New Zealand's Golden Visa Set for Major Shake-Up: Property Investment Rules to Relax

New Zealand is on the brink of a significant policy overhaul for its coveted Active Investor Plus (AIP) visa, often dubbed the "Golden Visa." The government is reportedly set to relax the stringent rules that currently prohibit direct investment in residential property, a move that could dramatically reshape the landscape for wealthy international investors looking to make New Aotearoa their home or investment hub.

The Active Investor Plus visa, launched in September 2022, was designed to attract high-net-worth individuals willing to inject a substantial NZ$15 million into the New Zealand economy over a four-year period.

Its primary aim was to pivot away from passive investments like bonds and towards growth-oriented ventures that directly benefit the nation. However, a key restriction has long been a sticking point for many potential applicants: the explicit exclusion of direct residential property investment from counting towards the minimum investment threshold.

This exclusion was a cornerstone of the previous Labour government's policy, reflecting a broader concern about foreign buyers exacerbating New Zealand's housing affordability crisis.

The sentiment was clear: investment should be productive, not inflationary in the housing market. However, the new National-led coalition government, which came into power with a platform focused on attracting foreign investment and stimulating economic growth, appears ready to reconsider this stance.

Lobbying efforts from powerful industry groups, notably the Real Estate Institute of New Zealand (REINZ), have played a crucial role in pushing for this change.

REINZ has argued that allowing investment in residential property, particularly for development or build-to-rent schemes, could actually contribute to increasing housing supply and stimulating the construction sector, rather than merely driving up existing house prices. Their argument posits that attracting more capital, even into property, ultimately benefits the wider economy.

Under the current AIP rules, investors have flexibility, with up to 15% (NZ$2.25 million) allowed for philanthropic contributions and a maximum of 50% allocated to managed funds, direct investments in private businesses, or listed equities.

But the door to residential property has remained firmly shut. The proposed relaxation suggests that a portion, or perhaps even all, of the investment could potentially be directed into residential real estate, albeit likely with specific caveats to prevent speculative buying.

The potential implications of this policy shift are far-reaching.

On one hand, it could significantly boost the appeal of the AIP visa, drawing in a larger pool of international investors who view property as a stable and attractive asset class. This influx of capital could stimulate various sectors of the economy, including construction, legal services, and financial advisory.

On the other hand, critics worry that even a limited opening to foreign property investment could reignite debates about housing affordability and potentially put upward pressure on prices in a market already struggling with supply and demand imbalances.

As the New Zealand government moves closer to a final decision, all eyes will be on the specifics of the new rules.

Will there be limits on the type of residential property investment allowed? Will it be restricted to new builds or commercial residential projects? The outcome will not only determine the future trajectory of the Active Investor Plus visa but also signal the government's broader approach to balancing foreign investment attraction with domestic socio-economic considerations.