The New Rules on Selling to Overseas Buyers Won't Affect Me, Right?
New rules about an overseas person acquiring land are proposed to be in place very soon.
So long as your residential, lifestyle or a farm over 5 hectares is not owned by a company or trust, then you are only affected by the new rules if you sell or transfer your property to an overseas persons.
Is the situation different if my property is owned by a company of trust? In these cases, YES because it is not just a “sale” to an overseas person that is caught.
Let’s take an example to explain. Your trust or company has trustees/shareholders that are New Zealand or Australian citizens/companies (or other citizens that hold residence class visas and live here). There are three trustees or shareholders. An overseas person becomes a trustee. This could be a say grandchild born of a New Zealand citizen but not born in New Zealand and not an Australian citizen. Children of citizens by descent (i.e. not born in New Zealand) have to apply to be New Zealand citizens. It is not automatic. Assume they have not applied for citizenship. The trust/company is now an “overseas person”.
But there has not been any sale! True, but this “ transaction” is likely to be classed as an “acquisition”. When the change is made on the title, in the case of a trustee change, your lawyer will need to certify the Act is being complied with. A trust can become an overseas person if ¼ of the beneficiates of the trust are overseas people as well.
In contrast, if you own you property in person, then overseas people can acquire your land under you Will without getting consent.
How to I find out how my property is classified?
Treasury says “A property’s classification can be obtained from various property-information websites.” It’s not clear to me what those information website are yet. Council does have this information, but does not include it on the rates assessment. So you have to ask for it. Safe to say unless your property is commercial, you probably are subject to the new rules.
Similar Australian rules do not apply to New Zealand citizens so that is why we have returned the favour and these new rules do not apply to Australian citizens wherever they live.
The cost to get consent for an overseas person starts at $22,000 and is a lengthy process. The overseas status of the buyer will need to be established before unconditional date. That will mean some extra work for agents for auctions that are unconditional straight away.
The new rules are expected to be in place by March.
Please contact us if you think you might fall into this catergory and would like legal advice.