26 Jan 2018

Fears private sellers could be fined in foreign buyer ban

8:16 am on 26 January 2018

Homeowners who sell up privately could be fined thousands of dollars if they knowingly sell to an overseas buyer when the foreign buying ban comes into effect.

A house for sale sign outside a home (stock shot).

Private sellers make up about 10 percent of the New Zealand property market. (file photo) Photo: 123RF

Under the new regulations it will be illegal to sell a house to anyone who is not a New Zealand citizen or resident.

The policy, one of Labour's key pre-election promises, would ban foreigners from buying land or property, but would not apply to those planning to build homes.

However, the tough penalties for local sellers would also extend to anyone who helps an illegal purchase.

NZ Realtors Network chair Mark Coffey said it was a potential pitfall.

He said he was also concerned that private sellers, about 10 percent of the market, might be targeted by overseas buyers trying to get around the ban.

"People are always trying to look for ways around the system," he said.

"If private sellers are the weak link in the chain, no doubt they'll be targeted."

A spokesperson for associate Finance Minister David Parker said private sellers would only be fined if they knowingly sold a home to a banned buyer.

However, it is not just sellers who could be in the firing line.

Chris Caldwell, the head of private sale company Homesell, said lawyers who acted on their behalf could fines of up to $20,000 if they failed to provide a certificate showing a deal is legal.

"They're there to look at the legislation and make sure that the proposed purchaser complies with the rules and provide that peace of mind to a seller that the buyer is either a New Zealand resident or comply with the rules around foreign ownership."

Real Estate Institute chief executive Bindi Norwell said research undertaken showed foreign buyers made up about 3.8 per cent of the market and it would have minimal impact on the market.

She said that similar regulations exist in Australia, and had not brought prices down.

Submissions on the Overseas Investment Amendment Bill closed on Tuesday and will be made public next week.

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