Introduction
In 2025, the New Zealand Government introduced the Overseas Investment (National Interest Test and Other Matters) Amendment Bill, marking the most significant overhaul of the Overseas Investment Act 2005 (OIA) since its inception. These reforms are a central pillar of the Government’s “Going for Growth” economic strategy, aiming to attract and promote overseas investment while safeguarding New Zealand’s national interests. The changes are a response to longstanding criticism that New Zealand’s foreign investment regime is among the most restrictive in the developed world, deterring much-needed capital and economic growth.
The Rationale for Reform
New Zealand’s foreign direct investment (FDI) framework has historically been complex and slow, with high compliance costs and uncertain outcomes for investors. International comparisons have placed New Zealand at the bottom of the OECD for openness to investment, with the country ranked 38th out of 38 for restrictiveness. The Government’s new approach is to reverse the presumption that investing in New Zealand is a privilege requiring justification, and instead adopt a starting point that investment should proceed unless there is a clear risk to the national interest.
Key Features of the Proposed Changes
1. Updated Purpose Statement
The Bill proposes to update the purpose of the OIA to explicitly acknowledge the importance of overseas investment in driving economic opportunity. While it reaffirms that foreign ownership and control of sensitive New Zealand assets remains a privilege, the new purpose statement recognises the positive role of foreign investment in bridging New Zealand’s savings gap, boosting productivity, and supporting higher-paying jobs.
2. Faster, Risk-Based Decision-Making
A central feature of the reforms is the requirement for the OIO to grant consent to low-risk applications within 15 working days, unless there are reasonable grounds to escalate to a full national interest assessment. This is a significant improvement over the current regime, where applications can take from 5 to 50 working days or more, depending on complexity. The aim is to provide greater speed and certainty for investors, making New Zealand more competitive globally.
3. Consolidation of Screening Tests
The Bill consolidates the existing investor test, benefit to New Zealand test, and national interest test into a single, unified “national interest test” for most investments. This new test will apply to all asset classes except farmland, residential land, and fishing quota, which will continue to be screened under existing pathways. The consolidation is intended to simplify and expedite the application process, reducing compliance costs for investors.
4. Three-Stage National Interest Test
The new national interest test introduces a structured, three-stage process:
- Stage 1: Initial Risk Assessment
The OIO conducts a triage to determine if the transaction poses any risk to New Zealand’s national interest. If no concerns are identified, consent is granted within 15 working days. - Stage 2: Full National Interest Assessment
If concerns arise, the OIO undertakes a more detailed assessment, considering both mandatory and discretionary factors (such as national security, public order, and the investor’s character and capability). - Stage 3: Ministerial Decision
Only the relevant Minister can decline an application if it is determined to be contrary to New Zealand’s national interest. This power cannot be delegated to the OIO.
5. Delegation and Ministerial Oversight
Most decision-making powers will be delegated to the OIO, with only a limited set of powers—such as the ability to decline consent on national interest grounds—reserved for the Minister. This is intended to streamline administration and reduce political involvement in routine cases, while retaining ministerial oversight for sensitive or high-risk investments.
6. Changes to Ownership Thresholds
Overseas investors will be able to increase their ownership or control interests from 75% to 100% without the requirement for consent, unless the investment involves a strategically important business (SIB). This change is designed to remove unnecessary barriers to capital consolidation and business growth.
7. Strategically Important Businesses (SIBs)
The Bill introduces new regulatory powers to designate additional classes of SIBs and make notification of overseas investments in SIBs mandatory, replacing the current largely voluntary approach. This ensures that investments in sectors critical to national security or infrastructure receive appropriate scrutiny.
8. Retrospective Exemptions and Technical Improvements
The OIO will have broader powers to grant retrospective exemptions to address accidental breaches of the Act, providing more flexibility and reducing the risk of disproportionate penalties for technical non-compliance. A number of minor and technical amendments are also proposed to improve the efficiency and consistency of the regime.
9. Targeted Exemption to the Foreign Buyer Ban for High-Value Investors
In a significant policy shift announced in September 2025, the New Zealand Government introduced a targeted exemption to the longstanding foreign buyer ban on residential property. Under this new provision, holders of the Active Investor Plus (AIP) residency visa—and certain earlier investor visa categories—will be permitted to purchase or build one residential property in New Zealand, provided it is valued at NZ$5 million or more. This exemption is not a wholesale reversal of the foreign buyer ban, but a narrow measure designed to attract high-net-worth individuals and their capital, supporting New Zealand’s broader economic growth strategy.
The exemption comes with strict limitations: it applies only to AIP visa holders (and Investor 1/Investor 2 visa holders), is limited to a single property per investor, and excludes sensitive land such as rural, farm, and other protected categories.
10. Repeal of the Special Forestry Test
The special forestry test will be repealed, and the new national interest test will apply to investments in forestry activities. However, conversions of farmland to forestry will remain subject to the more stringent “farmland benefit” test.
Implications for Investors
The reforms are expected to make New Zealand a more attractive destination for overseas capital, particularly for low-risk investments in business assets and non-residential land. Investors will benefit from faster processing times, reduced compliance costs, and greater certainty. However, investments in sensitive sectors—such as infrastructure, agriculture, and strategically important businesses—will continue to face rigorous scrutiny, with significant ministerial discretion retained to block or condition transactions deemed contrary to the national interest.
Next Steps
The Bill is currently before Parliament and is expected to be enacted by the end of 2025, with the new regime anticipated to take effect in early 2026. Public submissions are being invited as part of the Select Committee process, and further guidance will be issued to clarify how the new national interest test will be applied in practice.
Conclusion
New Zealand’s proposed OIO reforms represent a decisive shift towards a more open, efficient, and investor-friendly regime, while retaining robust safeguards for national interests. By streamlining processes and reducing barriers, the Government aims to unlock new sources of capital, drive economic growth, and position New Zealand as a more competitive player in the global investment landscape.