Proposes Ban on Wealthy Foreign Investors Buying Property
Rich-listers such as Californian billionaire Ric Kayne have issued a warning to New Zealand – banning house sales to foreigners could hurt the country’s reputation and turn wealthy investors away.
Mr Kayne, who has built an exclusive golf course in New Zealand and wants to expand his investments, is one of several rich businessmen who claim the proposed new law will have unintended consequences. They’re seeking amendments to the draft legislation or its withdrawal in its current form.
“The vision we have for what we would like to contribute to New Zealand is now being threatened,” Mr Kayne wrote in submissions to a parliamentary committee examining the proposed law change. The new rules will “impact on us personally, and others like us who, having discovered this country, want to devote considerable resources to preserving, protecting and enhancing it.”
The new Labour-led government came to power in October on a pledge to fix a housing crisis with a raft of measures, including a ban on foreign speculators buying residential property. While data suggest non-residents have only a minor impact on the wider housing market, support for the move was boosted by headlines about rich foreigners buying mansions and farms in New Zealand as boltholes away from the world’s ills.
House prices have surged more than 60 per cent in the past decade amid record immigration and a construction shortfall. In the biggest city of Auckland, prices have almost doubled since 2007 to an average of more than NZ$1 million ($730,000). That has made it more difficult for first-time buyers to enter the market and driven up rents, leaving increasing numbers of poor people homeless.
“It’s really important for us that we sort our housing market out, that we give New Zealanders a fair go at buying their first home,” finance minister Grant Robertson said in an interview this week. While the country welcomes foreign investment, “what we want is good-quality investment that supports the productivity of the New Zealand economy,” he said.
The proposed law, which the government says will bring New Zealand into line with neighboring Australia, will classify residential land as “sensitive,” meaning non-residents or non-citizens can’t purchase existing dwellings without the consent of the Overseas Investment Office. While it allows non-resident foreigners to invest in new construction, it forces them to sell once the homes are built.