OIO Recap: Foreign Investment in NZ Residential Real Estate

The Overseas Investment Amendment Act 2018 restricted investment by overseas persons in New Zealand’s housing market.  Five years on, we recap the permitted ways in which foreigners may invest in pockets of local real estate, including certain designated NZ apartments and hotel units.

Background to the current restrictions on overseas buyers of NZ property

The Overseas Investment Amendment Act 2018 was introduced at a time where double digit percentage year-on-year price growth had led to an unaffordability crisis among local buyers of New Zealand property.  Foreign capital was cited as being increasingly prevalent in the local housing market and was accused of fuelling the crisis.  New Zealand real estate had established its reputation as a compelling market for achieving a return on capital but increasingly, New Zealand was also becoming known as a safe haven for wealthy investors to have a ‘bolt hole’ amid global uncertainty. 

The 2018 legislative amendment was designed to cool the increasingly frenetic New Zealand property market of that time, and it did so by placing restrictions on foreign buyers.  Key changes included:

  • Prohibiting foreigners from buying residential properties (except in limited circumstances) – this was primarily achieved by extending the definition of ‘sensitive land’ to include ‘residential land’; and
  • Providing exemptions to channel foreign investment into construction of new facilities such as multi-unit residential dwellings and hotels. 

Special exemptions for Australian and Singaporean Investors 

Although the changes under the 2018 legislative amendment applied to all ‘overseas persons’, special concessions were granted to Australians and Singaporeans, in line with New Zealand’s international commitments. 

Investors from these countries are not automatically restricted from buying residential property in New Zealand, however, whether or not they require Overseas Investment Office (OIO) consent for property acquisitions will depend on whether they are citizens or permanent residents of Australia/Singapore and their residency status in New Zealand. 

OIO Consent – the current position on overseas investment in NZ property

For all other foreign investors, it is possible to seek OIO consent to buy a residential property where:

  • The overseas person’s plans include permanent residence in New Zealand (residence-based test); or
  • The overseas person’s contemplated purchase will have some wider benefit for New Zealand (in circumstances where a non-residential purpose is contemplated). One example is in circumstances where the ‘increased housing’ test is met, meaning the land will be developed in such a way that it adds to New Zealand’s housing supply.

There are certain prescribed exemptions to the above rules which allow flexibility for foreign buyers in certain circumstances. 

Large Apartment Developments – a notable exemption from the foreign buyer ban 

One key exemption to the rule prohibiting foreign ownership of residential property in New Zealand is where an overseas person buys ‘off the plans’ from a developer who holds an exemption certificate (specifically issued by the OIO) allowing the developer to sell a percentage (maximum 60%) of the units to overseas people.

Developers can apply for an exemption certificate from the OIO if:

  • the development has one or more multi-storey buildings, and
  • each building contains at least 20 residential dwellings.

The OIO will scrutinise the track record and financial standing of the developer to determine whether it may receive an exemption certificate to sell to foreign buyers.

Under the exemption certificate, a buyer is not allowed to live in the apartment but can hold it as an investment property and is not required to ‘on sell’ the apartment.

The list of apartment buildings holding exemption certificates are published on the OIO’s website:  Register: Exemption certificates for large residential developments | Overseas investment Guidance (linz.govt.nz)

Hotel Unit Exemption 

Similarly, overseas persons can invest in hotel units in New Zealand (or fund their construction in advance of completion) provided those hotel units are, or will be, leased back for hotel use.  The overseas purchaser cannot occupy, reserve or use the unit for more than 30 days in any given year.  For the rest of the year, the unit must be used for hotel purposes.  When the lease back ends the purchaser must either grant a further lease to the hotel or sell.

Particular criteria apply to the designation of the land, including the requirement that the land is ‘sensitive’ only because it is residential land as well as the requirement for the development to have twenty or more units. 

Hesketh Henry – Foreign Investment Experts 

Hesketh Henry regularly assists offshore clients (including large corporates and individual investors) with investment applications to the OIO.  If you would like further information about the legal frameworks applicable to foreign investment into New Zealand, please get in touch with Ben Hickson of our Business Advice team or your usual contact at Hesketh Henry.


Disclaimer:  The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

Knowing your limits: High Court confirms liability caps in engineering consultancy agreements are consistent with Building Act duties
Design errors in a construction project can result in millions of dollars in loss.  Standard form consultancy agreements typically limit the amount that can be recovered for such errors.  The cap on...
09.07.2024 Posted in Construction & Disputes
glenn carstens peters npxXWgQZQ unsplash
Sender beware – how private are digital workplace conversations?
Following on from the recent Official Information Act request for correspondence between Ministry of Justice employees, employees may be wondering how private their online conversations with colleague...
04.07.2024 Posted in Employment
Concrete pillars impressive
TCC confirms Slip Rule limits in Adjudications
The Technology and Construction Court (TCC) has confirmed the narrow parameters of the ‘slip rule’ in the UK, which allows adjudicators to amend their determination to correct for any clerical or ...
02.07.2024 Posted in Construction & Disputes
Scots rule standard notification clause was condition precedent
In a warning for contractors, a Scottish Court has ruled that a standard form notification clause was a condition precedent to recovering time-related costs (TRCs) (FES Ltd v HFD Construction Group Lt...
01.07.2024 Posted in Construction
rape blossom
Anticipatory Repudiatory Breach and the Date of Default: Ayhan Sezer v Agroinvest
The decision in Ayhan Sezer v Agroinvest [2024] EWHC 479 (Comm) clarifies that where there has been an anticipatory repudiatory breach of contract, the “date of default” is the date of the breach ...
25.06.2024 Posted in Trade and Transport
My cross-lease neighbour wants me to consent to their extension. Can I refuse?
From time to time a cross-lease property owner may be asked by their cross-lease neighbour for their consent to specific matters, such as proposed structural alterations or additions to their neighbou...
25.06.2024 Posted in Property
Contract stock edit
I have a land covenant (or an easement) registered on my title that restricts the use of my land. Can I get this removed?
Where land is subject to covenants and easements, owners might find themselves in a position where they are unintentionally or unknowingly in breach of a covenant or easement or have purchased land th...
25.06.2024 Posted in Property
Send us an enquiry

For expert legal advice, please complete the form below or call us on (09) 375 8700.