OIO investigation forces overseas investors to sell property
The High Court has ordered overseas-owned BCH Investments Ltd to pay the maximum civil penalty of $300,000, along with costs totalling $288,000 for buying five hectares of Auckland land without Overseas Investment Office (OIO) approval.
BCH must also sell the Albany properties within two years.
BCH bought properties at 79-95 Gills Road in Albany, Auckland, for $12.95 million in 2013. The land is sensitive under the Overseas Investment Act because it is next to a reserve. BCH planned to develop the land into 117 residential sections for sale, and work was already under way when the OIO discovered the breaches in 2014.
The OIO agreed that BCH could be given time to complete the subdivision and sell the lots in an orderly way to protect the interests of contractors and people who bought the subdivided lots.
The Court heard that, although the development is not yet complete, BCH will not make a profit on the sale of the properties, therefore a penalty based on any gain could not be imposed.
The Court instead ordered the maximum statutory penalty of $300,000 to be paid, noting that even though BCH did not make any gain, the original investment had the potential for significant commercial gain.
Justice Grant Powell said in his judgment: “Given the size, scope and nature of the development proposed BCH should have undertaken explicit enquiries as to its obligations under the Act.”
Land Information New Zealand Group Manager, Overseas Investment Office, Vanessa Horne said New Zealanders place a high value on our land, and the OIO makes sure that overseas people meet the rules for investment here.
“This case shows the importance for investors to seek the right advice when making overseas investments. This includes choosing a suitably qualified lawyer and asking the right questions.”
“The OIO has an important role in protecting our sensitive land, and we will continue to pursue cases where people have bought land illegally.”
The High Court judgment is on this web page.