The Finance and Expenditure Select Committee presented its report on the Overseas Investment Amendment Bill ("Bill") last night (18 June 2018) recommending some significant changes to the Overseas Investment Amendment Bill. Read below for TODD & WALKER Law's review of these recommendations.
THE OVERSEAS INVESTMENT AMENDMENT BILL – SELECT COMMITTEE REPORT
The report has recommended some significant changes to the Bill after receiving more than 200 submissions. More than 90% of submitters argued that the Bill would do the opposite of what is intended and would not stop foreign speculators or make more homes available to New Zealanders.
The report recommends changes to the Bill including:
1. Allowing all resident visa holders, not just those with permanent resident’s visas, to buy residential land without consent. Resident visa holders will now be required to be tax resident in New Zealand as well as having resided in New Zealand for at least the immediately preceding 12 months and having been present in New Zealand for 183 days or more in total in the immediately preceding 12 months.
2. Waiving the requirement for an overseas investor to immediately on-sell a unit in big developments (20 or more units) where the unit is intended to be rented out or sold under a rent-to-buy model.
3. Allowing up to 60 percent of units in big housing projects (20 or more units) to be pre-sold to overseas investors, without them having to on-sell once construction is finished with the requirement that the investors will not be allowed to live in the properties. The percentage of units per development that can be sold to overseas persons will be able to be amended by regulations. This recommendation recognises that large developments often rely on pre-sales to raise funds and a requirement for overseas persons to immediately on-sell would reduce the attractiveness of large developments and reduce their viability.
4. Allowing overseas persons to invest in major hotel developments (20 or more units) as long as they lease the rooms they buy back to the hotel. The overseas investor may reside in the room for up to 30 days per year.
5. Putting the burden of proof on purchasers, not lawyers, to make sure they do not require consent.
6. Allowing overseas persons to lease residential land for up to 5 years, rather than the current limit of 3 years, without requiring consent.
7. Providing a new exemption in the regulations that residential land acquired by utility providers will not require consents.
8. Including a new provision for an overseas person to apply for a standing order where an overseas person can apply for consent for an unspecified future transaction. Standing orders will be granted subject to conditions.
9. Creating a more streamlined consent process for residential land acquired for non-residential purposes such as hotels, supermarkets and businesses that create jobs.
The report also includes recommendations on the Supplementary Order Paper relating to overseas investment in forestry and viticulture which are now to be incorporated in the Bill. Profit a prendre rights, the right to harvest a crop without owning the land, will now be captured by the Overseas Investment Act and will require consent where the right exceeds five hectares. Forestry land will not require consent until the total holding exceeds 1,000 hectares.
The Select Committee’s proposed changes are not yet confirmed – they are only recommendations at this stage. The Bill now goes to its second reading which is scheduled for 19 June 2018
Some of the detail for these changes, and the requirements under the Bill, will be included in the regulations which have not yet been promulgated.
A full copy of the report is now available to view on line - https://www.parliament.nz/…/overseas-investment-amendment-b….
This review has been undertaken by Jessica Weinberg, a Senior Solicitor with TODD & WALKER Law. For more information on what the changes mean contact
Jessica at [email protected] or
Graeme Todd at [email protected] or 027 433 0457.