The Government has introduced a number of amendments to the foreign buyer ban which would give investors more leeway to put money into New Zealand housing developments. However, critics say that the changes do not go far enough, and that the legislation would still exacerbate existing housing shortages.
The Overseas Investment Amendment Bill aims to restrict foreign investors from buying residential homes, and to “ensure that investments in New Zealand made by overseas persons will benefit New Zealand.” The bill provides that overseas entrepreneurs can only obtain approval to buy land if they plan on developing it to add to housing supply, use the land for non-residential purposes, or show a commitment to reside in New Zealand.
The bill has since come under fire in over 200 submissions from critics who argue that the legislation would do the opposite of what is intended, and that blocking foreign investment would make it impossible for major housing developments to go ahead. They argue this would also put a damper on Government-led housing projects such as KiwiBuild, which directly aim to address housing shortages.
A select committee report released today recommends the following amendments:
- Allowing the pre-selling of up to 60% of units in major housing projects to overseas investors, so long as they do not reside in the properties
- Waiving the requirement to immediately on-sell for large developments which will be rented out or sold under a rent-to-buy model
- Allowing all resident visa holders to buy land without Overseas Investment Office consent
- Putting burden of proof on the purchasers, rather than the lawyers, to ensure they meet the residency criteria
- Allowing foreigners to invest in major hotel developments, so long as they lease the rooms they purchase back to the hotel
Opposition members have since slated the bill on the basis that it will “negatively affect the development of new housing in New Zealand,” and will “hamper the ability of New Zealand businesses to access foreign capital.”
Opposition MPs also criticised the way the amendments were introduced, calling them “arbitrary, unworkable and unenforceable.”
Commentator and economist Shamubeel Eaqub says there is no evidence that foreign buyers are driving up housing costs and taking homes from New Zealanders, and that the legislation is likely addressing a problem that doesn’t exist. The real problem, he says, is a severe shortage of housing supply.
Nonetheless, Eaqub welcomed the recommendation to allow foreign investment into rental development, saying that many major development projects wouldn’t be able to go ahead without overseas money. Lawyers will also welcome the onus on the person buying property to prove that they meet the residency criteria.
A new report on the Overseas Investment Amendment Bill is due 21 June.
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