The law banning overseas buyers from purchasing existing homes in New Zealand has passed its first hurdle in the country’s Parliament and the sell-off of state homes has been halted.
It is part of a drive by the newly elected Government to tackle affordability in the New Zealand housing market, particularly in Auckland.
‘This law recognises and reaffirms that it is not a right for an overseas buyer to purchase a house here. Our objective is to ensure that the New Zealand housing market is shaped by New Zealanders,’ said Associate Finance Minister David Parker.
It means that residential land is now part of the category of sensitive land in the Overseas Investment Act and under the law only New Zealand and Australian Citizens, and permanent residents of both countries, would be able to buy an existing home without going through screening from the Overseas Investment Office.
The Government continues to welcome foreign investment that brings benefits to New Zealand, including our businesses and communities, Parker pointed out. ‘We want to encourage foreign investment where it adds to our economy. But investment in existing homes by those who have no right to reside here, and no intention to live here, does not achieve that objective unless they add to housing supply,’ he added.
Parker said he did not expect the change to have a huge impact on prices at this stage in the property cycle, but it would have a greater impact at other times, for example if and when overseas buyer interest surges again.
‘This Government welcomes foreign investment in houses to add to our housing supply. However, purchases of homes by offshore speculators push first home buyers and families out of the housing market,’ said Housing and Urban Development Minister Phil Twyford.
He expects the law to be passed early in 2018 and explained that in practice it will mean that foreign buyers will not be able to buy residential property unless they are either increasing the number of residences and then selling them or converting the land to another use. They will need to be able to show that this will have wider benefits to the country.
Meanwhile, the Government has cancelled the sell-off of state houses which will stop the transfer of up to 2,500 state houses in Christchurch. Tenants in the suburbs of Shirley, Bryndwr and Riccarton had been told they were likely to have a new landlord by mid next year.
‘This week they will receive letters telling them their homes will not be sold. I’m pleased these families will be able to enjoy Christmas without the uncertainty this sale would create.
Community housing providers have an important role to play in housing those in need, but the first and last provider of public housing must be the state,’ said Twyford.
‘This Government is committed to not only keeping these houses within state ownership, but increasing the number of state houses. And a modernisation programme by Housing NZ will mean more dry, warm and healthy state houses,’ he pointed out.
‘While this is the end of large scale state housing sell-offs, Housing NZ will be rejuvenating its stock by building and buying newer homes where they are most needed and selling houses that are no longer fit for purpose. Sales to renew and grow the stock are quite different from the systematic large scale sales used by the previous government to reduce the role of Housing NZ,’ he added.
