New restrictions on foreign home buyers in New Zealand 13 Nov 2017
The new Government in New Zealand has announced changes to the foreign investment system. This will restrict non-resident foreigners from purchasing houses in New Zealand by changing the definition of “sensitive” to include such housing. At present other land is defined as sensitive under the Overseas Investment Act (OIA). That includes for example land that is bordering reserves and parks or on the foreshore of lakes or rivers or which is farming land (among others). For an overview on the overseas investment process click here and for information about key issues when immigrating to New Zealand click here.
New Zealand house prices have been increasing in the last few years and the intention behind the rule changes is to prevent foreign speculation on house prices. Ultimately, the Government is hoping to stop their growth which has been resulting in New Zealanders not being able to afford to purchase a home, particularly in Auckland where the average house price is very high.
David Parker the new Trade Minister said the following in a recent interview: “We’ve got to fix land. We think it’s absolutely abhorrent that New Zealand government would lose the right to control who buys homes in New Zealand from overseas. And we’re working up mechanisms on that.”
While the purpose is clear the exact mechanics and timing is not. Some have raised concerns that such a ban could be difficult in the context of different free trade agreements in place or due to be signed like the Trans Pacific Partnership (TPP). However, the intention is certainly clear and it is highly likely that there will be change soon.
We will provide updates when the precise changes are known but wanted to get this briefing note out in the meantime. We have acted for foreign buyers who are looking to purchase assets in New Zealand and can help you if you have any questions about the process.
We have also prepared a detailed guide called “Doing Business in New Zealand” which has an overview about the New Zealand business environment. We are happy to email that out to those who would find it of help.
This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Should you need any assistance or would like to request a copy of the "Doing Business in New Zealand" guide, please contact Kris Morrison at Parry Field Lawyers (348-8480) firstname.lastname@example.org