If you’re a New Zealand citizen, in most cases the process for buying property or land is relatively straightforward. Things get a little more complicated though when you’re an ‘overseas person’ as you may need consent from the Overseas Investment Office (OIO).

Individually, an overseas person is defined as someone who isn’t a New Zealand citizen, or isn’t classified as ‘ordinarily resident’.

‘Ordinarily resident’ means you have a residence class visa, have lived in New Zealand for at least the last 12 months and were physically present for at least 183 days of that.

For a company, it’s labelled as overseas if more than 25 percent is owned or controlled by an overseas person, or it was incorporated overseas.

So what do you need to know as an overseas person or company looking to buy land or property here?

WHO CAN BUY PROPERTY WITHOUT RESTRICTIONS?

There are three scenarios in which you can purchase property or land without restrictions.

1. If you’re a New Zealand, Australian or Singaporean citizen.
2. You have a New Zealand residence visa class visa and are ordinarily resident in New Zealand.
3. Are a permanent resident in Australia and Singapore and are ordinarily resident in New Zealand.

WHO NEEDS OIO CONSENT?

If you have a New Zealand residence class visa or you’re an Australian or Singaporean citizen or permanent resident and are not ‘ordinarily resident’ in New Zealand you need to obtain OIO consent to buy or build a home to live in.

If you’re given OIO consent, there may be conditions on the purchase, like a requirement to live in the property as your main home and be present in New Zealand for a certain number of days per year.

WHO CAN’T BUY?

There are two scenarios in which you can’t buy land or property in New Zealand.

1. An overseas person with a temporary, limited, interim or transit visa (such as a student, work or visitor visa)
2. An overseas person without any visa.

WHAT KIND OF PROPERTY NEEDS OIO CONSENT?

The key question is whether the land you want to buy is classified as ‘sensitive land’. Any size of residential or lifestyle land and property is captured by this definition.

Residential land is usually residential property in cities and towns – it can be a house that is already built, or land to build a house on. Lifestyle land is usually ‘lifestyle blocks’ in the countryside but close to cities or towns. You can check a property’s category on the Quotable Value website.

But just because a property isn’t categorised as residential or lifestyle, that doesn’t mean you don’t need OIO consent to buy it.

Some properties are categorised as ‘otherwise sensitive’, which may also need OIO consent to purchase.

DLA Piper Partner Martin Thomson says that includes rural land over five hectares.

“This is in many cases, the sort of headline type of land that features in the larger scale of our consent applications and probably the most sensitive because it involves large livestock farms.”

DLA Piper Partner Pavanie Edirisuriya says other types included in the classification are foreshore and seabed land, land over 0.2 hectares that adjoins the foreshore and land over 0.4 hectares that’s held for conservation purposes, or adjoins a lake, park or certain reserves.

“When you're looking at something in the commercial context, it's quite rare that you would get sensitive land consent triggered, because you're not really looking at getting anything above the 0.2 or 0.4 hectare landmass.”

“If it's residential, and you're looking at an apartment block that actually has mixed use, then that potentially could be classed as sensitive.”

There are other things like if it’s heritage land, or there are parks and reserves on it.

“If it joins or includes certain types of land, then it amounts to sensitive land for the purposes of the act, and then it triggers the requirement for consent.”

The rules also apply when it comes to lease agreements too.

“If the term of the lease is over three years for a residential property it gets captured. Any other type of land, you're looking at a term of over 10 years.”

You can view a more detailed list of otherwise sensitive land types here.

WHAT DO I NEED TO APPLY?

If you need consent to buy a house or land, you should apply as early as possible as your lawyer cannot complete a purchase until they have your Overseas Investment Office consent number.

You can apply for pre-approval to buy a property before you have found one you want to buy. This is the most flexible option and lasts for up to a year with no extra cost.

You can also apply for approval if you find a property you want to buy. If you apply for consent to buy a particular property, you don't have to buy that property – you will be given pre-approved consent for up to a year so you can buy another property instead.

If you need OIO consent you can’t buy a property at auction unless you have pre-approval. You may face significant penalties and have to sell the property if you buy it at auction without consent.

Pavanie Edirisuriya says to get on the residential property ladder, overseas people can only be granted consent to purchase a home they plan to live in.

“As a property investor, if you’re not going to move here you’re unlikely to get consent., So that makes it pretty hard for overseas people to purchase things like holiday homes.”

It usually takes up to 10 working days to process an application for consent to buy residential land, and up to 30 working days if the application includes land that is residential and otherwise sensitive.

Martin Thomson says difficulties can sometimes arise around timings, application costs and with certain extra requirements for particular types of land.

“With farmland, there is a requirement to advertise before an overseas person can enter into an agreement to purchase. So it's really important that you check off that advertising has actually been undertaken.”

You can apply for consent to buy or build a home to live in here.

IF I’M BUYING WITH A PARTNER, DO WE BOTH NEED CONSENT?

The rules for couples have often been the source of confusion, but they clearly state that if you’re married, in a civil union, or in a de facto relationship only one of you needs to meet the Overseas Investment Act rules for buying a relationship property in New Zealand.

This means that if you have consent to buy a house, and are buying it as a relationship property, your partner doesn’t need consent.

CAN SOMEONE PURCHASE A PROPERTY ON MY BEHALF?

Thomson says his office sees this scenario a lot.

“We see people constructing a narrative where they say an overseas person wants to fund an asset.”

“Because consent is required, the overseas person gives someone else the money to buy it under their name. They think that's okay, because a New Zealander is buying it even though there's an overseas person behind them.”

Thompson says that situation is risky, and advises against it.

“Even though it might be fully legal in the New Zealander’s name, if it's being funded by an overseas person, the New Zealander then becomes an associate and needs consent.”

“The Overseas Investment Office has pretty strong powers and a really strong enforcement arm. They can find people, and they can ultimately imprison them for breaking the rules.”

Getting on the wrong side of the OIO can also make it extremely difficult to get consent moving forward.

WHAT DO I NEED TO DO ONCE I GET CONSENT?

There’s a few things to keep in mind once you get consent.

1. You must live in the property as your main home and usually requires you to move within three months of taking over ownership, or if you’re building the property within the three months after construction is completed.
2. Be present in New Zealand for at least 183 days in each 12-month period after consent is granted.
3. Continue to hold a New Zealand residence class visa or continue to be an Australian or Singaporean citizen or permanent resident.

If you do not meet all these conditions, you may have to sell the land and could face penalties.