This page summarises recent changes to the overseas investment rules, which came into full effect on 24 November 2021.
The Overseas Investment Amendment Act 2021 came into force 5 July 2021. It amends the Overseas Investment Act 2005 and the final changes came into force on 24 November 2021.
An overview of the law changes since 2020 can be viewed here.
The website has been updated to reflect the changes. Details of these can be found below.
New assessment timeframes will apply from 24 November.
The timeframes will vary depending on the type of application.The assessment timeframes are end-to-end processing timeframes and apply to all participants.
Whilst the new timeframes are designed to provide more assurance around the time an application consent will take, there will be instances where the timeframe may be paused or extended.
The timeframes will require significant improvements to timeliness at all stages of the process and there will likely be a phasing in period to allow time for the improvements to happen.
Farm land advertising
All farm land sales that occur after 24 November will be subject to new, strengthened advertising requirements.
The land must be offered for purchase by a New Zealander on the open market prior to a transaction being entered into with an overseas person. The methods of advertising have also changed.
- The advertising must occur before the transaction is entered into with an overseas person.
- Two types of advertising will be required – you must advertise on the internet and in a paper publication. The paper publication should be a newspaper-in the property section of 1 edition, or a real estate sales publication-in 1 edition in the area local to the relevant land.
- You must advertise the land for at least 30 working days.
- Advertisements must be published within the 12 months preceding the earlier of either the date the application is made, or the date the transaction that requires consent is entered.
Farm land advertising exemptions can be applied for and are best made in advance of an application for consent. The fee for the exemption can be found in the OIO fees and penalties schedule.
Fresh or seawater areas (formerly ‘special land’)
Fresh or seawater areas are any part of the relevant land that is a marine or coastal area, the bed of a lake, or the bed of a river.
If you are applying for a consent to buy sensitive land under the benefit to New Zealand or forestry pathway and the land is, or includes, a fresh or seawater interest, you must notify the Crown. The Crown has the right to acquire the fresh or seawater interest unless a decision is made not to.
Your notification is included in your consent application, and you need to provide the details of the fresh or seawater area in the sensitive land certificate.
The Benefit to New Zealand test has been simplified with the counterfactual requirement now a comparison of the current state of the assets against what is likely to occur as a result of the investment.
The benefit factors have also been streamlined to 7 broad factors, rather than 21 specific factors. The new factors are:
- Economic benefit
- Environmental benefit
- Public access
- Protection of historic heritage
- Advancing government policy
- Oversight benefit
- Consequential benefit
There will also be greater emphasis on how sites of importance to Māori are protected.
In addition, there is a farm land benefit test which applies a higher benefit threshold and places greater emphasis on economic benefits and oversight or participation by New Zealanders.
The benefit to New Zealand test will also apply to applications to acquire fishing quota replacing the fishing quota national interest test.
Assessment timeframes, the fresh or sea water provisions and the new benefit test apply to all applications received on or after 24 November 2021.
The new farm land advertising rules apply to all applications where the agreement is entered into on or after 24 November 2021 (irrespective of when the application is received).
A new fees framework for applications to the Overseas Investment Office is now in place. It applies to all applications received from Monday 13 September 2021.
The changes have been made to reflect the complexity of an application and the amount of work required to process it. More complex applications now have 3 separate payments.
- Lodgement fee - payable when an application is submitted.
- Assessment fee - payable once an application is accepted.
- Monitoring compliance fee - payable before consent can be granted.
Fees that remain as a single payment, although the fee itself may have changed, are:
- Sensitive land: One home to live in – individual
- Sensitive Land: One home to live in – entity
- Sensitive land: Apartment off the plans
- Investor Test: Standalone
- Investor Test: Reassessment
All other fees require the three payments.
The updated fees can be found in the OIO fees and penalties schedule, and the OIO fees framework provides a detailed description of the new framework.
For more information on the consultation process:
The date an application is received by Overseas Investment Office determines whether the new rules apply to that application, regardless of when the transaction is entered into:
- if an application is received before 5 July 2021 then the existing rules apply (namely, the rules not changed by the Overseas Investment Amendment Act 2021)
- if an application is received on or after 5 July 2021 the new rules apply.
The farm land advertising rules that apply will depend on the date the transaction is entered into, rather than the date of the application. Transactions entered into on or after the new rules come into force later this year will be subject to the new rules. The new rules are likely to come into force in November or December 2021. Until that time the existing farm land advertising rules apply.
If you are uncertain which rules apply:
Removing lower risk transactions
Ways the rules will apply
Increases in interests in sensitive land that do not cross ownership or control limits will no longer require consent.
Transactions that result in an ‘overseas person’ increasing their ownership or control interest will only require consent if they cross an ownership or control threshold:
Transactions where the investor is no longer defined as an ‘overseas person’.
The new rules remove certain widely-held bodies corporate that are both NZ-incorporated and NZ-listed from the definition of ‘overseas person’.
Managed investment schemes, too, may not be ‘overseas persons’ under the Act if they are:
Lease transactions in sensitive land that are less than 10 years will no longer need consent.
Temporary ‘interests in sensitive land’ now only include interests for a term of 10 years or more (except for land that is solely residential land, where the term remains at 3 years).
Scope of national interest assessment is refined.
The threshold of non-New Zealand government ownership of investors triggering a national interest assessment will move from more than 10% to more than 25%.
Certain foreign government investors (such as pension funds) may apply for an exemption from the definition of ‘non-New Zealand government investor’.
New exemptions available for lower risk transactions.
Investors have available to them new exemptions, or changes to existing exemptions, for:
National interest test exemption for low-risk overseas government investors.
Investors who are, or include, non-New Zealand Government enterprises will have an exemption available from 1 component of the automatic application of the national interest test where they have limited control and influence over the investment.
Managing higher risk transactions and assets of significance
Ways the rules will apply
Major banks become ‘strategically important businesses’
Coming into force on 29 July 2021, a change to the regulations means investors investing in major banks are likely to be subject to the national interest test, if other criteria are met and any relevant exemptions do not apply.
Simplifying application requirements for investors
Ways the rules will apply
Repeat investors who have passed the new investor test will not need to satisfy the investor test each time they apply for consent (provided there are no substantial changes since the last time they obtained consent).
Investors may apply at any time to complete the new investor test.
Repeat Investors will have a streamlined investor test assessment (provided there are no substantial changes to the individuals with control or entities involved, that would make the investor unsuitable to own sensitive New Zealand assets).
Investors will also be able to apply for a standalone assessment of the investor test in preparation for future transactions.
New requirement for applicants
Ways the rules will apply
Tax information required for Inland Revenue monitoring and compliance
Applicants will be required to provide tax information when applying for consent to acquire significant business assets
Fees for new pathways
New fees have been set for the new application and exemption pathways that come into effect on 5 July 2021.
For information about our legislative environment, including Ministerial Directive letters and delegations, see Legislation, Ministers and delegated powers.
- Overseas Investment Act 2005
- Overseas Investment (Urgent Measures) Amendment Act 2020
- Overseas Investment Amendment Act 2021
- Overseas Investment Regulations 2005
- Overseas Investment Amendment Regulations 2021