What Australians need to know before buying property in New Zealand.

If you are from Australia and considering purchasing property in New Zealand, you need to be aware of the legal and regulatory requirements that apply to Australian buyers before entering into a property purchase agreement.
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While Australian buyers are exempt from some rules that apply to overseas buyers, consent from the Overseas Investment Office may still be required when purchasing certain types of New Zealand property. The consent process can be complex and time-consuming and there are large penalties and fines for non-compliance.

At NZ Legal, our experts routinely advise Australian buyers on:
- compliance with OIO requirements and consent applications;
- sensitivity investigations and due diligence on New Zealand property;
- what entities to use to purchase property in New Zealand; and
- drafting of the property purchase agreement;

Keep reading to explore the 4 things you will need to be aware of before you decide to purchase your dream property across the Tasman.

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What Restrictions Apply to Australian Buyers?

The main restrictions that apply to overseas buyers of New Zealand property stem from the Overseas Investment Act 2005. The Act regulates investments by overseas buyers of New Zealand property.
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An “overseas person” includes:

a company incorporated outside of New Zealand;

a company or entity that is at least 25% owned by an overseas person; and

a person that is not a New Zealand citizen or is not ordinarily resident in New Zealand.

Overseas buyers will usually require consent before they can buy a home that’s on residential or lifestyle zoned property, however there are a few key exceptions.

One key exception is for Australian and Singaporean buyers, who do not require consent to purchase residential or lifestyle zoned property.

Types of Property That Require Consent to Purchase

Australian and Singaporean buyers will however require consent when the property being purchased is “sensitive land".

“Sensitive land” can be farm land, land adjoining marine and coastal areas, significant Māori land, property on specific islands, and includes both freehold or leasehold interests in property.

The full list of sensitivities can be found in Schedule 1 of the Overseas Investment Act 2005 and a general guide to when consent is required can be found here.

Consent Process for
Sensitive Land

The consent process starts with an application being submitted to the OIO for sensitive land consent.

The application fees for consent range depending on the complexity of the application, but more complex applications can include fees in excess of $100,000NZD.

The OIO will then assess the application within the prescribed time frame and determine whether the transaction meets the benefit to New Zealand test and the investor test.

The benefit to New Zealand test is largely discretionary and involves an assessment of whether the purchase will bring a net benefit to New Zealand.

Some factors the OIO may consider as part of the test include:

will there be an economic benefit to New Zealand;

will historical sites be protected and accessible;

will there be a benefit to New Zealand’s natural environment; and

will the investment assist government policy.

While the investor test sets out the types of behaviours the OIO considers likely to pose a risk to New Zealand and questions the character and capabilities of the buyer. A common condition of consent is that the buyer continues to meet the investor test.

Non-Compliance With Overseas Investment Office

We highly recommend seeking expert legal advice before you enter into a property purchase agreement.

There are many areas where hopeful buyers get stung because they have failed to comply with OIO rules.

For example, if you sign an unconditional property purchase agreement in New Zealand without consent, you can be fined up to $300,000NZD and your purchase may also be declined.

Minor breaches may cost you the amount to remedy a breached condition or breached term of a prohibition order, while serious breaches can result in the court ordering penalties not exceeding $500,000NZD for individuals and $10,000,000NZD for companies.