Can Foreigners Buy Property in New Zealand?

 

Yes, but with caveats. The Overseas Investment Act 2005, particularly after the 2018 amendment, places restrictions on non-resident foreigners purchasing existing residential property. However, there are notable exceptions:

• Australian and Singaporean citizens are exempt from these restrictions due to free trade agreements.

• Permanent residents who are "ordinarily resident" in New Zealand (i.e., have lived in NZ for at least 183 days in the past 12 months and are tax residents) can purchase residential property without needing consent.

• Developers constructing large-scale residential projects (20 or more units) can sell a portion of these new builds to overseas buyers without requiring consent from the Overseas Investment Office (OIO).

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Commercial and Investment Properties

Overseas investors can purchase commercial properties, but if the land is deemed "sensitive" (which can include large tracts of land, land near the coast, or land with heritage value), OIO consent is required. The investor must demonstrate:

• Benefit to New Zealand: This includes economic benefits, job creation, or increased housing supply.

• Investor Test: A "bright-line" test assessing the investor's character and capability, including factors like criminal convictions or tax compliance.

Build-to-Rent Developments

Recognizing the need for more rental housing, the government has introduced a streamlined consent process for overseas investors in build-to-rent (BTR) developments. Key points:

• The development must consist of 20 or more dwellings intended for residential tenancy.

• The investor (and related parties) cannot occupy the land.

• This pathway aims to boost the supply of rental housing while providing investment opportunities.

  
  

Investor Visas: A New Approach

In a bid to attract more foreign capital, New Zealand has revamped its investor visa categories:

• Growth Investment Visa: Requires a minimum investment of NZD 5 million over three years in higher-risk investments.

• Balanced Investment Visa: Requires NZD 10 million over five years in mixed or lower-risk investments, including property.

Notably, the English language requirement has been removed, and the physical presence requirement has been reduced to 21 days over three years for the Growth category.

Tax Considerations

• No Capital Gains Tax: New Zealand does not have a general capital gains tax. However, profits from property sales may be taxed if the property was acquired with the intent to sell or if sold within certain timeframes (e.g., the "bright-line" test).

• Ring-Fencing Rules: Losses from residential rental properties cannot be offset against other income, limiting the benefits of negative gearing.

  
  

Upcoming Reforms

The government has signaled further reforms to make the investment process more straightforward:

• Fast-Track Consenting: Aims to reduce approval times for overseas investments.

• Consolidated Tests: Combining various assessments into a single "national interest" test.

• Case-by-Case Scrutiny: The government retains the right to review investments that may pose risks to national interests.

  
  

Final Thoughts

New Zealand remains an attractive destination for property investment, but navigating the regulatory landscape requires diligence. Whether you're considering a commercial venture, a build-to-rent project, or exploring visa options, it's crucial to stay informed and seek expert advice tailored to your specific situation.

If you're ready to explore opportunities or need guidance on the next steps, feel free to reach out. Let's chart a course that aligns with your investment goals.