As a New Zealand practitioner, I can clarify that the impending
restrictions to ban foreign owners of New Zealand residential real
estate look through all structures and nominee arrangements to
identify the ultimate beneficial owners - similar tests as used
to identify beneficial owners under AML/ CFT benefit and control
tests are applied.
A foreign beneficiary who is the sole beneficiary of a trust
holding the real estate will therefore be captured by the Overseas
Investment Amendment Bill, and the trustees of the trust will be
prohibited from purchasing New Zealand residential real estate.
From 23 October 2018, the general rule is that neither foreigners
nor structures that they control or hold more than a 25% interest
in will be able to buy New Zealand residential property, and,
where an exception does exist, neither they nor their associates
will have the right to use it. Lawyers acting on the conveyancing
for the purchaser will need to ascertain the ultimate beneficial
owner’s situation, and failure to exercise due care will carry a
fine of up to NZD 20,000.00.
There will be some exemptions available under the Overseas
Investment Act that remain in place, including the ability to
devise property owned prior to the 23 October 2018 to non-resident
Lee Harris TEP
Foley Hughes, New Zealand