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Selling to Overseas Buyers

September 2016

What you need to know

If you are selling your lifestyle property or holiday home in New Zealand to an overseas buyer, there may be requirements that need to be met before the sale can proceed.

Under the Overseas Investment Act 2005 (“the Act”), consent is required if the overseas buyer is an “Overseas Person” as defined under the Act and the property is considered “sensitive land”. The Overseas Investment Office (“OIO”) administers the Act and assesses and decides applications for consent from Overseas Persons who want to buy “sensitive land” in New Zealand. An Overseas Person who fails to apply for consent or attempts to circumvent the Act where consent is required is liable on conviction, in the case of an individual, to imprisonment for a term not exceeding 12 months or to a fine not exceeding $300,000.00. Furthermore, the High Court has the power cancel the sale of the property that goes ahead without consent.

Who is an Overseas Person?

An “Overseas Person” is defined in the Act and for an individual, it means a person who is neither a New Zealand Citizen nor “Ordinarily Resident” in New Zealand. “Ordinarily Resident” means you must hold a residence class visa granted under the Immigration Act 2009 and either be domiciled or residing in New Zealand with the intention of residing there indefinitely, and have done so for the immediately preceding 12 months. Note that an “Overseas Person” can include other entities, such as a company or a trust.

What is Sensitive Land?

Land is “sensitive” if it falls within the area thresholds detailed in the Act. Examples include:

  • Non-urban land that exceeds 5 hectares (e.g. dairy farms, sheep farms, vineyards, etc).
  • Land that exceeds 0.4 hectares and adjoins the bed of a lake or reserve or public park or other sensitivity listed in the Act (that also exceeds 0.4 hectares)
  • Land that exceeds 0.2 hectares and adjoins the foreshore (e.g. beach front properties)
  • Land of any size that includes foreshore or seabed.

Overseas Buyer to Apply for Consent

As mentioned above, an overseas buyer is required to apply for consent from the OIO if he/she is classified as an Overseas Person under the Act and intends to buy sensitive land in New Zealand. Applicants for consent have to satisfy a number of criteria, namely the core “investor test”, the “benefit to NZ test”, and the applicant must intend to reside in NZ indefinitely. The consent process is often rigorous and generally requires significant legal and land expertise, as a considerable amount of information has to be provided to the OIO. It is not unusual for the application process to take more than 6 months before the OIO issues consent.

Your Role as a Vendor

Before listing your property which is “sensitive” for sale, it is important to note that there may be specific requirements for advertising. For example, you will need to offer “farm land” for sale on the open market to people who are not Overseas Persons. Also, if the “sensitive land” includes special land such as foreshore, seabed, riverbed or lakebed, you may need to offer the special land to the Crown before consent can be granted.

Timeframes for OIO consents depend on the type of land and this can affect how long it takes for the sale to be completed, and therefore should be factored into the Sale and Purchase Agreement (e.g. when calculating dates for settlement, etc). Additionally, there could be requests from the OIO throughout the application process, and you as the Vendor can help speed up the process by responding to the requests promptly.

It is often recommended (due to the lengthy timeframe for an OIO application) that the Sale and Purchase Agreement includes a clause where the applicant is required to update the Vendor when requested or at regular intervals with respect to the progress of the application. This is due to lengthy application process and the OIO being unable to provide the Vendor directly with information regarding the application.

In regards to the parties’ liability under the Sales and Purchase Agreement, it is the overseas buyer’s duty to ensure that the Agreement is conditional on consent being obtained. Failure to do so means that the overseas buyer warrants that he/she does not require consent from the OIO. Therefore, if consent is indeed required, apart from incurring penalties under the Act, it also gives the Vendor the right to sue the overseas buyer for breaching the warranty provided under the Agreement.


The process of determining whether consent is required when selling “sensitive land” raises a number of important issues that need to be considered. Failure to properly address these issues may result in a breach under the Act and of the Court ordering the sale to be cancelled. This article discusses sale of sensitive land to Overseas Persons. In regards to sale of business assets (non-land) to Overseas Persons, other criteria apply and consent may be required from the OIO. If in doubt, please do not hesitate to consult us.