Purchase of Farm Land in New Zealand by Overseas Persons
Recently there has been keen interest shown by overseas persons to acquire farm land in New Zealand, especially dairy farm land. In New Zealand large farm lands are considered “sensitive land”. If an overseas person wishes to successfully acquire such land in New Zealand he or she must ensure that certain procedures are followed. As such advance planning is vitally important.
The Overseas Investment Act 2005 (“the OIA”) prescribes that purchase of certain assets in New Zealand by overseas persons could only be done with the consent of the Overseas Investment Office (“OIO”). These include investment in certain types of land and investment in business assets (including shares) worth over $100 million.
Q. Who is an overseas person?
Under the OIA the definition of “overseas persons” covers persons who are not New Zealand citizens and persons not ordinarily resident in New Zealand. Included also are companies that are incorporated overseas and those companies incorporated in New Zealand where 25% or a greater percentage of the shares are owned by overseas persons. In the case of a trust, the trust would also be considered an overseas person where 25% or more of its trustees are overseas persons.
Lands that are sensitive lands
There are many types of “sensitive land”. The most common types of “sensitive land” are:
- non-urban land, including farm land, that are larger than 5 hectares in area; and
- land larger than 0.4 hectares in area that adjoins a lake, a regional park or a nature reserve.
Before farm land exceeding 5 hectares in size can be sold to an overseas person the owner of the land must have advertised the proposed sale in New Zealand to non-overseas persons for at least 4 weeks. The advertisement of the land for sale must satisfy the standards and procedures prescribed in the Overseas Investment Regulations 2005.
OIO consent application
For an overseas person to complete his or her purchase of the farm land from the owner of the land, the overseas person must first obtain the consent of the OIO. In general, a straight forward application for OIO consent will take several months.
The process of applying for OIO consent is complicated and there are many criteria to be satisfied before consent can be granted. Further, determining if OIO consent is required and applying for consent are matters that require significant land and legal expertise. We strongly recommend to persons intending to acquire farm land or other sensitive land in New Zealand that they consult a lawyer prior to signing any agreement.
The above article is intended to provide general information only. The contents contained in this article do not constitute legal advice and should not be relied on as such. For legal advice please contact our professional team at Forest Harrison.