Golden Visa holders will be able to buy a family home in New Zealand from 2026 – but only homes worth at least NZD $5 million. Whether this will prime the pump of New Zealand’s residential sector and some other considerations.

Marcus Beveridge, Managing Director of Queen City Law, recently appeared on 1 News along with the Prime Minister, the Deputy Prime Minister and the Minister of Immigration. His expertise was sought by multiple real estate agencies and various publications including Bloomberg, Business Desk, and The Post.

The implementation of these changes will require legislative changes to the Overseas Investment Act 2005 (OIA). At the time of writing this article, the date that this change will become the law of the land is not obvious, but we would expect it to be effective by January 2026. This whole process has been painful, like extracting an impacted wisdom tooth. The story of The Boy Who Cried Wolf comes to mind. Lee Kwan Yew would turn in his grave. Watching the Hosk cross-examine the PM for what seems like months on end has been good sport though. President Trump however would have enacted an edict like a former Roman emperor, pronouncing changes which would become effective by lunchtime.

If it was the private sector, heads would surely roll. Anyway, enough said.

Up until 2018 the market regulated itself as there were very limited restrictions on overseas investment in the residential property sector. That year there was a change to the OIA with the aim to stop speculative trading by foreigners in New Zealand’s housing market and stop prices from rising too fast for, most often, tax-free profit. Unfortunately, not only did this not impact the housing market as intended but it also had the unintended side-effect of being so strict that it stopped migrants who genuinely wanted to live in New Zealand from buying a house. The general rule was that you had to have acquired a residence visa and live in New Zealand for 6 months before you could buy a house, which made it hard to live in New Zealand because you couldn’t buy a house (although there was an OIA workaround. The requirements to an eligible for an exception for OIA consent includes living in NZ for 12 months, qualifying as a NZ tax resident, holding a residence class visa and being physically present for at least 183 days). This has been a long-standing bugbear that has annoyed potential migrants, in particular for investor migrants who are currently required to invest $5-10 million into the NZ economy have not been able to buy a home to live in unless they ordinarily reside here. They’re granted residency, they just can’t reside in anything except temporary accommodation for 6 months unless they applied for an exemption under the OIA regime (the One Home to Live In test. Non-compliance with consent requirements included forced sale and penalties up to $300,000).

The new rules will allow migrants to buy residential homes again. But only a single home for the family and only if it costs at least $5 million. The aim is to attract migrants into the Active Investor Plus Scheme (AIP), the Golden Visa that allows migrants to apply for residency after investing a minimum of $5 million into New Zealand. Of course, buying a house does not count as investing here – if it is under the Growth Category of AIP, the $5 million has to be invested into businesses specifically approved by Invest NZ to ensure the money is supposedly doing the maximum amount of good for our economy. So far these funds are not really flowing directly into our SME economy but that is a topic for another day.

Of course, the number of applicants to a visa with such a high and expensive bar to entry is limited. On top of that, it’s estimated that only 1% or less of residential homes in New Zealand are worth $5 million or more. Accordingly, there is no perceived risk of these wealthy migrants buying up available housing stock and depriving local Kiwis.

In addition, those applying pursuant to the Golden Visa rules will probably comprise less than 1% of New Zealand’s annual immigration intake. Marcus believes that this will have a positive effect on the housing market:

“Sometimes what happens with these situations is that some of the deals at the top end bring confidence right through the market and so it can prime the pumps”.

Houses are most people’s most valuable asset and when the housing market stagnates, it reduces people’s confidence in the economy. But at previous junctions in our nation’s residential property history, the injection of large amounts of capital into the top end of our property sector has created an uplift in the market. This nexus is causal and direct, and its impact is often underestimated even by trained economists and other commentators. Most would agree that our residential property sector is languishing, so bring it on says Marcus.

The PM’s recent press release also confirmed that a Golden Visa holder could buy or build one home.

“The minimum value of the home that can be bought or built will be set at $5 million – which equates to less than one percent of New Zealand homes”

Government Press Release

So ultimately, these changes collectively mean that Singaporeans, Australians, Golden Visa holders and pre-existing Investor 1 and 2 visa holders will be able to buy or build properties in excess of $5 million.

That has to be good news for Kiwi chippies in the luxury housing sector. Currently there are a couple of exceptional houses in New Zealand both owned by US citizens (in one case “former” would be more apt). One cost in excess of $120,000,000 to build and another in excess of $50,000,000.

These sorts of projects create work for architects, engineers, lawyers, assorted tradesmen, licensed building practitioners and others. Even if the owner decides NZ is no longer his or her cup of tea and moves elsewhere, these improvements stay here in our little island nation. One of Queenstown’s best builders took me on a guided tour of some of the properties the company had built, including The Hills Golf Club and the Jagged Edge. Truly stunning properties that are genuinely breath-taking, demonstrate what we can achieve and make you proud to be a Kiwi.

