OIO grants 30 'transitional' exemptions allowing apartment sales to foreign buyers

Wednesday, 3 July 2019

The Overseas Investment Office has approved 30 'transitional' exemptions allowing hundreds of foreign buyers to buy and live in large apartment developments.

Thirty 'transitional exemptions' allowing hundreds of foreign buyers to buy and live in large apartment developments have been granted by the Overseas Investment Office.

The transitional exemption permits developers of existing large residential developments who had started selling the residences before August 22 2018 to continue to sell to overseas people.

They can sell all the units to overseas people who are allowed to live in them and don't have to onsell them, but the transitional exemption only applies to the first buyer and cannot be passed to another overseas person.

The 30 transitional exemptions were granted in the past eight months since the more restrictive Overseas Investment Amendment Act 2018 came into force on October 22 2018.

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A different exemption allows developers to sell up to 60 per cent of the apartments to overseas buyers, but they cannot live in them but may rent them. The planned Paddington low-rise development in central Wellington, illustrated, has one of these exemptions.

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The under development Toru Apartments in Queenstown, illustrated, has a transitional exemption.

These types of exemptions to New Zealand's foreign buyer ban were short tem and have now ended.

Applications for them closed on February 21 2019 and OIO finished processing them and granted the last transitional exemption on June 7.

All but two of the transitional exemptions are for developments in Auckland.

The two which are not are for the Toru Apartments in Remarkables Park, Queenstown, being developed by New Ground Living, and Bedford Apartments being developed by Fletcher Living in central Christchurch.

Overseas buyers can still purchase apartments in large apartment developments. Under a different exemption, the developer may sell up to 60 per cent of the apartments to foreign investors who are not allowed to live in them, but they do not have to onsell them and can rent them.

The development at 30 Madden Street in Auckland's Wynyard Quarter has been granted a transitional exemption. The developers are Willis Bond.

It means the apartment buyers do not have to seek the exemption to buy the apartment from OIO themselves.

Twenty-eight of the 30 approved transitional exemptions were for Auckland developments. This is an illustration of the penthouse in the development at 30 Madden Street.

So far OIO has granted four of these exemptions, in the past month, for three developments in Auckland and one in Wellington.

The Wellington development is The Paddington, a planned, low-rise development of 152 freehold terraced houses at 97 Taranaki Street. The developers are Australian company Thames Pacific and Wellington property magnate and philanthropist Mark Dunajtschik.

The three Auckland exemptions are Fiore Cook in central Auckland, the Jervois and Lawrence Apartments in Herne Bay and The Fitzroy in central Auckland.

OIO keeps a register of transitional exemptions and exemptions.

If an apartment development does not have an exemption, overseas people must apply for approval to OIO themselves to buy off the plans, they cannot live in the apartments and they must on-sell once the development is completed.

Auckland real estate agents Barfoot & Thompson managing director Peter Thompson said the real estate company went overseas to some of the property expos to help move the apartment market.

New Zealand was well-known now for the restrictions on foreign buyers purchasing residential property here.

'It has had a major impact, A lof of them (potential buyers) just bypass New Zealand and look at other countries still allowing offshore buyers to buy.'

They had been people from the United States, United Kingdom, Europe and China before the restrictions were imposed. Australia, with less restrictions on foreign buyers, was picking up some of those sales.

'If I had my way I would see a slight reduction in the restriction but the one thing I would enforce is that people buying from offshore would have to live in the property and that would stop the land banking and having a lot of vacant property and that's happening all around the world.'

'If you can get the exemption, whether you use that or not, you can decide that later, but it would be handy to have. Eventually all buildings do sell.'

New Zealand needed people from offshore in the construction, teaching and nursing sectors but at the moment New Zealand was making it hard for them to buy property when they come here, he said.