Although it is early days, and the Government's overseas investment policy has not yet been formally published, the coalition Government is pushing ahead at pace to encourage offshore investment in New Zealand through changes to our overseas investment regime. This is consistent with the Government's coalition arrangements, which made clear that reducing red tape to make things easier for overseas investors to invest in New Zealand was one of its immediate policy priorities.
Based on consent processes that Russell McVeagh has been involved in recently, decision-making by the Overseas Investment Office (OIO) has been significantly faster since December 2023 (when the new Government came into power), with a number of "significant business assets" consents being granted in less than half the indicative statutory timeframe of 35 "working days". There have been clear signals from our involvement in those processes that the OIO has already been directed, within the bounds of the existing legal regime, to take a lighter touch approach to obviously low risk investors and transactions in order to ensure that OIO consents are granted in a more timely fashion.
The Minister for Housing and Associate Finance Minister, Hon Chris Bishop, also announced yesterday that the coalition Government will introduce legislation amending the Overseas Investment Act to encourage new housing supply by making it easier for overseas investors to invest in Build to Rent developments through a new streamlined consent pathway that will allow investors to purchase land with the intention of building a new Build to Rent development. The same announcement confirmed that Cabinet has agreed that a new Ministerial Directive Letter, which sets out each new Government's policy approach to, and instructions to the OIO on, overseas investment, will be issued shortly, stating that it will do so to provide "immediate certainty" that New Zealand is open to foreign investment in Build to Rent developments.
The Government's coalition arrangements also commit to amending the Overseas Investment Act to limit Ministerial involvement in OIO consent processes to investments engaging national security concerns, which indicates that the Government intends to delegate all "sensitive land" and fishing quota decisions that currently require Ministerial approval, as well as potentially some "national interest" decisions (which currently require a decision by the Minister of Finance), to the OIO. We expect these changes to be implemented both through amendments to the legislation and the issue of the new Ministerial Directive Letter.
Given the coalition Government's other objectives of accelerating investment in energy and infrastructure, and based on consultation with Treasury late last year, we also expect that this review of the regime will consider other aspects of the legislation that need tweaking to remove unnecessary hurdles to beneficial inbound investment and encourage investment in key sectors. While legislation will take time, we expect policy aspects and formal direction to the OIO to be published imminently.
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