Experts welcome anti-foreign buyer back-down

Foreigners will still be banned from buying houses in NZ under the proposed law. Photo / Jason Oxenham

Property and legal experts have welcomed changes to the Government's proposed anti-foreign crackdown, saying restrictions on new home building won't now happen.

Connal Townsend, Property Council chief executive and lawyers Joanna Pidgeon and Christina Lefever backed changes to the Overseas Investment Amendment Bill recommended by a select committee.

"We're pleased to see the original bill has been significantly improved to recognise the positive role overseas investment has in large scale residential development. The changes to the bill will mean developments built solely for the purpose of renting are likely to become a reality here in New Zealand. This is a significant benefit for New Zealanders struggling," Townsend said.

Pidgeon, Auckland District Law Society president, said many of her organisation's recommendations had been taken into account.

Lefever, special counsel at Duncan Cotterill, said substantial changes had been made to the original bill.

"As expected, the underlying ban on overseas persons buying residential properties remains, but the committee has introduced changes to address many of the issues raised in the public submission process," she said.

But in doing that, a very complicated piece of legislation had been created, she said.

"By providing specific rules for specific scenarios there is a risk that some transactions will fall through the cracks and still be caught by the legislation, even if the nature of the transaction is similar to one that might benefit from more relaxed rules," Lefever said.

"Where an overseas person wishes to acquire residential land, an application to the Overseas Investment Office will still be required in all cases. Applicants might benefit from the revised rules, but an application will still be necessary - with associated costs and processing times. Ultimately, it seems that developers are bearing the cost of the ban on overseas buyers," she said.

David Parker, associate finance minister, said even in its changed format "the law will ensure that the market for our homes is a New Zealand market and not an international one."

The bill supported new housing development and KiwiBuild by better harnessing foreign capital and directing it towards large residential developments, he said.

Under the new regime, overseas investors would be able to invest in new housing, particularly apartments, new rentals and homes in rent-to-own or shared-equity arrangements, Parker said.

Lefever said some of the amended provisions included developers being allowed to retain interests in new projects if it was 20-plus residences.

Developers of 20+ apartments per building could apply for an exemption certificate, allowing them to sell a certain percentage of the apartments to overseas buyers without those buyers requiring OIO consent, she noted.

"It is expected this percentage will initially be set at 60 per cent. The overseas buyers will not be permitted to occupy the apartments," she said.

Telcos would escape the law's noose as well.

"There is a specific exemption for network operators - power, gas and telecommunications companies - who need to acquire interests in residential land to provide their services to residential areas," she said.