Upcoming changes to overseas investment
Words by Bea Chamberlain and Varnell Clay
On 23 February 2025, Associate Minister of Finance David Seymour announced details of the Government’s proposed reforms to the Overseas Investment Act 2005 (Act).
The proposed amendments seek to streamline the investment process and attract foreign capital while protecting national interests. Key changes include a two-phase approval system, faster consent for low-risk investments, and a more detailed evaluation for high-risk ones.
Alongside this, the government has also established the new ‘Invest New Zealand’ agency (currently incubating under New Zealand Trade and Enterprise (NZTE)) dedicated to facilitating foreign direct investment.
These efforts are hoped to make New Zealand more competitive in global markets & promote economic growth, while still ensuring that investments align with the country’s strategic interests.
If passed, the proposed reforms will constitute the most significant update to the Act since its enactment.
Reframing the Purpose
The Act’s purpose currently acknowledges that it is a privilege for overseas persons to own or control sensitive New Zealand assets. The proposed reforms seek to amend this purpose to reverse the presumption that investing in New Zealand is a privilege requiring justification from investors. Instead, the presumption will be that investment should proceed, unless contrary to New Zealand’s national interest.
This change has some real practical implications. The burden of proof would now lie with the Overseas Investment Office (OIO) to demonstrate why a proposed transaction is not in New Zealand’s national interest and therefore should not proceed. This is a significant change from the current process that places a heavy onus on investors to prove their eligibility to invest in New Zealand.
“National Interest” as a Safeguard
The proposed reforms focus on “national interest” becoming the safeguard against potentially adverse impacts of foreign investment. To this end, it is proposed to streamline the assessment process by consolidating the Act’s core tests—investor test, benefit test, and national interest test.
This consolidation is intended to expedite decisions, with the government retaining the flexibility to scrutinize investments on a case-by-case basis and intervene on rare occasions that a transaction is not in the national interest.
The new national interest test will be codified in a new section of the OIA and is expected to clarify what factors decision-makers must consider. To date the exact definition of New Zealand’s “national interest” within this framework remains somewhat undefined in public communications.
This approach has sparked some debate, with critics expressing concern that narrowing ministerial decision-making to national security concerns only might risk eroding sovereignty.
Statutory Timeframes for Application Processing
It is proposed that the OIO be required to process all applications (except for residential land, farmland, and fishing quota) within 15 working days, unless national interest concerns arise Currently, applications take 5 to 50 working days depending on the type. This proposed reform will be a welcome change for investors, from both a speed and certainty perspective.
Changes to Consent Requirements for Sensitive Land
The proposed reforms aim to simplify the sensitive land regime by reducing the types of sensitive land transactions that require consent.
While farmland investments will still undergo investor and benefit tests, the government is considering removing or amending the farmland advertising rules which currently requires farmland be marketed to New Zealand buyers before it can be purchased by overseas investors. The agricultural, horticultural and viticulture industries are presently most impacted by this regime.
No Change to the Residential Land Rules (Yet)
At this stage, the Government has not proposed to remove the ban on overseas investment in residential land. However, it is considering aligning investment rules with recent changes to the Active Investor Plus (AIP) visa, as often those investors will want an easier pathway to buy a house once they have their AIP visa.
Legislative Timeline and Next Steps
The Government is now drafting the legislation for these changes and aims to have it in place by the end of 2025.
We will provide further updates as the legislative process progresses. If you have questions or need advice, please contact our Business & Commercial Law Team.
