Buyers in rush to beat new rules

For the first time New Zealanders will be able to get an accurate pictures of the number of foreign property buyers. Photo / Regan Schoultz

Foreign buyers debate: Agent touts for business as investors prepare for restrictions on property speculation.

An agent from Auckland's biggest residential real estate business says some buyers are trying to beat the Government's new property speculator restrictions, which come into force in October.

Kevin Liu of Barfoot & Thompson's Onehunga office sent a letter to home owners, asking them to get in touch if they were thinking of selling.

This is because there was demand from "some groups of buyers", which, he said, would be affected by a new law due to come into effect from October 1. To get around new tax and banking restrictions, those buyers wanted places, he indicated. Liu wants to list more residential properties so he can meet that demand, which is exacerbating an already short listings supply, he said.

"At the moment, we are seeing an upward spike in demand for property as some groups of buyers try to buy before these changes take place."

That is a reference to the Taxation (Land Information and Offshore Persons Information) Bill, now before Parliament's finance and expenditure select committee. The new law will gather information for Land Information New Zealand and Inland Revenue about overseas buyers.

Barfoot has been at the centre of Labour claims this month, after data was leaked indicating Chinese buyers were targeting Auckland. Labour housing spokesman Phil Twyford said yesterday the agent's letter was yet further evidence of the nature of the problem.

"Even these very weak rules that the Government has announced have produced a rush by speculators, no doubt including non-resident foreign buyers, trying to get in before the rules come into force. It shows just how out of control wild speculative investment is in Auckland which is the wild west and there are no controls. There is no benefit to New Zealanders from offshore speculators making a killing on real estate. The Government should implement an Australian-style ban on offshore speculators," Twyford said, citing the success of regulations, attacked by Prime Minister John Key yesterday as not having worked.

Twyford disagreed: "By ensuring foreign buyers build new places, Australia has succeeded in channelling large amounts of mostly Chinese investment into new apartments in Sydney and Melbourne and that's been stimulatory."

Liu said the new proposed law was already having a big effect: "You may have heard on the news recently or read in the paper the changes which are taking place on 1 October, 2015. These are likely to have an impact on property values," he wrote in the letter.

The changes

• Requiring non-residents and New Zealanders buying and selling any property other than their main home to provide an IRD number.

• Requiring non-residents to have an NZ bank account and IRD number.

• A new "bright-line" test to tax gains from residential property sold within two years of purchase, unless it's the seller's main home, inherited or transferred in a relationship property settlement.

• Requiring investors in Auckland using bank loans to have a deposit of 30%.