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OIO grants first standing consent for residential land purchases

June 06, 2019

Contacts

Partners Greg Allen
Senior Associates Tara Wylie

Overseas investment

The OIO has recently granted the first standing consent for residential land development. In April 2019, Fletcher Residential Limited (FRL) was approved to buy up to 200 hectares of residential (but not otherwise sensitive) freehold land in Auckland, Canterbury or Waikato.

This will enable FRL to make up to 12 transactions by 1 May 2022 (the length of the term of the standing consent). FRL is an overseas person for the purposes of the Overseas Investment Act 2005, even though it is owned 100% by Fletcher Building Limited, a New Zealand listed entity operating in New Zealand since 1909.

Our commercial property team (led by partner Greg Allen and senior associate Tara Wylie) acted for Fletcher Residential Limited in its application for standing consent.

What qualifies as “residential land” under the Overseas Investment Act?

Under the changes to the Overseas Investment Act 2005 (Act), which came into effect in October 2018, overseas persons were required to obtain consent to purchase “residential land”.

Residential land under the Act is defined as land that has a property category of residential or lifestyle in, or for the purpose of, the relevant district valuation roll. As a consequence of this broad definition, most land in urban areas that would be acquired for the development of new residential housing, retirement villages, supermarkets, service stations or other hardware and gardening stores will likely be residential land. 

And if the land developer, retirement village operator, supermarket, service station or hardware store operator is an overseas person for the purposes of the Act, then approval from the Overseas Investment Office (OIO) will be required to acquire the land.

Apply for a standing consent

The changes to the Act introduced pathways to enable such land developers or commercial operators to be able to continue to do business if their use of residential land would increase housing numbers or was for non-residential or incidental residential use.

Land developers or commercial operators can, before identifying the property or land they want to buy, apply for a “standing consent”. The standing consent acts as a form of ‘pre-approval’, to enable them to make multiple acquisitions of residential land (provided it is not sensitive land for any other reason under the Act) over a set period of time.

Under a standing consent, the investor must notify the OIO each time they settle a transaction in relation to the standing consent. A standing consent will not apply to land that is not sensitive for the purposes of the Act, in which case, OIO approval is not needed, nor to land that is sensitive for other reasons under the Act (eg, it may have a historic building or waahi tapu site on it, or adjoin a recreational reserve, regional park of the foreshore), in which case a separate application for approval will need to be made to the OIO.

Please get in touch with our contacts if you’d like more information or to discuss an OIO application.