Overseas Investment Amendment Act 2018 (OIA)
On the 22nd of August 2018, the OIA introduced some changes to the act, which includes a restriction on foreign ownership of residential and lifestyle land, now also known as sensitive land. This act works to prohibit foreign owners from purchasing sensitive land in New Zealand without meeting the required criteria to do so.
However, the Act also provides for an exemption process, allowing some developers to obtain a partial exemption to this restriction. The exemptions are the Transitional Exemption Certificate (TEC) and the Exemption Certificate (EC). These exemption certificates are made via an application to the Minister of Land Information (Minister), who will have final discretion as to whether the exemption is granted.
Transitional Exemption Certificate (TEC)
The TEC is obtained for large residential developments, it can be applied for only if the development is likely to be completed before the 22nd of August 2023 (being within 5 years), and applications can only be made until the 21st of February 2019 (six months after the Royal Assent).
However, if you are eligible and a TEC is obtained, it will allow 100% of the new apartments to be sold to overseas persons. These overseas persons will be able to bypass the requirement of obtaining the OIA consent and, will be able to live in the apartment.
To be eligible for a TEC:
an application must be made to the Minister on or before the 22 February 2019;
the development must be used (or be intended to be used):
in the construction of one or more multi-story buildings as one development, where each building consists of at least 20 residential units; or
to increase in the number of residential dwellings in 1 or more multi-storey buildings, where the number of residential dwellings in each building will be increased by 20 or more;
the development must include at least 20 new residential apartments that were not complete as at 22 August 2018, but are likely to be completed by 22 August 2023;
at least one genuine apartment sale transaction must have been entered into in the ordinary course of business by 22 August 2018; and
the Minister, when reviewing the application, must be satisfied with the progress of the development, the developer’s financial strength, and the developer’s previous activities, records and history of compliance with consent conditions (noting the Minister can also consider the developer’s associates).
The application fee for a TEC is $25,500.00 and the fee for applying to vary a TEC is $13,000.00.
Exemption Certificate (EC)
An EC will allow you to have 60% of the new apartments to be sold to persons overseas also bypassing the requirement for OIA consent. However, the overseas buyer will not be able to live in the apartment.
Similar to applying for a TEC, to be eligible for an EC:
As with a TEC, the development must be used (or be intended to be used):
to increase in the number of residential dwellings in 1 or more multi- storey buildings, where the number of residential dwellings in each building will be increased by 20 or more;
As with a TEC, the Minister, when reviewing the application, must be satisfied with the progress of the development, the developer’s financial strength, and the developer’s previous activities, records and history of compliance with consent conditions (noting the Minister can also consider the developer’s associates);
The application fee for the EC is $27,500.00.
You can have a look on the Land Information New Zealand (LINZ) website at the different applications forms to find the one that suits your requirement. Click on the following LINZ URL showing these applications: https://www.linz.govt.nz/overseas-investment/applying-for-consent-purchase-new-zealand-assets/preparing-your-application-oio/our-application-templates.
Alternatively, you can give any of the team here at iCLAW a ring and we can assist you in completing the correct form.
There are also changes within this Act that apply to the general purchase of houses in New Zealand. To help summarise these changes, we have used a table categorising the criteria of eligibility and potential process a person may have to go through when purchasing a house in New Zealand. Refer to it below to see if you can buy a home in New Zealand, if you need to apply for consent in order to purchase a home or if you are not eligible to buy a home in New Zealand at all.