Residential Land Changes - Overseas Investment Amendment Bill

In December 2017 and February 2018 the Treasury released information relating to the introduction of a Bill to amend the Overseas Investment Act.

On 14 December 2017 the Government introduced a Bill to amend the Overseas Investment Act. The Bill implements the Government’s policy to bring residential land within the category of "sensitive land" for the purposes of the Act.

These changes will mean that overseas persons who are not resident in New Zealand will generally not be able to buy existing houses or other pieces of residential land. The Government's objective with these changes is to make homes more affordable for New Zealand buyers while also supporting its efforts to build a more productive economy by helping redirect capital to more productive uses.

Sensitive land that is residential land will be all properties classified as either "residential" or "lifestyle" for rating valuation purposes under the Rating Valuations Rules, which are issued by the Valuer-General. A property's classification is available from various property-information websites.

A natural person is an overseas person under the Overseas Investment Act if they are neither a New Zealand citizen nor "ordinarily resident in New Zealand". For residential land, a person will be ordinarily resident here if they hold a permanent resident visa and have been residing in New Zealand for at least a year and have been present in New Zealand for at least 183 days in the past year. The definition of "ordinarily resident in New Zealand" remains as it is in the current Act for all other purposes.

Overseas persons will be able to buy sensitive land that is residential land in certain situations. These are:

• if they will be developing the land and adding to New Zealand's housing supply; or
• if they will convert the land to another use (eg, a business) and are able to demonstrate this would have wider benefits to the country; or
• if they have an appropriate visa status and can show they have committed to reside in New Zealand (the criteria for this will be defined through regulations).

Conditions will be imposed if an overseas person purchases residential land utilising one of these exemptions, for example, if an overseas person purchases residential land for development, they will be required to on-sell the new houses that they build.