Commercial Property Newsletter - April 2018 The Overseas Investment Bill 2018 - a Queenstown Perspective Written by Tim Stevens - Senior Associate, Queenstown (Property) As has been widely covered by media and commentators, the Overseas Investment Amendment Bill (Bill) has been introduced by the new Government as a method of ending overseas property speculation and making housing more affordable for New Zealanders. Queenstown, more so than other parts of New Zealand, will be affected by the Bill. Here, we discuss who will not be able to buy residential property, highlight some of the arguments that have been raised by the Queenstown Lakes District Council (QLDC) in its submission to the Bill and discuss what the Bill in its current form would mean for QLDC. What does the bill do? The Bill effectively seeks to limit overseas investment in residential property by preventing overseas investors from buying residential property unless they meet one of the following three tests: 1. The commitment to New Zealand test; Analysis of these tests has been covered in detail by a number of our contemporaries and is not repeated here. However, the presumption is the increased regulatory framework will significantly limit overseas investment. What does this mean for Queenstown? Arguments raised by QLDC As noted in its submission, Queenstown Lakes, according to LINZ’s data collection, had the second highest number of international buyers in New Zealand (from July 2017 to December 2017). QLDC rightly points out that, given Queenstown’s population ranking (32nd in New Zealand) the burden will be disproportionately shouldered by the local population. QLDC raised six separate areas of impact on the region, three of which are paraphrased below: 1. The Bill does not distinguish between the role of overseas buyers in the regular housing market and those in the luxury market; QLDC argues that there is a luxury home market in the Queenstown Lakes region that does not form part of the general housing market and that these properties are not distinguished by the Bill. The Queenstown Lakes region has benefited both from luxury-home buyers making philanthropic donations and through the development of a highly skilled workforce capable of creating these luxury homes. Limiting the sale of luxury properties to the overseas market (albeit the purchaser could seek to meet the criteria of one of the three tests) will in turn determinately impact a thriving industry and limit philanthropic investment. One possible solution put forward by QLDC, is a price floor model (as has been applied in Malaysia), meaning certain residential properties over a certain price would be exempt. Submissions on the bill now close on the 14th of April 2018. Many in the property industry will wait with baited breath to see what recommendations the select committee make and what the next form the bill will take. Perhaps none more so than the QLDC and its people. If you would like more information on the Bill, then please feel free to contact one of our expert property lawyers today. Getting it right - Payment Claims and Payment Schedules under the Construction Contracts Act Written by Jeroen Vink - Associate, Christchurch (Property) One of the main purposes of the Construction Contracts Act 2002 (Act) is to facilitate regular and timely payments between parties. The Act provides a standardised mechanism for dealing with payments through its payment claim and payment schedule regime. The recent amendments to the Act mean the payment claim and payment schedule regime applies to both residential and commercial building work. Therefore, it is more important than ever that the clients, contractors, and subcontractors understand the requirements and consequences of payment claims and payment schedules. Requirements of a payment claim The requirements for a valid payment claim are set out in section 20(2) of the Act. A payment claim must:- • be in writing; These requirements are strict, and the courts have been ready to strike down payment claims if they fail to contain the exact details required. For example, in Auckland Electrical Solutions Ltd v Warrington Group Ltd a payment claim was held to be invalid because it was unclear whether the claim contained the correct reference to the Act. Requirements of a payment schedule If the payer disputes whether an amount claimed is properly due then they must respond with a payment schedule under section 21 of the Act. A payment schedule must:- • be in writing; If the scheduled amount is less than the amount in the payment claim then the schedule must indicate:- • the manner in which the payer calculated the scheduled amount; It is also crucial that a payer ensures that they pay the scheduled amount by the due date for payment. What happens when a payment schedule is not provided, and the claimed amount is not paid? A payer is liable to pay the full amount stated in a valid payment claim if no payment schedule is provided within the timeframe specified in the construction contract (or within 20 working days if no timeframe is specified). If there is no payment made by the due date for payment then: • the outstanding amount becomes a debt that can be recovered; If a payer disputes a claimed amount they must ensure they respond using a valid payment schedule within the allocated timeframe. The consequences for a payer not meeting these requirements are reasonably severe. The payment claim will become a debt due and the ability to dispute the claimed amount is lost. It is important to get payment claims and payment schedules right. However, contracting parties often fall short and serve payment claims or schedules without the correct form and content, or worse, they are not even aware of the requirements or consequences. If you would like further information or advice in relation to payment claims or payment schedules, then contact the specialist construction team at Cavell Leitch. Meet two members of our commercial property team:
Tim Stevens - Senior Associate Having worked in some of New Zealand’s preeminent law firms as well as the intensive London property law sector Tim has developed skills in managing large commercial transactions, client management and the provision of strategic legal advice. Tim’s focus is on providing excellent advice that adds real value to the commercial transactions he is working on. Find out more about Tim's expertise here.
Elliot Scott - Senior Solicitor Elliot is part of the wider property team and acts on a broad range of property matters. His speciality areas include commercial leasing, the sale and purchase of commercial and industrial property, and reviewing and advising on residential and commercial construction contracts Elliot is committed to adding value when assisting clients with their legal issues, he provides practical advice to clients that is both straightforward and concise. Our commercial property experts; (front row) Stephen Brent, Janine Ballinger, Emma Ferguson, Ann Maria Buckley, Emily Nind and Lauren Jerard. (back row) Mike Parker, David Fitchett, Elliot Scott, Jeroen Vink and Tim Stevens. |