Government Introduces Further Amendments to Overseas Investment Rules

The Government introduced a number of amendments to the Overseas Investment Act 2005 (the OIA) on 24 November 2021, following several incremental amendments implemented throughout 2021. The OIA governs overseas investment in sensitive land, significant business assets and fishing quota, and recent reforms aim to support and attract quality overseas investors whilst managing risk.

Three key recent amendments relate to the sale of farm land, the sale of fresh or seawater areas and the “benefit to New Zealand” test.

1.   Sale of farm land

The advertising requirements for the sale of farm land have been strengthened. Vendors of farm land must advertise the land to New Zealand purchasers on the open market before selling to an overseas investor. The OIA defines farm land as non-residential land used exclusively or principally for agricultural, horticultural or pastoral purposes, or for the keeping of bees, poultry or livestock. The sale of such land must be advertised both on the internet and in a paper publication, such as a newspaper, for a minimum of 30 working days. Advertisements must also be published within a certain timeframe of the transaction. Farm land can only be sold to overseas investors once these advertising requirements have been met.

2.   Sale of fresh or seawater areas

When an overseas investor wishes to buy land that is or includes marine or coastal areas, lake beds or river beds, the Crown must be given the first right of refusal. This means that the Crown must be notified if an overseas investor wishes to purchase this type of land and has the right to acquire the land before it is sold. If the Crown chooses not to acquire the land, it can then be sold to an overseas investor.

3.   The “benefit to New Zealand” test

The “benefit to New Zealand” test is used to assess applications from overseas persons to invest in sensitive land (if it does not fall within another assessment pathway) or fishing quota. The test has been streamlined from what was originally 21 specific factors down to seven simplified “benefit factors”, including economic benefit, environmental benefit, and protection of historic heritage. The new test also places greater emphasis on protecting sites of importance to Māori

If you have any questions about the most recent amendments to the OIA or would like to know how your purchase or sale of property may be affected, get in touch with one of our Directors – Edward Bostock or Kevin Osborne – who’ll be pleased to help.