A couple recently moved to New Zealand and commenced house hunting immediately.  They found a house they wanted to buy and asked the agent to send through the Agreement for Sale and Purchase.  The agent mentioned to them that they may need to obtain consent of the Overseas Investment Office so they decided to take legal advice.

Under the Overseas Investment Act 2005 all residential land in New Zealand is classed as sensitive land, and therefore you must meet the eligibility criteria under the Act to be able to purchase residential land/property in New Zealand. 

There are three categories of eligibility: 

• people who can buy property without restrictions
• people who can buy certain types of property if they have consent
• people who cannot buy property

People who can buy property without restrictions

Purchasing a property without restrictions means you do not have to apply for consent from the Overseas Investment Office before signing an Agreement for Sale and Purchase of Real Estate. 

New Zealand citizens, and New Zealand residence class visa holders who are ordinarily resident in New Zealand can purchase property without restrictions. 

Other people who can purchase without restrictions are: 

• Citizens of Australia or Singapore who are buying ‘residential’ or ‘lifestyle’ property
• Citizens of Australia or Singapore who are ordinarily resident in New Zealand and are buying land that is ‘residential and otherwise sensitive’ (sensitive land refers to land adjoining rivers, beaches, or conservation areas, or is on an island)
• Permanent residents of Australia or Singapore who are ordinarily resident and are buying ‘residential’ or ‘lifestyle’ property 

The term ‘ordinarily resident’ means that you have a residence class visa, have lived in New Zealand for at least the last 12 months, you have been physically present in New Zealand for at least 183 days of the last 12 months, and you are a tax resident of New Zealand. 

People who can buy certain types of property if they have consent 

People who need consent from the Overseas Investment Office if they want to purchase property or land are: 

• People who have a New Zealand residence class visa but are not yet ordinarily resident
• Permanent residents of Australia or Singapore who are not yet ordinarily resident
• Citizens of Australia or Singapore who are not yet ordinarily resident and want to buy land that is ‘residential or otherwise sensitive’ 

Consent must be obtained from the Overseas Investment Office prior to entering into an Agreement for Sale and Purchase, otherwise the Agreement for Sale and Purchase must be conditional upon the purchaser receiving consent.  The ADLS/REINZ Agreement for Sale and Purchase already includes a clause for obtaining consent whereby you can confirm if such consent is required.

You can apply for pre-approved consent before you have found a property to buy which lasts for up to one year. 

If you enter into an unconditional Agreement for Sale and Purchase without first obtaining consent to purchase, you will be in breach of the Act. 

People who cannot buy property

If you do not fit into one of the above categories for purchasing property without restrictions or needing consent, you will not be able to buy property in New Zealand. 

Purchasing with a spouse or partner 

If you want to purchase property with your spouse or partner, only one of you will need to fit into the above eligibility criteria. 

Other matters to consider

The ownership of the property is not the only thing that is captured by these restrictions.  Things that may be done in an attempt to circumvent the Act and therefore may result in a breach of the Act are:

• Purchasing the property in someone else’s name instead of applying for consent. 
• Receiving a gift of the purchase price from a relative currently living overseas who intends to obtain a share of ownership in the property eventually 
• Receiving a loan from an overseas person for the purpose of buying a property on the understanding that the overseas person will not charge interest on the basis they get to use the holiday home. 

If you are unsure whether you need consent to purchase a property, or if you need assistance with obtaining consent, you should obtain legal advice from a legal professional who can guide you through the process. 

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.