Fletcher opens door to rent-to-buy scheme in Overseas Investment Amendment Bill submission

High house prices have made it difficult for Kiwi families to save the required deposit. Photo/123RF.

Fletcher Building is calling on lawmakers to soften aspects of the foreign buyer ban to allow the introduction of rent-to-buy and shared equity schemes.

In a submission on the Overseas Investment Amendment Bill, which is at select committee stage, Fletcher argues that such schemes will give it a role to play in increasing the amount of affordable housing available in New Zealand.

"It is important that the Government preserve as much as possible a full range of options for the private sector to be part of the solution to addressing housing shortages in New Zealand," the submission says.

As it currently stands, the bill provides that overseas persons holding interests in residential land must cease to hold such interest after an undefined "specified period".

"It seems evident that this provision is intended to prevent long-term speculative land banking of residential land without any increased housing or associated development works being undertaken," the Fletcher submission says.

Fletcher proposes that there shouldn't be a blanket ban on investors holding interests in land over an extended period of time and that the provisions should rather provide enough flexibility to allow for the rent-to-by and shared equity schemes.

Rent-to-buy schemes are already used in international markets, where they allow renters to steadily build up enough of deposit to eventually purchase a home.

In the UK, for instance, the rent-to-buy Government scheme allows renters to transition from paying rent to purchasing a new build. If accepted into the programme, renters are given a 20 per cent rebate off the full market rate, which is then put toward a deposit in the home. Throughout the lease period, renters have the option to purchase the home once they have accrued a high enough deposit.

While this might require a building company to hold an equity stake in a property long after the home has been completed, the home does not sit empty.

The Guardian has reported that such schemes have been effective in helping UK families priced out of the housing market get on to the property ladder.

Locally, the Green Party has come out in support of such programmes, issuing a press release last year saying that rent-to-buy initiatives "would open the door to home ownership for the four in five New Zealanders who can't afford a house".

Written submissions to the Overseas Investment Amendment Bill have closed and the Government is set to issue a report on the views expressed on May 31.