The Overseas Investment (National Interest Test and Other Matters) Amendment Bill (Bill) completed its first reading and was referred to the Finance and Expenditure Select Committee last night. The Committee is due to report back by 31 October 2025.
As we have previously highlighted, the changes were first announced with much fanfare in October – at the time, we said that the changes are likely to be the most significant changes of the past two decades, given Associate Finance Minister (and now Deputy PM) David Seymour's statement that: At the core of [the principles agreed to by Cabinet for the reforms] is reversing the presumption that investing in New Zealand is a privilege and that investors must justify their transaction to the government. The new starting point is that investment can proceed unless there is an identified risk to New Zealand’s interests.
Having now reviewed the Bill, we would say that:
- The purpose of the Act has become more balanced, rather than the presumption being reversed, and
- Using the OIO data for transactions in 2024 as a test, the number of transactions that would qualify for the new lighter touch regime could be lower than might have been expected.
More particularly, the first stated purpose of the Act will remain – ie, that it is a privilege for overseas persons to own or control sensitive New Zealand assets. The Bill proposes to add that the Act also has the purpose of recognising the role of overseas investment in increasing economic opportunity by enabling the timely consent of the less sensitive investments through an initial national risk assessment.
Further, as we highlighted in February, the most sensitive categories of assets (farm land, fisheries, and residential land) would remain in focus. The Bill is consistent with this, leaving largely unaltered the core consent criteria for these categories. This is interesting when considering that, for the 551 consent decisions made in the 2024 calendar year, over 400 related to the acquisition of residential property to live in or to develop, and close to 50 related to farm land (including farm-to-forest conversions). This means that the bulk of the 2024 consent transactions, if they were to occur after the Bill becomes law, would be unaffected by the changes proposed.
That said, for the 70 or so transactions that did not involve farm land or residential land, the changes proposed by the Act would likely mean a swifter decision on an application, with the OIO having the ability to make a decision to approve the transaction with a light touch review. This could include rotation forestry, and high-value (non-sensitive land) business asset transactions. And of course, the data only shows transactions that were screened – not transactions that did not occur because of the perceived time/cost barrier of the current foreign investment regime settings.
For any investor interested in our settings, now is the time to consider what changes would better facilitate high-quality foreign investment. Talk to one of our specialists if you would like help with a submission.
