Proposed reform to the Overseas Investment Act – the ability for overseas buyers to purchase or build property in New Zealand
The government recently announced a reform to the Overseas Investment Act 2005 that would allow overseas residents with a New Zealand investor residence visa to buy or build a property to the value of $5 million-plus. Applicants must satisfy the national interest test and pass the risk assessment required by the proposed legislation. After passing its first reading in June, the reform bill is currently before the select committee to receive submissions.
Currently, overseas residents and investors are largely restricted from purchasing or building property in New Zealand.
Granny flat legislation just passed
The Building and Construction (Small Stand-alone Dwellings) Amendment Bill was passed into law on 23 October 2025. This law change will allow small stand-alone dwellings or ‘granny flats’ of up to 70m2 to be built without a council building consent provided that certain conditions are met. These changes will roll out in the first quarter of 2026 (1 January to 31 March).
The conditions are:
- The building must be of a simple design and comply with the Building Code
- The work must be undertaken or supervised by a licensed building professional, and
- The local council must be notified before the build begins and at its completion.
It will be interesting to see how this law change plays out and whether any issues arise in the future. There are also penalties for those who do not satisfy the above conditions required by the legislation.
Please do not hesitate to talk with us for advice if you are interested in building a granny flat and you want to ensure you are complying with the new requirements.
No further restrictions on sunset clauses in sale and purchase agreements
In our last edition (Winter 2025), we discussed the Property Law (Sunset Clauses) Amendment Bill which was introduced into Parliament in April 2025. The bill was aimed at restricting sellers developing vacant plots of land from using ‘sunset clauses’ to cancel sale and purchase agreements and to add an extra layer of protection for buyers.
To recap, a ‘sunset clause’ is a provision in an agreement enabling the seller or buyer to cancel the agreement if the development is not completed by the specified or intended date. The bill was debated at its first reading in Parliament before being voted down by a majority of 68 to 54.
The majority argued that the passage of the bill would ultimately deter developers from entering into these sale and purchase agreements, and therefore reduce the availability of off-the-plan housing when there is already a shortage of housing in New Zealand.
It was also pointed out that there are already some existing protections afforded to buyers in legislation, specifically in section 225(2b) of the Resource Management Act 1991. This clause enables buyers to give notice to the seller to cancel an agreement if, two years after the granting of a resource consent or one year after the date of the agreement, the seller has not made reasonable progress in obtaining or depositing a survey plan.
Changes to the assessment of earthquake-prone buildings
The government recently announced its intention to introduce the Building (Earthquake-prone Building System Reform) Amendment Bill into Parliament soon. The proposed reform focuses on increasing the threshold and implementing strict criteria that must be met to condemn a building as earthquake-prone and uninhabitable.
The proposed new regime will only capture buildings that pose a genuine risk to human life in medium to high-risk zones. Consequently, the government believes that around 55% of earthquake-prone buildings (about 2,900 buildings) will be removed from the system.
We look forward to reading the draft bill once it is introduced into Parliament; it has implications for many building owners.
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