The Overseas Investment Act: What Property Buyers Need to Know
New Zealand has some of the most restrictive rules in the world around overseas persons buying residential property. The Overseas Investment Act, administered by the Overseas Investment Office (OIO), sets out who qualifies as an overseas person and what they can and cannot purchase without obtaining consent. For many buyers who have moved to New Zealand or who are purchasing from offshore, understanding whether these rules apply to them is a critical first step before making any property purchase decisions.
Who Is an Overseas Person Under the Act?
Under the Overseas Investment Act, an overseas person is broadly defined as someone who is not a New Zealand citizen or a person ordinarily resident in New Zealand. A person is considered ordinarily resident if they hold a residence class visa and are either already domiciled in New Zealand or have been living here for at least twelve months and have New Zealand as their permanent place of residence.
New Zealand citizens who live overseas can still purchase residential property freely. However, people who hold certain temporary visas, or who have a residence visa but do not yet meet the ordinary residence test, may be considered overseas persons for the purposes of the Act. If you are unsure of your status, this is an area where legal advice is strongly recommended before you proceed.
What the Restrictions Mean in Practice
An overseas person generally cannot purchase residential land in New Zealand without obtaining consent from the Overseas Investment Office, which involves a formal application and assessment process. The restrictions cover what is defined as residential land under the Act, which includes most urban residential properties.
There are some exceptions and pathways. New Zealand residents who meet the ordinary residence test are not overseas persons and can buy freely. Certain categories of property, such as some apartments in large developments that have received standing consent, may be available to overseas purchasers. And consent can in some circumstances be obtained, though this is not a guaranteed outcome and the process has costs and timeframes attached to it.
Financing and the OIO
From a mortgage perspective, lenders in New Zealand need to satisfy themselves that a borrower is not in breach of the Overseas Investment Act when they are lending to purchase property. A lender will typically require confirmation of your citizenship or residence status as part of the application process, and if there is any uncertainty about whether OIO consent is required, the matter needs to be resolved before a loan can be advanced.
If you are a New Zealand resident who recently received your visa, it is worth being clear about whether you have met the twelve-month ordinarily resident threshold and that New Zealand is genuinely your permanent place of residence. Your lawyer and mortgage adviser can help you work through this as part of the purchase process.
- The Overseas Investment Act restricts most overseas persons from purchasing residential land in New Zealand
- New Zealand citizens and ordinarily resident visa holders are not overseas persons under the Act
- Ordinarily resident means holding a residence visa and having lived in New Zealand for at least twelve months with New Zealand as your permanent home
- Lenders require confirmation of your status before advancing a mortgage for a residential purchase
- Legal advice is strongly recommended if there is any uncertainty about your status under the Act
The Overseas Investment Act is an important piece of legislation that directly affects who can buy property in New Zealand. At Chaperone, we work with buyers from all backgrounds and can connect you with legal advisers who can give you a clear answer on your status so you can move forward with confidence.