New Zealand’s newly appointed Labour-led coalition Government has moved to implement the first tranche of its demand-side housing reforms, undertaking to amend the Overseas Investment Act in a manner that won’t impact the nation’s in-force free trade agreements (FTAs). From Interest.co.nz:
The Labour-led government says it has found a way to block non-resident foreigners from buying existing houses which will not clash with the vast majority of New Zealand’s free trade agreements (FTAs).
Residential housing will be classed as “sensitive” under the Overseas Investment Act. “This means non-residents or non-citizens cannot purchase existing residential dwellings. Australians will be exempt as New Zealanders are in Australia,” Prime Minister Jacinda Ardern said. The one FTA the move will clash with is Singapore’s, which Ardern said was up for renegotiation soon.
Speaking to media after the announcement, Ardern clarified that non-citizens who were resident in New Zealand would be allowed to purchase existing houses. The ban would apply to non-resident non-citizens.
Non-resident foreigners would also still be allowed to buy vacant residential land, Ardern said. Labour welcomed this type of investment if foreigners increased the housing stock, she said. Labour would look at the issue of land-banking further down the track.
Legislation to amend the Overseas Investment Act to reclassify residential housing as sensitive is expected to be introduced before Christmas. Ardern said it should be passed in early 2018.
Great to see. Although I would have gone further and banned temporary residents from purchasing established dwellings as well. As is the case in Australia, there is also the issue of how the new regime will be enforced. After all, there’s little point in having the rules in place if they are policed lackadaisically, and those found breaking the rules are not punished adequately.
Nevertheless, Labour’s reforms are a huge improvement on the former National Government’s do-nothing approach, which used New Zealand’s FTAs as a convenient excuse to not change New Zealand’s foreign ownership regulations.
