The Overseas Investment Regulations 2018: The changes keep coming
They say there’s no rest for the wicked, and those who have the task of seeing in the changes to the overseas investment regime in New Zealand must certainly be feeling like a lie down by now. With the Overseas Investment Amendment Act 2018 having gone from inception to law within nine months, the drafters have now already produced the regulations that sit under the Amendment Act and complete the new overseas investment “landscape”.
The Overseas Investment Amendment Regulations 2018 (Regulations) were passed by the Governor-General this week and will come into force on 22 October 2018 (immediately after the Amendment Act comes into force).
For a detailed summary of the Overseas Investment Amendment Act 2018, please see our previous alert here.
The Regulations will take some working through, but the key takeaways are:
- a new schedule of fees will apply to applications for consents, exemptions, waivers and variations;
- new administrative penalties will apply for retrospective consent applications;
- new exemptions have been included, particularly relating to various types of forestry transactions;
- the exemptions for certain classes of Australians and Singaporeans are now clarified; and
- as anticipated, the percentage of properties within a multi-storey development of 20 or more apartments that developers can sell to overseas persons (if they obtain the relevant exemption) has been set at 60%.
We set out more detail on these aspects and more below.
The cost of consent
How much will it now cost someone to apply for the privilege of owning residential land or forestry rights in New Zealand? The answer is, it depends. The Regulations set new fees for residential applications and exemptions, with a complicated sliding scale of fees depending on the degree of sensitivity of the land, the value of the land and whether the application must be considered by Ministers or dealt with under delegated authority.
Fees start at $2,040 for an application by an individual or individuals to acquire residential land under the “commitment to reside in New Zealand test”, but quickly elevate to $34,100 for applications under the non-residential use test and incidental residential use test. Land that is also sensitive for other reasons will set an applicant back even more.
Applications to invest in forestry on sensitive land also run on a sliding scale depending on land value and could set an applicant back between $34,100 and $51,100.
The Regulations also prescribe administrative penalties for retrospective consent applications.
Exemptions for Australians and Singaporeans
The Regulations give effect to and clarify the nationality exemptions for Australian citizens and permanent residents and Singaporean nationals and permanent residents, and also set out the exemptions for “investors” from both countries when acquiring an interest in residential land.
New Regulation 33 exemptions
The existing Regulation 33 exemptions have been replaced, and now include various types of forestry transactions. New exemptions have also appeared, including exemptions for acquisitions of residential land for diplomatic premises and acquisitions by charitable entities.
Maximum thresholds now set for off-the-plan dwellings
Developers now also have certainty on the Schedule 3 exemption for off-the-plan dwellings in large apartment developments. The maximum percentage of dwellings within this type of development that the developer can sell to overseas persons off-the-plan without obtaining consent will be set at 60% – which is what we expected.
Qualifying reasons for absence from New Zealand
We also now know what kind of factors the OIO will take into account when it is considering whether a person remains committed to residing in New Zealand. The Regulations include a set of “qualifying reasons” for a person’s absence from New Zealand including compassionate (for example, absence due to attendance at a significant family event or for medical treatment) and employment (such as certain types of absence due to service in the course of one’s employment). The list is not exclusive but gives an idea of the reasons the Ministers will put weight on.
As mentioned, the new Regulations are complex and need careful review, and we will provide further updates on key aspects of the changes prior to their coming into force.
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