Chinese businesspeople identified as Hong and Ke were recently fined NZ$2,950,000 by the High Court in Auckland for illegally purchasing two properties in Warkworth, Auckland, without approval from New Zealand's Overseas Investment Office (OIO).
The High Court ordered the two Chinese businesspeople to sell the properties and pay penalties, costs and investment profits.
The properties are land at 185 Sandspit Road and Kourawhero Lodge at 471 Wyllie Road. Both are farmland exceeding 5 hectares, so overseas buyers need OIO approval to purchase them.
In July 2012, Hong and Ke purchased Kourawhero Lodge through a business partner for NZ$2,550,000. In April 2014, the property was transferred to a company jointly owned by Hong and Ke.
The property is due to be sold on 16 September 2019 for NZ$3,250,000, with no profit remaining after associated costs.
Kourawhero Lodge
In January 2014, Hong and Ke used another investment company they owned to purchase the land at 185 Sandspit Road for NZ$4,480,000. Following an OIO investigation, the property was sold on 18 June 2019 for NZ$10,100,000. After associated costs, the profit was approximately NZ$2,340,000.
During the OIO investigation, Hong and Ke sought retrospective consent for the properties, but were turned down. The OIO considered that the investment would not deliver sufficient benefits to New Zealand.
Do you fully understand the overseas buyer ban?
Last year, the New Zealand Government introduced legislation imposing tighter restrictions on overseas buyers purchasing farmland and existing homes in New Zealand. Even a small oversight could leave overseas buyers on the wrong side of the law.
Meanwhile, some people who had recently obtained resident visas and already qualified to buy spent more than NZ$2000 unnecessarily applying for OIO consent because they feared breaking the law.
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Today, YIJU provides a brief overview of the conditions overseas buyers must meet to purchase residential property in New Zealand.
Q: Who is an overseas buyer?
A: 1) Not all foreign nationals are overseas buyers. If you are an Australian or Singaporean citizen holding a passport, you are not an overseas buyer. You do not need to apply to the OIO when buying a home.
2) If you are not a New Zealand, Australian or Singaporean citizen, but hold a New Zealand Resident Visa or Permanent Resident Visa, or an Australian or Singaporean Permanent Resident Visa, you also do not need to apply to the OIO provided you have spent 183 days in New Zealand within the past 12 months and are a New Zealand tax resident.
You must have residency, have spent 183 days in New Zealand before buying a home and be a New Zealand tax resident; all 3 conditions must be met.
Overseas people with permanent residency who have just returned to New Zealand and want to buy a home must demonstrate that it is for living in New Zealand rather than investment.
Q: I hold a New Zealand Resident Visa or Permanent Resident Visa, but have spent fewer than 183 days in New Zealand over the past 12 months. Do I need to apply to the OIO for consent to buy a home?
A: Yes!
Q: I have heard that overseas buyers can buy apartments off the plans directly. Is that true?
A: You can buy off the plans in a large development—a multi-storey building with more than 20 homes—if the developer has obtained an exemption certificate. Otherwise, you still need to apply to the OIO for approval!