A Herald debate published this week on whether the Government should ban foreign house buyers has struck a chord with readers.
Of the 2100 readers who participated in a poll after the debate, 58 per cent said they felt the Government was heading in the right direction with the ban, 30 per cent said it was making a mistake and 12 per cent said it was more of a grey area.
A number of readers also sent in written responses, sharing their arguments for and against the proposed legislation.
Here some of the best contributions sent in.
(Note: Responses have been edited for readability)
When it comes to land, the law needs to be strict. No one except NZ domiciled residents or NZ citizens should be able to purchase land. Land includes residential property and rural property. Land is so core to the identity of being a New Zealander, we sell our souls when we sell our land overseas.
When it comes to apartments, I'm less convinced a law banning foreign purchases is good for NZ, although I'm not strongly opinionated either way as I am with land. There are millions of high net worth foreign people who we may want to have an apartment bolt hole in a city such as Auckland. For example, they send their kids to our educational institutions, they inject capital into NZ businesses - why not allow them to purchase a luxury apartment to stay in. If we need more apartments, just build another apartment block - takes up negligible land and creates lots of jobs in the process. Building apartments won't materially impact residential property prices - the two markets are fairly independent. It's easy to add capacity to apartments by building more, enormously beneficial to the economy (building an apartment block creates hundreds of jobs), and they take up negligible land.
When it comes to businesses - c'mon. NZ needs as much foreign capital as it can. Who cares where the capital comes from? To grow, you need capital and we don't have enough in NZ. And it's not just the capital - foreign capital and ownership give our companies access to the markets we need access to.
Look at Xero. How many jobs have they created in NZ (and the US for that matter) by virtue of their massive US capital injection? Hundreds of high paying IT jobs in NZ that didn't exist before. There are hundreds of other examples of companies who, through injection of foreign ownership, jobs and wealth have been created in NZ. Look at Ireland - they own none of their companies yet they are one of the wealthiest countries in Europe, enjoying affordable property, high wages, and high standards of living.
One of the reasons we have low wage growth in NZ is because we don't have enough growth capital injected from overseas into high-value sectors that drive labour productivity. If Kiwis want to earn more, don't stop the foreign ownership and capital - crikey- 101 economics here folks. Jumping on the nationalist bandwagon with respect to foreign capital (capital = ownership) into companies would send us backwards - fast.
Finally, there are some exceptions to foreign ownership of companies. Electricity, core infrastructure like rail, core utilities - more of a debate needs to be had here. Pros and cons of selling off the Crown Jewels, and the regulations around control of core assets. I think we can ring fence such "assets" and leave that to our politicians whose job it is to decide what is the best direction to take re foreign ownership of these types of businesses/assets. They have all the facts and are best placed to debate this and make the right decisions - that's what we pay them for!
The solution to the issue is simple: let foreigners purchase property here, but all property owners are to pay capital gains tax at the highest tax rate, excluding the occupied family home.
A vacancy tax applies, if the property is not rented for more than 330 days per year or occupied by their immediate family for the same time then the property attracts a tax of 5 per cent of the capital value of the property payable annually.
Large estates/farms and commercial buildings may only be owned on the same terms as above, but they must be turned over to a new owner every 10 years, so taxes etc will enter the NZ revenue stream. There is no set-off against income for any property for repairs, maintenance, interest and taxes so all the properties will have to stand on their own two feet.
Very similar to New South Wales but better as it addresses negative gearing which is causing them a problem at the moment.
Peter Mueller (in response to arguments laid out by Connal Townsend):
"Large-scale residential developments require capital including foreign investment."
I take issue with this [statement]. One of the fundamental reasons large-scale developments require so much capital is we have allowed in foreign land bankers who have hugely inflated the cost of raw land. And to add insult to injury, they have also taken their profits out of NZ, depriving the economy of both capital and tax revenue.
A case in point was the land reported at Huapai that over a few years went through several foreign hands and in the process rose from a few hundred thousand to over a 100 million and, of course, no tax was payable. That equates to an extra $100 million the home buyers had to raise mortgages for and will spend years paying off.
What's worse, is so much of our mortgages are now funded "offshore" meaning both the interest and repayments are sent out of our economy and into someone else's economy, depriving our economy of the oil that makes an economy run.
The Property Council claims without foreign buyers these will not be built but what they didn't tell you is a foreign buyer adds between $100,000 to $150,000 to the end price (this is from first hand experience). It's a case of more money being drained from our economy. Just to remind you, they claim we need foreign Investors "because there is not enough money in our economy". I'm starting to see a pattern.
Secondly, we have a crisis of "affordable" not a housing crisis. These large-scale developments are not producing what we need: basic affordable houses - 45m2 and 75m2 units at $10,000 a square metre are not affordable homes.
Evidence of this can be easily found in the ever-increasing number of finished but unsold terraces and apartments both in Christchurch and Auckland. Finished but not sold. I thought we had a supply problem. Then there are the numerous developments that are abandoned, on hold or are being slowed down.
These large-scale developments are delivering expensive multilevel housing - absolute genius for an ageing population.
To quote an 80-year-old neighbour currently living in a four-bedroom, two-storey home (only uses the bottom level) his options to move are: too old, too big, too expensive or two storey. (He is one of tens of thousands of older Kiwis trapped in their oversized homes).
If one backyard out of 20 in AK had a small single-level second home build on it, that's about 50,000 new homes and the crisis would be over. But there would be no money in this solution for Townsend's supporters. They are pinning their hopes on Labour making the mistake that they are the solution.
I have a few questions for your team. Are we doing enough? Can or will the bill address all the current empty houses and apartments owned offshore? Can we set a minimum time you must spend in NZ to show you use the property or at least try to make some available for rental market?
Also, if farmland is so integral why do we not lease our land rather than sell it?
What will happen to NZ when all food produced here is owned offshore? Who will NZ be?
Thank you to our readers for sending in your responses to this topic.