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Fast track for foreign buyers ban

Legislation banning foreign buyers from purchasing existing homes is being rushed through Parliament, after passing its first reading last night.

Wednesday, December 20th 2017, 10:00AM 1 Comment

by Miriam Bell

ACT party leader David Seymour

The Bill will now head into the Select Committee stage – but this period has been truncated to February 20, which is a much shorter period than usual and includes the Christmas/New Year break.

Under the new law, only New Zealand and Australian Citizens, and permanent residents of both countries, would be able to buy an existing home in New Zealand without going through screening from the Overseas Investment Office.

Associate Finance Minister David Parker says the objective of the law is to ensure that the New Zealand housing market is shaped by New Zealanders.

The government wants to encourage foreign investment where it adds to the New Zealand economy, he says.

“But investment in existing homes by those who have no right to reside here, and no intention to live here, does not achieve that objective unless they add to housing supply.”

Parker says he doesn’t expect the change to have a huge impact on prices at this stage in the property cycle.

“But it would have a greater impact at other times, for example if and when overseas buyer interest surges again.”

While the Bill may have passed its first reading, it generated some fiery debate in Parliament and opposition from both the National and ACT parties.

ACT party leader David Seymour says the government’s decision to ban foreign home-buyers shows it has bowed to populist pressure and is not serious about tackling the housing crisis.

“The evidence from jurisdictions which have restricted foreign home-buyers is that these measures do not work.

“Hong Kong, Vancouver, Sydney and Melbourne have all banned or taxed foreign home-buyers and yet are still in the top ten least-affordable cities in the world.”

In his view, it is the Resource Management Act’s "bureaucratic processes, red-tape and anti-development bias" that has helped create the housing crisis.

"Until the government shows it is willing to fix the RMA and free up land for development, it cannot be taken seriously on housing.”

There needs to be separate urban development legislation, a prioritising of land supply, and a reducing of red tape on developers to address the housing crisis, he says.

Read more:

Foreign buyers ban bill hits parliament 

Limited impact from foreign buyer ban 

« Free Investment Property Showcase Events: Auckland, Wellington and ChristchurchPre-Xmas housing policy rush »

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Comments from our readers

On 20 December 2017 at 3:15 pm MrKing said:
The quickest way to make housing more affordable would be t severely restrict immigration- as in supply and demand. The next best way is to ensure more homes are built..not allow existing stock to be used as trade able assets and remove them from aspiring NZ resident home buyers. Buying new is better for investors re maintenance etc and adds to housing stock..no brainer really

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HSBC Premier 5.24 3.35 3.35 3.35
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Kiwibank 5.80 ▼4.14 ▲4.30 4.64
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Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
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Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
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SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
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The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
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TSB Bank 6.09 4.35 4.25 4.69
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