Leave regions and millionaires' mansions out of foreign ownership ban, MPs told

Prime Minister Jacinda Ardern announces the ban on foreign investors in the residential housing market. The aim is to have a housing market where local buyers, not foreign money drives prices.
KEVIN STENT/STUFF
Prime Minister Jacinda Ardern announces the ban on foreign investors in the residential housing market. The aim is to have a housing market where local buyers, not foreign money drives prices.

A lobbying push is on from business, and people living in some regions, to persuade the government to modify its planned laws banning foreigners from buying residential property in New Zealand.

Some, including several multi-millionaires, have called for luxury homes, and even whole regions to be exempted from the proposed law.

In submissions to the Finance and Expenditure Select Committee Queenstown and Northland residents called on MPs not to carve out multi-million-dollar homes, and whole areas like Northland and Queenstown, from its planned Overseas Investment Amendment Bill.

Auckland is the epicentre of the housing affordability crisis thanks to years of the city failing to build enough homes as its population swelled.
SIMON MAUDE/STUFF
Auckland is the epicentre of the housing affordability crisis thanks to years of the city failing to build enough homes as its population swelled.

Amy Kirk from Queenstown told MPs she feared it could crash the Queenstown economy.

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"Fundamentally, restricting all overseas ownership within the Queenstown Lakes District Council will have catastrophic effects on our local economy and our diverse population and will not solve the housing problem."

Stopping foreigners from buying millionaires' mansions in Queenstown like this home being marketed for $23.5 million won't solve Auckland and Wellington's housing affordability problems.
LUXURY REAL ESTATE
Stopping foreigners from buying millionaires' mansions in Queenstown like this home being marketed for $23.5 million won't solve Auckland and Wellington's housing affordability problems.

"The Bill groups overseas buyers of properties within the regular housing market with overseas buyers of luxury housing or property. The effects of these purchases on our local economy are very different and need to be further understood and differentiated within the legislation.

"Put simply, luxury home buyers are not purchasing homes that would otherwise be available for regular working families to purchase."

Multi-millionaire Debra Schilling said the country risked losing the benefits of having wealthy people like herself bring their money to boost the economy.

"I immigrated to NZ in 2001 and became a citizen in 2004. I currently own a home in Queenstown valued at more than $5,000,000. I pay taxes on that home. And I pay taxes on my income. I buy services and local products, including a car for which I also pay taxes. I do not cost the government anything as I do not have children in school or live off benefits."

"This bill would have prevented me from becoming a valuable citizen of NZ. I support the economy that employs the people who need affordable housing and I sincerely wish the government would act to help those families acquire their own homes. But preventing me from coming in and buying an expensive home would not have helped those families one bit.

"We need to attract more wealthy individuals, not keep them out. It is people like me who provide the jobs everyone depends upon."

Queenstown resident Louis Alfeld, who immigrated from the US, makes similar points: "I purchased land in Queenstown and build a lovely $7 million home. I was elected to the Queenstown City Council. For ten years I chaired the Queenstown Urban Design Panel that made a considerable impact on the beauty and livability of Queenstown.

"If this Bill had been in effect, I would not have been able to move here and contribute to this vibrant community."

"I do not understand how preventing my immigration would accomplisht (sic) that purpose. My home is not and never will be "affordable" in the sense of helping less fortunate families acquire a home. Instead I created jobs in the building trades that did help working families."

While Queenstown residents worry about scaring off the super rich, people in other regions see no point in restricting foreign ownership when they have no housing crisis.

Northlander Chris Reid said in his submission: "If you are adamant on introducing this xenophobic bill, then please allow for regional variation. That is, if you feel it is needed in Auckland then so be it, but permit Northland to allow overseas buyers as I have seen no evidence to suggest there is an issue negatively impacting on Kiwis in Northland."

Some submitters also called on the government end plans to force foreigners investing in building new homes to immediately sell them on completion.

Ellie Porteous from homebuilder GJ Gardner said: "We sell our homes and apartments off-the-plan prior to commencing construction. Many do not intend to live in their new house, however rent them out to local New Zealanders for a return with a long-term investment outlook.

"If our foreign investors are forced to on-sell their properties upon or before completion, they will simply not purchase at all. The result of this will be that less houses will be built."

She said: "We need off shore investment to help increase New Zealand's housing and rental supply."

WHAT'S THE PLAN?

Labour promised to ban foreigners from buying homes to take pressure off the stretched housing market. It was a plan coupled with a pledge to speed up home-building which had failed to keep up with population growth, especially in Auckland, for several decades.

WHO CAN BUY?

Kiwis, permanent residents and Australians will be allowed to buy residential property. That last group has some submitters baffled, believing it to be wrong to allow one group of foreigners to buy homes her, but not others. What about people from countries New Zealand has free trade treaties with, some ask.

WHAT'S THE PENALTY?

Those caught breaking the law could suffer financial penalties of three-times their gains. Banks like ANZ are worried they could be deemed to have conspired to break the law, if they accidentally help a foreigner break the law.

WILL IT WORK?

Some are telling the government, the move will slow home-building by excluding foreign investment in new homes. Others call for a region by region approach, limiting bans to areas like Auckland, where there is a housing affordability problem.

One submitter Rob Dowler believes the ban will be easily circumvented by foreigners investing by making non-recourse loans to residents to buy homes, on condition they get a share of the capital gains, when they are sold.

"I believe that the purported benefits of the proposed legislative provisions will fail to deliver, because the provisions can and likely will be readily and easily avoided by any foreigner that wants economic exposure to New Zealand property without having to take actual ownership," Dowler said.

WHO'S AGAINST IT?

Housebuilders, millionaires, bankers, bach-owners, and many property owners.

WHO'S FOR IT?

Plenty of ordinary people, including many with surnames that would have seen them counted in Labour's infamous 2015 blunder when it counted every property owner with a Chinese-sounding name as a foreigner in a tally of foreign ownership of houses. Submitter Roger Sun told MPs: "I think this bill is great, and will make the house price to be more affordable, the residential houses should be only for all New Zealanders. During the last 3 years, National government was doing nothing to stop overseas buyers and non-resident buying Auckland houses, they push up the prices, more and more kiwis are renting, paying lots of rents to foreign owners in their own countries."

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