From 7 June 2021, there are changes to the legislation regulating overseas investment in New Zealand.
In June 2020, concerned about COVID-19’s potential to negatively impact the value of New Zealand companies and land, the New Zealand government introduced the Emergency Notification Regime (ENR).
The ENR lowered the thresholds at which foreign investment had to be notified, with the intention of protecting local companies and land from being purchased at distressed prices by foreign investors. The ENR was always intended to be a temporary measure and has been reviewed every 90 days since its introduction.
With New Zealand’s economy now performing more strongly than expected, and the reduced economic risk of COVID-19, the ENR is being removed on 7 June and replaced with a new system - the National Security and Public Order (NSPO). This is a narrower and more targeted regime that puts a greater focus on regulating higher-risk transactions and protecting assets of significance.
The stated objective for the NSPO is to:
- Remove the requirement for consent for lower-risk transactions
- Better manage higher-risk transactions and assets of significance
- Simplify application requirements
The immediate changes include the following:
- Increasing ownership/control levels in sensitive land (that doesn’t cross ownership or control thresholds) will not require consent
- An easing of how certain corporates are defined as an ‘overseas person’
- An easing of restrictions on lease arrangements for sensitive land
- An increase in the ownership threshold before a ‘national interest’ assessment is required
- Repeat investors will not have to satisfy the investor test for each new investment
- Tax information will be required for consent to acquire significant business assets
Further changes have been signalled for the next six to 12 months. Specifically, these will relate to:
- Simplifying application requirements for investors:
- Strengthening and simplifying the benefit to New Zealand test
- Replacing the ‘with and without’ counterfactual for a comparison of ‘before and after’
- A requirement for proportionality in assessment for the benefit to New Zealand test
- Introduction of statutory time frames
- Managing higher-risk transactions and assets of significance:
- Higher benefit thresholds for farmland applications
- A tightening of rules for advertising farmland
- Changes to applications involving freshwater and marine areas
- Greater recognition and protection for sites of cultural importance to Māori
This information has been reproduced from the Land Information New Zealand website. For full details of the changes being made to the overseas investment legislation, visit Land and Information New Zealand.
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This article provides general information on potential investment opportunities in Auckland and is not intended to be used as a substitute for financial advice. The views and opinions expressed are those of the relevant author, and do not necessarily reflect the views of Auckland Unlimited. Auckland Unlimited disclaims all liability in connection with any action that may be taken in reliance on this article, and for any error, deficiency, flaw or omission contained in it.