New Zealand passes law to crack down on foreign home buyers

WELLINGTON: New Zealand’s government will ban foreigners from buying residential property, making good on its promise to crack down on offshore speculators who it says are partly to blame for spiraling house prices.

The Overseas Investment Amendment Bill, which places limitations on foreign purchasers, passed its final reading in parliament yesterday in Wellington. The restrictions will take effect within two months of the law receiving formal assent from the Governor General, the symbolic head of state, Associate Finance Minister David Parker said in a statement.

“This government believes that New Zealanders should not be outbid by wealthier foreign buyers,” said Parker, who shepherded the legislation through parliament. “Whether it’s a beautiful lakeside or oceanfront estate, or a modest suburban house, this law ensures that the market for our homes is set in New Zealand not on the international market.”

Prime Minister Jacinda Ardern campaigned on a foreign buyer ban in last year’s election, saying overseas speculators had driven up house prices and made property unattainable for many young Kiwis.

Prices have surged more than 60% in the past decade amid record immigration and a construction shortfall, driving home ownership to its lowest since 1951.

While data suggest foreign buyers play only a small role in New Zealand’s housing market, wealthy Americans such as tech billionaire Peter Thiel and former US broadcaster Matt Lauer have made headlines for snapping up sosme of the most pristine property in the country.

Those cases and others have fuelled the perception that New Zealand is being used as a bolthole for the world’s elite.

The new law, which the government says brings New Zealand into line with neighboring Australia, classifies residential land as “sensitive,” meaning non-residents or non-citizens can’t purchase existing dwellings without the consent of the Overseas Investment Office. Foreign buyers will need to show they are either increasing the number of residences and then selling them, for example by building an apartment block where a house once stood, or converting the land to another use, the government has said.