First penalty for foreigner who leased land without Overseas Investment Office consent

Rural land deals, including leasing, require consent. Photo / File

The Overseas Investment Office said the first penalty had been imposed on a foreigner for leasing - rather than buying - New Zealand land illegally.

The High Court at Auckland ordered Chinese citizen Bin Zhao to pay a penalty of $49,000 and $15,000 in costs for failing to get consent from the office before entering a long-term lease of land classified as sensitive.

Zhao, 61, is a permanent New Zealand resident who lives here with his wife and son, owns businesses here and in China as well as several residential and commercial New Zealand properties.

All foreigners need consent before buying or leasing sensitive land.

"This is the third court-ordered penalty decision for breaches of the Overseas Investment Act in recent weeks, and the first court case involving an overseas investor leasing land in New Zealand," the office said.

Justice Rebecca Edwards said breaches involving leases should not generally be regarded as less serious than those involving the purchase of freehold land.

In 2014, Bin Zhao agreed to buy 20.5ha of Rodney land at 112 Coatesville Heights for $6 million, conditional on office approval. But approval was not sought and the sale did not go ahead.

On the same date of the purchase agreement, the investor also entered a 10-year lease over the land for $1 a year with a 10-year right of renewal. The vendor's solicitor prepared the lease and the Zhao did not seek independent legal advice, the office said.

In 2018, Zhao consulted a different lawyer and at that point, the breach was reported to the office.

Zhao promptly admitted liability and cooperated with the office's investigation, including attending a voluntary interview.

Anna Wilson-Farrell. office group manager, said: "While the investor may not have purchased the land, he did obtain a significant long-term interest in the land and he should have applied for consent.

"Failing to seek consent to enter into a long-term lease should not be considered a low-level breach, as this decision has shown.

"We always recommend that overseas investors get specialist independent advice on the Overseas Investment Act before they enter into any agreements," she said.