Australians exempt from foreign house buyer ban

Legislation will take effect early next year, says PM

New legislation will be introduced before Christmas to ban foreigners from buying existing residential homes in New Zealand, the Prime Minister announced yesterday.

The new law would amend the Overseas Investment Act to classify residential housing as “sensitive”, which would mean non-residents and non-citizens cannot purchase existing residential dwellings. Australians would be exempt, as New Zealanders are in Australia.

“We expect legislation to be introduced before Christmas and take effect immediately once passed early in 2018,” Jacinda Ardern said.

She added that foreigners would still be able to buy land and build new homes, as that would add to overall supply.

Ardern said foreigners buying homes off the plans was an issue that still had to be resolved.

“That’s a detail that we’re working through.”

She did not know how many homes the change might affect, saying there had never been reliable data on the issue.

Minister for Trade and Export Growth David Parker did not think foreigners would now rush to buy New Zealand homes.

The announcement is the first major change that Cabinet has confirmed.

“This Government places a high priority on home ownership and housing affordability. We stand strongly in favour of the view that It must be galling for National. Jacinda Ardern may be about to deliver National’s TPP legacy of the past nine years to New Zealand, having barely lifted a finger to get it.

But there are times, perhaps, when National should say nothing.

And Ardern’s first post-Cabinet press conference as Prime Minister, at which she announced the ban on house sales to non-resident foreign buyers before TPP takes effect, was one of those times.

Former Finance Minister Steven Joyce was on a hiding to nothing — trying to criticise Labour for keeping its promise.

He suggested it was making new policy by press release, as if National had never done that; he said there was no detail around the announcement; and suggested the housing is a right,” Ardern said.

She said the previous Government’s claims that banning foreign buyers would breach free trade agreements were wrong.

The new provision would not breach the Free Trade Agreement with Korea or China, or affect the proposed Trans-Pacific Partnership.

Ardern said there would be an issue with the Singapore Closer Economic Partnership.

“The options with Singapore will be worked through.

“The proposed change means we can move our focus away from land issues . . . at Apec when negotiations on the TPP reach their final stages, and focus on Investor-State Dispute Settlement clauses.”

Ardern declined to say whether New Zealand would refuse to join the TPP if the ISDS issues were not resolved.

“I’m not going to undermine our negotiating position. We are going in [to try] and remove New Zealand from these clauses”.

She said it will be “very difficult” to achieve at this late stage, but “that is not going to stop us from trying”. National’s finance spokesman Steven Joyce said the policy was a political move rather than an economic one, adding that a similar rule in Australia had done little to take heat out of the housing market. The policy lacked detail and would add a layer of compliance that would push up housing prices, he said. “Imagine if you have a foreign-sounding name and you want to buy a house. You would effectively have to go to a real estate agent and prove your citizenship.”

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