Foreign buyer ban prompts house-builders to seek special clearance

Foreign-owned builders applying to the OIO. Photo/Duncan Brown

The Government's foreign buyer ban is affecting some of New Zealand's biggest house builders who are overseas-controlled, including Fletcher Building and Universal Homes, says National's Judith Collins.

A number of businesses were now in the process of applying for clearance from the Overseas Investment Office so they could continue building homes here, Collins said.

Steve Evans, chief executive of Fletcher Building's residential and development division which builds about 1000 homes annually, confirmed the business had applied for pre-approval to buy residential land in the form of standing consents.

"That has been applied for under a set of conditions the Overseas Investment Office has set out," he said.

If successful with its application, Fletcher would need to tell the office each time it bought land but would not need the office's pre-approval to buy the land, he said.

Mike Pearce, Universal Homes' sales manager, confirmed that the business had also applied.

Fletcher is owned by foreign interests but headquartered in Auckland's Penrose. Evans said the business was not the main target of the legislation.

"The application would not make us exempt. We would need to notify the OIO and it has to be within the conditions and grounds with which a standing consent is granted," Evans said.

Universal Homes, 97 per cent foreign-controlled, needed to be able to continue to buy land so had applied for an exemption, Pearce said: "We're hoping we'll get it within three months."

Universal had not bought land between when the new law came into force late last year and now, so the ban had not affected it so far, he said. Nor does he expect the changes to have any effect.

But Collins says the law change forces such businesses to act which concerned her.

"This makes a nonsense of the whole foreign buyer ban which will reduce the ability of capital to come into New Zealand's construction industry. It's going to slow down house building making fewer new homes available for New Zealanders to buy," she said.

"Big housing companies are part of the solution to our problems yet if they have to go through this process, it causes delays which cost money," Collins said.

Pearce said Universal Homes was now waiting for the Overseas Investment Office decision.

"We've applied for blanket cover," he said, indicating Universal's application to the OIO was for all its New Zealand residential land purchases to be exempt. That would mean that it does not in future need to seek clearance each time it buys properties.

"It's more to do with buying land. That's when you have got to have the Overseas Investment Office approval," he said.

Universal is foreign-owned, controlled by the Chinese. A previous application to the OIO says it is 97.18 per cent in the hands of the Chinese Government.

Pearce said Universal had built just under 200 homes in the latest year.

The Overseas Investment Amendment Act 2018 came into force on October 22, 2018. The changes prevent certain overseas people from buying residential property in New Zealand.

The new regime applies to land that is categorised as residential or lifestyle under the district valuation roll.

The OIO says: "There are opportunities for overseas people to buy residential land, but not live in it, if you are a property investor/developer who adds to New Zealand's housing supply by developing the land and on selling new housing; or building and possibly operating long-term accommodation facilities."

Standing consents may be granted, it said.

To date, the OIO has granted two transitional exemption certificates. Those decisions are published on ourwebsite.

"We are also assessing a number of other applications for exemption certificates. Those applications are currently being considered, and further details will be published once a decision is made," a spokeswoman said.