In light of the changes to the Overseas Investment Act 2005, there has been a lot of discussion about who cannot buy residential land in NZ now. To look at it another way, I have considered who can buy residential land in NZ without consent.
So, who can buy residential land as of right in NZ?
These people are some of the people who can:
1. New Zealand citizens
2. Persons who are ordinarily resident in New Zealand (for the purposes of residential land), i.e. persons who:
• have a residents class visa; and
• have been living in New Zealand the last 12 months; and
• are tax resident in New Zealand (e.g. have been in New Zealand for 184 days and tax residency has not “stopped”); and
• have been in New Zealand for 183 days or more in the past 12 months.
3. A company where no “overseas person” has:
a. ownership of 25% or more of the shares; or
b. the power to control 25% or more of the board; or
c. the right to control 25% or more of the votes.
To determine this we will need to consider who are the directors, who are the shareholders, what does the Constitution say and what do the shareholder agreements say, if applicable.
4. A trust where no overseas person (or persons):
a. comprise 25% or more of the trustees, or
b. are entitled to or have beneficial ownership of 25% or more of the trust property; or
Where a discretionary trust is concerned then provided one of the discretionary beneficiaries is a New Zealand citizen then this test should not be triggered because an entitlement to “be considered” as a discretionary beneficiary is not the same as having an entitlement to the assets or ownership. If however, all discretionary beneficiaries became overseas person then the trust would become an overseas person too.
c. hold 25% or more of the power to amend or control amendment of the trust deed; or
Typically this is about checking who the settlor is or who holds the specific power of appointment to change beneficiaries.
d. hold 25% or more of the power to control the trustees (e.g. the appointor).
You are also excused the need for consent or have different rules that apply to you if an exemption applies. There is a long list of exemptions in the Overseas Investment Regulations 2005. For example, exemptions are potentially available to:
- certain company restructures
- a change of trustee
- beneficiaries inheriting property under wills
- permitted security arrangements
- relationship property where one spouse is an overseas person
- the owner of the freeholder who acquires another interest e.g. the leasehold
- charitable entities
- Australian citizens
- Australian permanent residents who are ordinarily resident in New Zealand
- Singaporean nationals
- Singaporean permanent residents who are ordinarily resident in New Zealand
However, we need to take real care also with the associate rules e.g. if an overseas person is somehow really running things then these associate rules can be triggered and consent will still be needed. Consideration of who really has ownership or control or who is really giving the instructions is important also.
There is a lot of great information at www.linz.govt.nz/overseas-investment. There is also a tool on the NZ Immigration website www.newzealandnow.govt.nz/living-in-nz/housing/buying-building. Here you can answer a couple of questions and quickly determine whether it is likely you need consent to purchase land in New Zealand.