The purchase of New Zealand land by overseas persons is regulated by the Overseas Investment Act 2005 and the Overseas Investment Regulations 2005. Overseas persons, being persons who are neither a New Zealand citizen nor ordinarily resident, wanting to acquire “sensitive land” in New Zealand need to apply to the Overseas Investment Office for consent.
Government policy is to encourage overseas investment, however the assumption of the Act as quoted by its purpose is “that it is a privilege for overseas persons to own or control sensitive New Zealand assets…”.
Consent applications are usually successful, and the refusal rate over recent years has been very low. However, the consent requirements are stringent, and it is important that legal advice is obtained before making a purchase decision.
Determining whether the land is “sensitive” often requires significant research and legal expertise, especially if the land includes or adjoins foreshore, river bed or lake bed.
Whether land is sensitive is determined by the types of land and area thresholds in the Act. Generally consent will be required if the land:
Exceeds 5 hectares and is not in an urban area; or
Includes the foreshore or seabed, or is greater than 2,000 sqm and adjoins the foreshore; or
Exceeds 4,000 sqm and includes:
Any lake, the bed of which exceeds 8 hectares; or
Any land which is held for conservation purposes, is provided as a reserve, public park, for recreation purposes or as a private open space, is subject to a heritage order or is an historic place; or
Exceeds 4,000 sqm and adjoins similar types of land as noted above.
The above list is not exhaustive but covers the majority of land deemed to be “sensitive”.
There are few restrictions on the purchase of residential, commercial or industrial land in New Zealand. However if the purchase price exceeds $100 million or the area of land is greater than 5 hectares or less for certain lands, consent will be required.
The Government is currently reviewing the overseas investment legislation to consider whether changes to the screening thresholds, which determine the classes of land considered “sensitive”, are needed. The review will also focus on the most problematic areas of the legislation, so that unnecessary barriers to overseas investment can be identified and removed.
As noted by Finance Minister, Bill English in confirming the review “…beyond the recession, overseas investment will make an important contribution to New Zealand’s economic growth in the longer term”.