By David Hargreaves
The Government's proposed new law banning offshore-based people from buying New Zealand residential property was introduced into Parliament on Thursday and it contains provisions to force sale of properties, along with up to $20,000 fines in some circumstances.
While Housing and Urban Development Minister Phil Twyford and Land Information Minister Eugenie Sage spoke to introduction of the legislation earlier in the week, the Overseas Investment Amendment Bill as it is styled was introduced by Attorney-General, Trade, Economic Development and Environment Minister David Parker.
The preamble to the Bill states that it will ensure that overseas persons who are not resident in New Zealand "will generally not be able to buy existing houses or other pieces of residential land".
"This will lead to a housing market with prices shaped by New Zealand-based buyers.
"The Bill will therefore make homes more affordable for New Zealand buyers at some times in the property market cycle, including for first home buyers, while also supporting our efforts to build a more productive economy, by helping redirect capital to productive uses."
The Bill provides that overseas persons would be able to buy residential land in certain situations. These are:
• if they will be developing the land and adding to New Zealand’s housing supply; or
• if they will convert the land to another use and are able to demonstrate this would have wider benefits to the country; or
• if they hold an appropriate visa and can show they have committed to reside in New Zealand.
"The Bill requires that conditions be imposed if an overseas person purchases residential land utilising one of these exemptions, for example, if an overseas person purchases residential land to build houses on it, they will be required to sell the land when the houses are built," the Bill's preamble states.
In terms of the enforcement powers given to the Overseas Investment Office in relation to the new legislation, the Bill states that the 'regulator' may issue a property buyer with notice to dispose of the property if the regulator has reasonable grounds to believe that the buyer has:
(a) contravened this Act; or
(b) committed an offence under this Act; or
(c) failed to comply with a condition of a consent or of an exemption.
The Bill says the notice period for sale given by the OIO must "not be less than 90 days after the date on which the notice is given".
This would suggest therefore that a three-month notice period would probably be standard.
The Bill goes on to say that if the buyer does not dispose of the property within the time and in the manner specified in the notice, "the regulator may take any other enforcement action it thinks fit in relation to the contravention, offence, or failure".
Another very interesting section in the bill refers to the issuing of certificates showing that the buyers are entitled to buy a property.
The Bill states that the provider of conveyancing services must give the certificate.
"Before the transaction to acquire the interest is given effect, the provider must, in the prescribed manner (if any), certify that, to the best of the provider’s knowledge, A [the buyer] will not contravene or commit an offence under this Act by giving effect to the transaction."
It goes on to say that the "provider" must keep a copy of the certificate for a period of at least seven years after the date on which the transaction is given effect.
"Every person who, without reasonable excuse, fails to comply with this section commits an offence and is liable on conviction to a fine not exceeding $20,000," the Bill says.
The Bill will be sent to Select Committee so that public submissions can be heard, but the Government's hoping to have it passed into law early in the New Year.