Housing may be freed up with the new foreign buyer screening process being introduced in the Overseas Investment Amendment Bill.
The Bill is currently before the Committee of the whole House; following this, it will return to the House for its final reading. Once passed, the Bill will prevent people who are not New Zealand, Australian and Singaporean citizens or residents/resident visa holders, from investing in residential land without first obtaining consent.
This restriction includes all 'transactions' with residential property, not limited to purchasing but including entering into residential tenancy agreements for a term of five years or more, or entering into periodic leases that offer a certainty of term for three years or more.
The three grounds for consent will be granted where the investor can show the investment will:
1. Increase housing in New Zealand: this will be applied where investors build new apartment complexes off the plans or purchase hotel units and lease those units back to the hotel
2. Benefit New Zealand: this will apply where the foreign investment creates jobs or investment opportunities in New Zealand, or
3. The investor shows a commitment to New Zealand: investors must normally reside in New Zealand and have spent at least 183 days out of the last 12 months in New Zealand.
The Bill will not have retrospective effect, so any overseas investor who already owns land in New Zealand or those who already have a transaction (an agreement to purchase or an existing lease) in place at the date of commencement will fall under the restrictions of the current Act where residential land is not sensitive land.
For guidance more information on how this legislation could affect you buying or selling property – either now or in the future – please give us a call.