regime is liberal by international standards. However the changes made under the Bill tighten the regime, especially the ability for overseas persons to buy residential land.
Residential land now "sensitive land"
Previously residential land has not been classed as “sensitive land” unless it is also “sensitive” i.e. land that is also:
Under the Bill, residential land is classed as sensitive land regardless of whether it falls into any of the other “sensitive” categories. This is the key change under the Bill.
OIO consent now needed to buy residential land
Previously anyone could acquire residential land without consent (including overseas persons) as long as it was not sensitive land. However, as residential land becomes sensitive land under the Bill, only NZ citizens and people who are “ordinarily resident in NZ” can now acquire residential land without OIO consent.
“Ordinarily resident in NZ” means a person who:
The Bill includes a couple of exemptions to the requirement for OIO consent to acquire residential land.
Overseas persons will not need OIO consent to acquire residential land that is not otherwise sensitive if one of the following exceptions apply:
OIO consent is not just required when overseas persons purchase sensitive land, it is also required when they enter leases for sensitive land with a fixed term of 3 years or more (including renewals).
As residential land is now “sensitive land”, this means overseas persons also need OIO consent to enter into leases of residential land. However the Bill limits this so leases of residential land to overseas persons do not need OIO consent if they:
How we can help
Our experienced team can guide you through the consent process, including by:
A copy of the Bill to be enacted can be found here.
David Alizade, PARTNER