Ensuring a positive home-buying experience for new kiwis

Let’s set the scene. You’ve just helped a client sell a house — vendor and purchaser have signed on the dotted line and, as settlement approaches, you’re about to send your client a gift to say thank you. Then you receive a call from your very unhappy and stressed-out client.

They call to inform you that settlement is delayed, bridging finance is required to pay off two mortgages, lawyers are involved, legal fees are rising, and the Overseas Investment Office (OIO) is asking questions.

Your client is stressed. You’re stressed.

Why? Because the agreement wasn’t conditional on consent from the OIO, and it needed to be.

Some aspects of the consent rules aren’t always well understood. Unfortunately, that sometimes sees buyers breaking the rules without realising it — especially in an active market where people tend to move quickly to secure a property.

In situations like these, a well-informed real estate agent can make all the difference in helping people navigate the rules and seek the right legal advice.

Helping new kiwis buy a home

New Zealand’s population reflects a growing diversity where large communities from many different parts of the world are now proud kiwis and call New Zealand home.

Since 2018, overseas buyers have needed Government consent before buying residential land in New Zealand. The

Overseas Investment Act provides a clear legal process for people wanting to make New Zealand their permanent residence, and apply for permission to buy a home to live in.

Understanding who needs consent and who doesn’t

‘Overseas persons’ need consent. An overseas person is an individual who is not a New Zealand citizen, and not ‘ordinarily resident’ in New Zealand. Permanent residents may still be overseas persons and need consent.

People who are New Zealand citizens or are ‘ordinarily resident’ in New Zealand can buy real estate here without the need for consent. Whether a person is ordinarily resident depends on their visa status and how long they have been in New Zealand. The OIO’s website has more information on how we define ‘ordinarily resident’. Australian and Singaporean citizens (with some restrictions) can also buy certain residential property without consent because of our free trade agreement obligations with those countries. There are also exemptions for relationship property under the Overseas Investment Regulations 2005. Legal advice is recommended in these cases.

Who can apply for consent?

People who are committed to living in New Zealand and are on the road to living here permanently can apply to the OIO for consent to buy a home to live in.

To qualify, people need to hold a residence class visa and intend to make the property their main home. If they don’t hold a residence class visa or don’t intend to live in the property, they will not get consent.

Conditional offers

Consent is required before a contract is entered into unless the contract is conditional on consent being granted.

Buyers in a competitive market might want to make their offer subject to as few conditions as possible to make it more attractive. It is very important for buyers who require OIO consent to have that listed as a condition of their offer. If they don’t, they will breach the Overseas Investment Act and may be penalised.

Buying at auction

Auctions are a popular option for vendors selling in an active market. Auctions, however, present some significant issues for people who need consent from the OIO.

Consent is required before the auction unless the vendor has agreed to the person’s bid being conditional on consent being granted. An overseas person who wins an auction without consent will breach the rules.

Getting consent sorted

The good news is that applying for consent is a simple process. Buyers can apply for pre-approval to buy a home to live in. Consent is valid for a year, but can only be used to buy one home to live in. This means they can make fast offers with fewer conditions and bid at auctions with confidence.

Applying for pre-approval is straightforward and done online via the Toitū Te Whenua Land Information New Zealand website.

Resolving problems

Any deliberate breaking of the law is always treated seriously. However, people who meet the criteria to be granted consent but have inadvertently breached the rules may be eligible for retrospective consent.

However, this is best avoided as it requires more paperwork and is expensive — involving a penalty of up to $10,000. This would be on top of the application fee and any legal advice required, without any guarantee of getting consent.

If you become aware that someone has inadvertently breached the rules, please encourage them to contact Toitū Te Whenua Land Information New Zealand so we can work with them on a solution.

As Toitū Te Whenua’s head of regulatory practice and delivery, Rebecca McAtamney has management oversight for the overseas investment regime, the Surveyor General, the Registrar General of Land, Valuer General and the Commissioner of Crown Lands.

Pedro Morgan

Lead Advisor, Overseas Investment Office, Toitū Te Whenua Land Information NZ