High-net-worth foreign investors now have a new pathway to buy residential property in New Zealand. With the Government seeking to encourage broader economic engagement without flooding the housing market, the pathway – and its likely impact – is narrow, but serves a wider purpose: showing that New Zealand is open for business.

What’s changed?

Currently, Active Investor Plus (AIP) visa holders – a category of residence visa for high-net-worth individuals aimed at generating higher business productivity and job growth – must use the same housing pathways as any other foreign buyer looking to reside here. 

Under the updated policy, holders of the AIP residence visa (who invest a minimum of NZD5 million, and meet other qualifying criteria for either the “Growth” or “Balanced” categories within the visa programme, as summarised here) will now be allowed to buy or build one residential property valued at or above NZD5 million [1].  

Importantly, the existing restrictions on the acquisition of residential land under the Overseas Investment Act remain in place for other foreign investors. This means overseas purchasers who do not hold an AIP residence visa (or AIP investors purchasing a house for under NZD5 million) must continue to rely on the existing Overseas Investment Act consent pathways, such as the “one home to live in” pathway.

Our take: Limited change without undermining core policy but sending a clear message

The practical impact of this reform on the New Zealand housing market and on levels of foreign investment is likely to be modest. 

By setting the threshold at NZD5 million or more, the exception only applies to a small segment of the residential market. Homes at this price point are well outside the reach of most New Zealanders, meaning the change is unlikely to generate any additional competition in the mainstream housing market or undermine the policy objective of protecting local buyers. 

Given the broader investment requirements of the AIP visa, the reform also sets a very high entry point for foreign investors. An AIP investor must commit NZD5–10 million in qualifying investments (which excludes investments in residential property for personal use), and under this new exception can also acquire a single dwelling worth NZD5 million or more. The net result is an expected outlay of NZD10–15 million: a threshold that firmly limits eligibility to a small group of high-net-worth individuals. 

While this means the impact on the residential market will be minimal, the policy serves a wider symbolic and practical purpose: signalling that New Zealand is open to serious investors, while providing a carefully controlled and deliberately narrow stimulus at the very top end of the market.

However, there is a pitfall to consider for AIP investors acquiring a house, as they will need to ensure they do not inadvertently become tax resident in New Zealand. That kicks in from the earlier of when they have been in New Zealand for more than 183 days in any 12-month period or the date they establish a “permanent place of abode” in New Zealand. Whether a house is a permanent place of abode is a question of fact and degree, looking at connections to New Zealand such as the time spent in the house, intentions about future presence, family or social ties, employment, business or economic interests, and where their personal property is located. If New Zealand tax residency is triggered, then the 4-year transitional tax exemption and tax residency tie-breaking under any relevant tax treaty needs to be considered.

Critical details that will impact the outcome are still to be released

Several key details remain uncertain and will shape how the policy operates in practice. Among them:

• Timing: When the change will come into effect?

• Holding period: Will investors be required to retain ownership for a minimum time before resale?

• Threshold: Will the NZD5 million floor be adjusted for inflation or market shifts over time?

• Scope: How will the rules apply to ancillary land (for example, if the property is later subdivided)?

If you’d like to discuss the personal or transactional implications of the proposed change, or for assistance in working through New Zealand’s immigration and incidental regulations, please reach out to our experts.

Footnote

[1] The Government has also stated that individuals who received residence visas under the previous Investor 1 and 2 visas will also be eligible for the exception.