Rules relaxed on foreign buyers ban
The proposed foreign property buyers ban has been relaxed for foreign investors looking to buy apartments.
The Government will accept changes suggested by the majority of the finance and expenditure committee in its report on the bill.
The major change concerns apartments. Originally, the ban would allow foreign buyers to purchase apartments off the plans but would force them to sell them on once the building was completed.
Now the ban will allow foreign buyers to hang on to apartments bought off the plan, as long as they are part of a development that is 20 or more units large.
Up to 60 per cent of units in new apartment developments of this size could be purchased by foreigners to keep and rent out, although the Government could set that limit lower, depending on market conditions.
Those buyers would still not be allowed to occupy the unit but could rent them out.
Foreign buyers would still not be allowed to purchase existing standalone homes or hold on to new standalone homes on land they bought for development.
Controls will be introduced to make sure people are at ‘‘arms length’’ from those they rent to – meaning they could not simply allow their children to live there rent-free, for example.
The ban has always exempted New Zealand residents as well as citizens. It also exempts visaholders who can show a commitment to reside in New Zealand long-term.
The Government has also announced Singapore will join Australia as a ‘‘carve-out’’ nation, with all of its citizens enjoying the same rights as Kiwis to buy property, in order to not disrupt a free-trade agreement.
As originally written, the bill classed all residential land as ‘‘sensitive’’, meaning anyone who was not a citizen or resident would have to obtain consent to buy the land.
They would be allowed to buy the land if they were adding to the housing stock by building a new house or apartment – but would have to sell it on once it was built.
Other changes will allow hoteliers to build on residential land and utility companies to build cellphone towers and the like on residential land.
Trade Minister David Parker said he had taken the message from submitters on the bill that the original ban could have hurt investment in new housing in Auckland.
‘‘We’ve decided that if they are multi-storey apartments they can be held for leasing but not owneroccupying,’’ Parker said.
Deputy Prime Minister Winston Peters described it as a ‘‘smartening up’’ of the law.
‘‘This law will ensure that the market for our homes is a New Zealand market not an international one,’’ Parker said.
‘‘It’s also a matter of values. We believe that from the most expensive seaside and lakeside properties to the most modest homes in our towns and cities New Zealanders should not be outbid by wealthier foreign buyers.’’
The Real Estate Institute of New Zealand (REINZ) welcomed the news of the relaxation, but was still against the ban.
‘‘ Allowing up to 60 per cent of apartments to be purchased by offshore buyers will ensure that we don’t constrain supply, which was one of REINZ’s largest concerns in relation to the ban,’’ REINZ chief executive Bindi Norwell said.
‘‘However, it is still our view, that it’s not worth going ahead with a ban on foreign buyers.’’
National leader Simon Bridges said the ban was ‘‘a real case study in bad law-making.’’
‘‘We’ve decided that if they are multi-storey apartments they can be held for leasing but not owneroccupying.’’
Trade Minister David Parker