It’s become harder for overseas buyers of residential or lifestyle property

From 22 October 2018 every purchaser of residential or lifestyle property-  with or without a house – will be required to complete a Residential Land Statement advising whether they need Overseas Investment Office (OIO) approval to buy the land.

The purchasers lawyer will usually be the one to file this Statement prior to settlement. However real estate agents and salespeople will be expected to query the citizenship and residency status of purchasers prior to drawing up an offer.

This is a significant change.

  • New Zealanders are exempt from requiring OIO approval (but must still complete the Residential Land Statement).
  • Australian and Singaporean citizens who live in NZ will also have an exemption under most circumstances.
  • Overseas people wanting to buy residential or lifestyle property but not reside in NZ will need OIO approval –  but don’t hold your breath about getting the go ahead.

OIO have a guideline of 65 days to make a decision on an application to purchase – if all the information required is incomplete on day one, things will get dragged out longer.

Consequences of ignoring OIO consent

  • If a purchaser requires OIO consent and enter into an agreement that does not include a clause saying it is conditional on OIO consent, they will be in breach of the Overseas Investment Act as soon as they enter into the agreement.
  • Any deposit paid may be forfeited and they could have action taken against them by the Vendor for any losses suffered.
  • Settlement cannot take place until OIO approval is granted – this could expose the purchaser to penalty interest on delayed settlement if this runs beyond the date in the Agreement for Sale and Purchase
  • If the Vendor and/or real estate person knew OIO consent was required, but entered into the deal anyway, they could be liable for substantial civil penalties

Land Information NZ and OIO have produced two brief flyers on this matter:

Investing in New Zealand

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