New Zealand Law Society - Overseas investment law changes recommended

Overseas investment law changes recommended

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Parliament's Finance and Expenditure Committee has released a report on the Overseas Investment Amendment Bill, with a majority recommending its passage with amendments.

The bill seeks to amend the Overseas Investment Act 2005 to introduce greater limitations on the types of property that can be purchased by overseas persons, by bringing residential land into the category of "sensitive land" in the Act.

The bill seeks to ensure that overseas people who are not ordinarily resident in New Zealand would generally not be able to purchase existing houses or other land classed as “residential” under the bill. The bill provides that overseas investors could only obtain consent to buy residential land (that is not otherwise sensitive) in certain situations.

The report's recommendations include insertion of a clause to provide that developers of large multi-storey apartment buildings of 20 or more units could apply for an exemption to sell a percentage of the units to overseas buyers “off the plans”, without the need for consent or the requirement to on-sell once the unit is complete. However, buyers would be allowed to occupy the units themselves.

The report also notes that the committee was concerned by many of the new requirements that would be imposed on the conveyancers of purchases under the bill as introduced.

"Clause 31 of the bill as introduced inserts new section 51A, providing that conveyancers must certify, to the best of their knowledge, that a purchaser will not contravene or commit an offence under the Act," it says.

"It also provides that anyone who failed to comply with that section would be committing an offence and liable on conviction to a fine of up to $20,000.

" We consider that the burden placed on conveyancers in the bill as introduced is too high, and that 'the best of the provider’s knowledge' is too subjective. Instead, we recommend replacing clause 31 and inserting new sections 51A and 51B to place the primary responsibility for compliance on the purchaser."

Under the new section 51A, someone acquiring an interest in residential land would be required to provide to a conveyancer a statement related to whether the transaction requires consent under the Act. New section 51C would require the conveyancer to obtain and keep the statement. If they had not received such a statement, or had reasonable grounds to doubt the accuracy of a statement, the conveyancer would not be allowed to effect the transfer of the property.

National Party and ACT members of the committee opposed the bill.

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