With reference to the $5 million residential housing threshold, actual details are not yet available. One assumes that if a family elects to build their own (and only) NZ based home, the rules to be released will further define how this value is calculated. It is probably safe to assume that registered valuations will form part of the evidentiary requirements. For example, if say the land cost is $3 million it is assumed a completed valuation will be required and perhaps a QS report showing, in this case, that the project costs more than $2 million. Or if someone acquired the land for $1 million, at least $4 million would be required to be spent on the project. If the land was $10 million and the building costs $30 million then the facts would speak for themselves. But the actual details setting out how the consideration is calculated will be interesting. There is likely to be some interesting activity at the $5 million threshold. For example, will this figure be the net of real estate fees, GST if any, and so on.

There are of course other inherent benefits, as investor migrants who are able to settle and integrate into New Zealand tend to continue investing more capital, IP, equity, sweat and so on into the economy. New Zealand is a great place to live after all, which we have talked about previously (see here), so allowing investor migrants to settle quickly helps them fall in love with God’s Own and can stimulate much greater participation in our investment economy. Again, these downstream benefits to New Zealand are often not properly appreciated. There are intergenerational impacts (which the Minister appreciates) that must augur well for NZ’s long term economic development. This includes factors such as increasing New Zealand’s level of human capital, encouraging enterprise and innovation and fostering external links (the express contents of the objective of our Business Immigration Policy).

It is excellent to see these changes finally come into play. After all, home is where the heart is. But what actually sits behind a lot of these considerations is tax and liability thereto.

That is, under the Growth Category of the Golden Visa ($5 million), an applicant must spend 3 weeks in New Zealand over 3 years. Under the Balanced Category of the Golden Visa ($10 million), an applicant must stay in NZ for 105 days over 5 years. In both cases there is no obligation to become a tax resident of New Zealand. In fact, there is also no mandatory requirement to open a NZ bank account nor get an IRD tax certificate here.

Tax practitioners will be well versed in the relevant tax law relating to an immigrant’s tax residency. But most punters don’t have the foggiest. Where a family chooses to reside is material from a taxation viewpoint as is the principal place of abode concern. Advice may be required given that the acquisition of a family home could conceivably trigger New Zealand tax residency. So, there is some irony here. Thankfully, our tax laws were modified some years ago to give a new immigrant to New Zealand a 4-year grace period on their worldwide taxable income (will the purchase of a family home also start the 4-year transitional exemption earlier than expected?).

But such individuals should always seek specialised and bespoke advice for such important matters.

Unfortunately, it’s not quite all sunshine and rainbows. Even with these new changes, the OIA can be a difficult piece of legislation to untangle and work through. Applications under the AIP program are complex. The New Zealand Government requires clear and comprehensive health reports for every individual, clear policer certificates, and comprehensive information relating to an applicant’s legal earnings and their source of funds, and among another things. Not to mention the complexity of investing a substantial sum into our little island nation. Accordingly, it is questionable whether an immigration consultant per-se has sufficient sophistication to navigate the nuances of the legislative framework associated with these matters. Queen City Law can guide clients through every step of the process however, with our experienced staff who understand complex transactions and can ensure compliance with the government regulations in a manner that’s most suitable for your needs. The firm also has leading property law experts including extremely experienced property partners and senior legal executives who can assist with every aspect of your New Zealand based property dealings including all construction matters if required.

Anyway, good on the Government for finally getting around to making these sensible changes. It has been somewhat of a slow boat to China and the Government could not be accused of being nimble on its feet. Perhaps that is simply the reality of governance in a coalition government environment where the tail seems to wag the dog sometimes. Obviously, a solid argument could be mounted to bring back First Past the Post but it is what it is. In terms of context, as stated above, residential property deals over $5 million apparently comprise less than 1% of New Zealand’s housing stock (the PM noted that this relates to approximately 10,000 houses with only 90% of them located in Auckland and Queenstown). Cotality believes there is in fact about 7,000 homes in New Zealand in the $5 million-plus price range.

“$5M+ homes were only about 0.4% or 0.5% of all dwellings,” Cotality's chief property economist Kelvin Davidson said.

In Auckland, there are 4,3000 such properties, or about 0.8% of the city’s housing stock, which Queenstown has another 1,250 representing about 5.5% of its market.

“It’s a more notable share of the Queenstown market but even in Auckland it’s fairly small,” Davidson said. “If you add up 4,300 in Auckland and 1,250 in Queenstown, it only leaves about 1,500 across the country everywhere else”.

We expect that the recipients of Golden Visas in New Zealand will represent about the same percentage of New Zealand’s annual immigration intake. Nevertheless, the perception is that New Zealand is open for business. That is the options we very much need in these evolving economic times.

Given some of these factors, it makes good sense to instruct Queen City Law as we have a complete wrap-around service and we can assist you with immigration, property, taxation, structuring, OIA and all related issues. You do not need to be passed around like a ping pong ball between assorted advisors, and the value of well qualified and deeply experienced trusted advisors can make all the difference in the world.

New Zealand’s reputation as a safe, stunning destination makes it a magnet for global investors. This policy opens a unique opportunity for Golden Visa holders to purchase luxury properties while securing a foothold in a stable economy. With competent lawyers as trusted advisors, investors can move confidently, knowing their interests are protected.

You can contact us if you have any questions at any time at:

marcus@queencitylaw.co.nz

bradley@queencitylaw.co.nz

luke@queencitylaw.co.nz