19 Jun 2018

Government relaxes rules on foreign buyer ban

1:25 pm on 19 June 2018

The government's overseas buyers' ban on New Zealand homes has been softened, with some multi-storey apartment buildings now being exempted.

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

The government is easing its stance on the overseas buyers' ban after acknowledging some fish hooks in the new policy. Photo: 123RF

New Zealand officials and minister have also been negotiating with Singapore as the ban contravenes agreements between the two countries - that has now been resolved with Singapore securing an exemption, along with Australia.

Since the legislation has gone through select committees the government has acknowledged some fish hooks, that may have actually put the brakes on housing supply in Auckland.

Broadly, they apply to developers concerned about not being able to complete big projects if they can't sell individual apartments to foreign buyers.

Another issue was overseas corporates getting caught up in the ban when they wanted to buy residential land - for example to build cell phone towers.

They were valid concerns, Trade Minister David Parker said.

"The advice we had from officials was that if we didn't allow investment in apartment buildings then the whole complex was more likely not to proceed so there would be fewer purchase choices for New Zealanders," Mr Parker said.

Under the new regime, overseas investors would be able to invest in new housing, particularly apartments, new rentals, and homes available to purchase under rent-to-own or shared-equity arrangements.

New Zealand First leader and deputy prime minister Winston Peters said it was a "smartening" of the policy, not a softening.

"Because it allows us to engage in the investment potential of other countries while getting the same outcome for New Zealanders - far more affordable homes for New Zealanders," Mr Peters said.

New Zealand has also been negotiating for months to reach a deal with Singapore over the foreign buyers ban, which Mr Parker said had been resolved.

"We've agreed with Singapore that they will have a carve out, we have a side letter with them which says that if there is a material increase in the number of houses being sold to Singapore people we'll look at it again," Mr Parker said.

Australian and Singapore citizens and residents would therefore be treated the same as New Zealand citizens and permanent residents, for the purposes of the foreign buyer ban.

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