New rules for overseas home buyers

New rules for overseas home buyers
New Zealand is such a fabulous place to live – and it’s not just Kiwis who think so. Every year, people from overseas look to buy homes or land here, either to live in, or for investment purposes. But recent changes to our overseas investment laws now create some restrictions for foreign home buyers, as part of the government’s efforts to solve our housing shortage and to curb rising house prices. The new rules apply to any contracts dated after 21 October 2018. So what are the key things you need to know? First, there aren’t any restrictions for many New Zealanders. You can buy residential land wherever in the world you happen to be as long as you meet one of the following criteria:
  • You are a New Zealand citizen or
  • You have been a permanent resident for at least a year, have been in New Zealand for at least 183 days of the last year and you’re a NZ tax resident.
If you’re either Australian or Singaporean, the same rules apply as if you were a New Zealand citizen or permanent resident. This is so that we comply with our ‘closer economic partnership’ arrangements with those countries. However, if you have more recently obtained residency, it’s a different story. If you don’t want to wait until you meet the criteria automatically, then you’ll need to apply to the Overseas Investment Office for permission to buy. For instance, if you’ve got residency but you don’t live here at the moment (or haven’t spent enough time here during your residency), then you might be able to get permission to buy – probably with some conditions – as long as you can demonstrate a sufficient commitment to live in New Zealand. Alternatively, you may get permission if you can show that you’re part of a property development to increase the supply of homes here. Increasing the housing supply is a major way in which we can address our housing shortage, so there’s some flexibility for people who show they will help with that. The rules are more difficult, though, if you’re buying an apartment off the plans.  In over-simplified terms, each development will have a maximum number of apartments that can be sold to foreigners without on-sell conditions, unless it has an exemption. Either way, you can’t live in the apartment. There are conditions to meet and if the developer is over their foreign investor quota, you’ll need consent. Complicated? Just a bit. And, in case you were wondering, you can’t get around the rules by owning a company or buying land through a trust. Again in general terms, if an overseas person owns 25% or more of the company, or controls 25% or more of the trust or decisions about the trust, then they’ll be caught by the new regime. You’re probably out of luck altogether if you’re here on a temporary visa (such as a work, student, working holiday or visitor visa) – it’s unlikely you’d get permission to buy residential land. For some general advice on your situation use this link But if you’re not sure about whether these new rules affect you, or what to do, come and talk to our residential conveyancing experts. We can help you understand how the rules might apply to you, and would be happy to give you advice.
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