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The controversial Overseas Investment Amendment Bill, under which foreigners are banned from purchasing existing dwellings without the consent of New Zealand’s Overseas Investment Office, has passed in the New Zealand Parliament with 65 votes for and 57 against.
To be able to purchase residential property in New Zealand, buyers must hold a residence class visa and be a tax resident, whereas before they were required to hold a permanent resident visa.
Australians, who account for approximately a third of the foreign home buyers in the country, are exempt from the ban, as are Singaporeans, due to bilateral free-trade agreements.
Foreigners who already own homes in New Zealand will not be affected by the new legislation.
Speaking in favour of the amendments, Minister for Economic Development, Environment, and Trade and Export Growth David Parker said that owning a house in New Zealand is “a privilege, not a right”, further noting that the amended legislation is aimed at making the residential property market more accessible to local home buyers.
“This government believes that New Zealanders should not be outbid by wealthier foreign buyers,” Mr Parker of the ruling Labour Party said.
“Whether it’s a beautiful lakeside or ocean-front 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.”
Acting Prime Minister Winston Peters claimed that home ownership in New Zealand has been on the decline for some time, with local home buyers losing to “overseas speculators who have no ties to New Zealand and who pay no tax”.
“New Zealanders should be able to buy their own homes rather than being tenants in their own country,” the acting PM said.
“The passing of this act is an important milestone in securing New Zealanders’ birthright… New Zealand should belong to New Zealanders.”
Mr Peters said that the government will be working to build a “comprehensive registry of foreign-owned land and housing”.
“Accurate data is necessary to determine our next steps,” Mr Peters added.
According to data from Stats NZ, a little over 3 per cent of houses sold or transferred in the March quarter went to foreigners, which dropped to 2.8 per cent in the June quarter.
The proportion of foreign sellers also increased in the March quarter, reaching 1.5 per cent, but decreased to 1.2 per cent in the following quarter.
Bindi Norwell, CEO of the Real Estate Institute of New Zealand, said given statistics showing that overseas buyers account for a small portion of the market, she is disappointed that the legislative amendments have been passed.
“We have been very vocal over the past year that we don’t believe that banning foreign buyers from purchasing property in New Zealand is going to have any impact on house prices nor will it help young people into their first homes,” the CEO said.
“Increasing the level of supply, speeding up the consenting process, creating consistency at councils around New Zealand and reducing LVR restrictions for first-time buyers are all more appropriate measures that will help with affordability ahead of banning offshore investors.”
Not all hope is lost for overseas buyers; they will still be able to invest in retirement villages, student accommodation and aged-care facilities.
Further, they will still be able to purchase new dwellings in apartment blocks, but only if the number of units owned by foreign residents in the block does not exceed 60 per cent, and as long as they don’t occupy the units themselves.
The government also said that the Overseas Investment Amendment Bill had “streamlined” the approval process for the purchase of residential land for business purposes, such as building hotels, or for residential purposes to support a business.
[Related: Analysis: How LVR limits helped de-risk the NZ mortgage market]
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