Mahvash Ikram
The government is working swiftly through “coalition politics” in a bid to overturn the ban on foreign investors buying residential properties worth more than $2 million, says Trade and Investment Minister Todd McClay.
Meanwhile, New Zealand First leader Winston Peters, who spearheaded the ban in 2018 and has until now vehemently opposed any relaxation of the rules, has hinted that some conditions could be relaxed for the “right investor” by the end of this year.
A NZ First spokesperson told LawNews the foreign investment being offered would need to be significant enough to create jobs and benefit the New Zealand economy, although no minimum threshold has been made public. “Dollar figures around the level of investment are still being discussed, but the threshold could be anticipated to be substantial,” the spokesperson said.
In an interview earlier this year, Peters said the capital would need to be higher than a “a lousy $20 million”.
At a lunch in Auckland last Friday, hosted by The Law Association, McClay said it was important that any residential property bought by such investors was in addition to the investment itself. “You can’t use your investment in the house, but in addition to it.”
McClay said he was advocating for the ban to be relaxed because a low corporate tax rate was not the only thing that would attract investment into the country and the ban had been a deterrent to sizeable injections of capital. “I think it’s those who are super wealthy that we’re keeping away. Not the people [who have] $5m to $10m and want to invest in a business and are coming down anyway for lifestyle.”
Peter Kiely, a founding partner at Kiely Thompson Caisley, said international investors found the ban “culturally insensitive and a turn-off”.
“They want the certainty because culturally, that’s what they do – they have their own residence. And because it’s [a house] over a certain value and because they’re from Berlin or Dublin or wherever, they can’t have the house.”
Kiely said foreign investors often had company representatives or country managers who wanted to purchase a residential property that was worth more than $2m, but were unable to do so because of the ban. He said owning a home was so important for some foreign senior executives that they might decline a job offer from New Zealand if it meant living in rental accommodation long- term.
“The international investors say, ‘we love New Zealand and we want to invest but you have to let us buy a house for certainty’.”
McClay agreed the ban was discouraging for investors because it was akin to telling them, “We want your capital, we want your expertise, bring your family down to help us grow the economy and give wonderful jobs to young New Zealanders. But we don’t like you enough to [let you] buy a $5m house”.
One of NZ First’s conditions was that the local housing market would not be disrupted if the ban were relaxed. Some industry experts believed this could be achieved if foreign buyers purchased only new-build homes. But Kiely said that was a “policy issue” and foreign buyers just wanted the certainty of owning a house where they could live while in New Zealand.
“The ban was a way of preventing overseas investors filling up housing stock and [then] being absentee.”
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