For­eign buy­ing ban does make sense

Taupo Times - - YOUR LOCAL NEWS - DO­MIN­ION POST ED­I­TO­RIAL

OPIN­ION: The hous­ing cri­sis has many causes and fix­ing it will not be easy.

One con­trib­u­tor to the price bub­ble and to the short­age of houses, how­ever, has been for­eign buy­ing.

The new Gov­ern­ment’s de­ci­sion to ban for­eign­ers from buy­ing ex­ist­ing homes is there­fore a rea­son­able pol­icy.

There is no ob­jec­tion in prin­ci­ple, and the ban is not xeno­pho­bic.

The duty of any gov­ern­ment is to en­sure that its cit­i­zens are rea­son­ably housed.

If for­eign buy­ing makes it more dif­fi­cult to do this, for­eign buy­ing needs to be dis­cour­aged.

The gov­ern­ment doesn’t have a duty to house for­eign­ers who have made no com­mit­ment to New Zealand.

China, for in­stance, makes it dif­fi­cult for for­eign­ers to ac­quire a house in that coun­try.

It al­lows for­eign­ers to buy a house (or more strictly lease one, since that is the de­fault method for any­one ac­quir­ing res­i­den­tial prop­erty) only if they live in China and pay tax.

And a cou­ple can buy only one such prop­erty.

The ban in New Zealand ap­plies only to ex­ist­ing prop­er­ties, not to for­eign­ers who build a house.

Once again, the tar­get­ing is ra­tio­nal be­cause it is aimed at the hous­ing sup­ply prob­lem and not at ev­ery for­eigner who wants a house here.

For­eign­ers who com­mit to New Zealand by be­com­ing per­ma­nent res­i­dents or cit­i­zens will be able to buy an ex­ist­ing house.

That is as it should be and once again dis­proves the ac­cu­sa­tion of xeno­pho­bia.

The ef­fect of the ban is un­clear.

An in­ter­na­tional boom in for­eign prop­erty-buy­ing seems to have peaked now, and the slack­en­ing of de­mand has added to a wider slow­down in prop­erty prices.

The boom has prompted con­cern in many coun­tries, in­clud­ing Bri­tain and Aus­tralia.

Aus­tralia has in­creased stamp du­ties for for­eign buy­ers; Lon­don’s mayor, Sadiq Khan, re­cently at­tacked the habit of for­eign buy­ers of buy­ing up ex­pen­sive prop­er­ties in Lon­don and leav­ing them empty.

Trade Min­is­ter David Parker says the ef­fect of the ban will be mar­ginal be­cause the hous­ing mar­ket has cooled.

Two years ago, when for­eign buy­ing was more in­tense, the ef­fect on prices and sup­ply would have been larger.

But the re­stric­tion on for­eign buy­ing should be a per­ma­nent thing, and not just a tem­po­rary mea­sure to meet a spike in for­eign de­mand.

The ban is im­posed by clas­si­fy­ing all res­i­den­tial prop­erty as ‘‘sen­si­tive’’ un­der the for­eign in­vest­ment leg­is­la­tion, a move which has drawn Op­po­si­tion crit­i­cism that it is not a ‘‘ban’’ at all. This is triv­ial. The ef­fect will be of a ban.

Some say the law will be easy to cir­cum­vent.

Con­veyanc­ing lawyers, as ser­vants of the court, must obey the law.

Penal­ties should be very tough to dis­cour­age law-break­ing.

The ban in New Zealand is be­ing launched be­fore the im­por­tant Apec meet­ing this month over the TPP11 trade deal.

Its in­ten­tion is not to en­dan­ger New Zealand’s abil­ity to sign the pact.

Cer­tainly the coun­try should not have to choose be­tween pro­tect­ing its cit­i­zens’ hous­ing rights and the ben­e­fits of the trade deal.

Fi­nally, the ban is stand­ing Labour pol­icy and if the Gov­ern­ment had not acted on it it would be break­ing an elec­tion promise.

PM Jacinda Ardern an­nounces a ban on for­eign house buy­ing.

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