In 2018, New Zealand made international headlines by enacting one of the world’s most stringent foreign buyer bans on residential property. The move, led by the Labour-NZ First coalition government under Prime Minister Jacinda Ardern, was a political response to growing public concern over housing affordability and the perception that foreign speculators were driving up prices and locking out local buyers.
iNZvest, a firm specializing in services for high-net-worth foreign investors, can attest that the 2018 amendments to the Investor Visa program—combined with the implementation of the foreign buyer ban—led to a marked decline in international investment interest in New Zealand.
Seven years later, in September 2025, the current government has announced a significant shift in policy—introducing a targeted exemption for wealthy investors under the Active Investor Plus visa scheme. This change, coupled with sweeping reforms to the Overseas Investment Act, marks a new chapter in New Zealand’s approach to foreign investment.
Origins of the Ban
The 2018 ban was introduced through amendments to the Overseas Investment Act 2005. It prohibited most non-residents from purchasing existing homes in New Zealand, with exceptions for citizens and permanent residents of Australia and Singapore due to free trade agreements. The rationale was clear: it was a political response to cool a runaway housing market and prioritize Kiwi homeownership.
The policy was popular among Labour-NZ First coalition voters but controversial among economists and international observers. Critics argued that foreign buyers made up a small fraction of the market and that the ban could deter broader investment. Nonetheless, the law remained largely unchanged for years, even as house prices fluctuated and economic conditions evolved.
The 2025 Shift: A Targeted Exemption
On September 1, 2025, Prime Minister Christopher Luxon announced a new exemption to the foreign buyer ban. Under the revised rules, holders of the Active Investor Plus visa—commonly referred to as the “golden visa”—will be allowed to buy or build one residential property in New Zealand, provided it is worth at least NZ$5 million.
This exemption is designed to attract high-net-worth individuals who are already investing heavily in the New Zealand economy. The visa requires a minimum investment of NZ$5 million over three years in higher-risk ventures or NZ$10 million over five years in lower-risk investments.
As of August 2025, over 300 applications had been received, representing more than NZ$1.8 billion in potential investment.
The government has emphasized that the exemption is tightly controlled. It excludes rural, farm, and other sensitive land, and applies only to a small subset of luxury homes—less than 1% of the national housing stock.
Most eligible properties are located in Auckland and Queenstown, areas already popular with international buyers.
Political Compromise and Economic Strategy
The change reflects a political compromise between the National Party and NZ First, who had previously supported the 2018 ban. National had campaigned in 2023 on allowing foreign purchases of homes over NZ$2 million with a 15% tax, but this proposal was dropped during coalition negotiations
NZ First leader Winston Peters insisted on a higher threshold and stricter conditions, ultimately settling on the NZ$5 million minimum.
The government argues that the policy balances economic growth with housing market protection.
OIO Reforms: Streamlining Investment Oversight
The foreign buyer exemption is part of a broader reform of the Overseas Investment Act, currently progressing through Parliament as the Overseas Investment (National Interest Test and Other Matters) Amendment Bill. These changes aim to modernise the investment regime, reduce compliance costs, and accelerate decision-making while safeguarding national interests.
Key changes include:
- Single National Interest Test: The existing investor, benefit to New Zealand, and national interest tests will be consolidated into a three-stage process. Low-risk applications will be cleared within 15 working days by the OIO. Higher-risk cases will undergo full assessment, and the Minister retains the power to decline applications deemed contrary to the national interest.
- Delegation of Powers: Most decision-making authority will be delegated to the OIO, streamlining the process and reducing ministerial bottlenecks.
- Repeal of Special Forestry Pathway: Forestry investments will now be assessed under the general national interest framework, removing the previously streamlined pathway.
- Ownership Thresholds: Investors can now increase their ownership or control interests from 75% to 100% without requiring consent, unless the investment involves a strategically important business.
- Expanded Regulatory Powers: The government will have greater discretion to designate certain transactions as being of national interest, even if they don’t involve sensitive sectors.
These reforms are part of the government’s “Going for Growth” strategy, aimed at attracting foreign capital to stimulate the economy during a period of recession. The changes are expected to be enacted by the end of 2025.
Implications and Outlook
The partial reversal of the foreign buyer ban signals a shift in New Zealand’s investment philosophy—from protectionism to strategic openness. While the core ban remains intact for most foreign nationals, the new exemption and OIO reforms reflect a nuanced approach that seeks to harness the benefits of foreign investment without compromising housing affordability or national sovereignty.
The policy is targeted and economically beneficial. With fewer than 10,000 homes eligible under the exemption, and strict investment requirements, the impact on the broader housing market is expected to be minimal.
As the reforms take shape, much will depend on how the OIO implements its new powers and how the government balances investor interest with public sentiment. The success of the policy will hinge not only on economic outcomes but also on maintaining trust in the integrity of New Zealand’s housing and investment systems.