New Zealand Law Society - LINZ advises on foreign-purchased land which changes category

LINZ advises on foreign-purchased land which changes category

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The 22 October 2018 changes to the rules for foreign purchase of residential property in New Zealand have resulted in a number of queries from lawyers, Land Information New Zealand (LINZ) says.

LINZ says two questions that have frequently come up relate to land that changes category after the agreement is entered into, and to exemptions for Australian and Singaporean companies. It provides the following information:

Q: My overseas client (A) has agreed to buy an apartment off the plans. At the moment, the land is categorised “commercial” but it will change to “residential” before the transaction is settled. Does A need consent to acquire the land?

A: Yes, A will need consent from the OIO before settling the transaction. The requirement for consent will be triggered at settlement if the District Valuation Roll (DVR) category changes before then.

Q: My Australian client wishes to buy land through a New Zealand company. Do the residential land exemptions that apply to Australian and Singaporean companies also apply to their New Zealand subsidiaries?

A: No. The exemptions only apply to Australian and Singaporean entities (which the New Zealand subsidiary won’t be) and the Australian and Singaporean branches of non-New Zealand entities, and only to entities with substantive business operations in Australia or Singapore. See regulations 78 and 83.

Q: Why have you used the word “home” in the residential land pathway information?

A: “Home” is used for the commitment to reside in New Zealand pathway as it reflects the policy intent that only people who are committed to living in New Zealand can get consent to buy residential land to live on. Occupying the dwelling as their main home is a mandatory condition of all such consents.

Residential Land Statement now required

Among the most important changes for lawyers and conveyancers is the requirement that a Residential Land Statement is necessary for every residential land sale from 22 October 2018.

LINZ has provided a comprehensive set of resources to explain the new rules and requirements.