Labour's non-resident foreigner house buying ban already being worked on, Prime Minister Jacinda Ardern says; Mini-Budget with parts of Labour's 100-day plan might be on its way

The new Labour-led government has already started work on how to ban non-resident foreigners from buying existing New Zealand homes, Prime Minister Jacinda Ardern says.

Meanwhile, a mini-Budget might be on its way, incorporating bits and pieces from Labour’s 100-day plan.

Speaking to media in the Parliament forecourt after being sworn in as PM at Government House, and then addressing a large public crowd in Parliament grounds, Ardern said the foreign house buyer ban remained a priority.

The promise has thrown up a number of questions as to whether Labour can renegotiate certain trade agreements – including one with South Korea and the Trans Pacific Partnership (TPP) – to allow for the policy. 

Labour has already started work on its negotiating position for when Ardern travels to the annual Asia-Pacific Economic Cooperation (APEC) meeting in early November, where TPP will be discussed. Ardern said Foreign Affairs Minister Winston Peters and Trade Minister David Parker will travel to APEC with her and be part of that negotiating team.

Introducing the legislation for such a ban is included in Labour’s 100-day plan, which will be outlined early next week, Ardern said. Very little has changed regarding the plan from Labour’s pre-election outline. 

There may also be a mini-Budget coming, she said. Advice was being sought on whether parts of the 100-day plan could be raked into a mini-Budget, she said. Cabinet would discuss whether this was required.

Meanwhile, Ardern was quizzed about Labour’s stated goal to get unemployment back to 4% by 2020. Asked how the new government planned to do this, she noted the strong regional development focus of the new government. Labour would also introduce a number of programmes to assist long-term unemployed into work, like its Ready for Work scheme, she said.

Labour and New Zealand First Ministers later had their first Cabinet meeting on the Beehive's tenth floor:

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

114 Comments

up
25

Well, at least the new government is busy doing something, unlike the old one. We'll see in 3 years if the upcoming changes are positive or not

"I am from the government ; I am here to help you" - is not that just great ?

It's been an alien concept for 9 years. Someone authoritative in a black suit with a neuralyzer (flashy thing) will be along soon to explain things.

up
11

WoW ! Actual policy on house speculation by foreigners !
This is surely what government is for
Which begs the question what was National for ?

self interest

I actually thought this was NZ First policy hi-jacked by Labour. I classify Labour as Johnny come lately on immigration issues.

Not only South Korea and the TPP... our FTA with China won't allow Chinese investors to be treated less favourably than any other nation... and we allow Australians to buy houses here.

up
15

Australians allow us to buy houses there but not other countries (like China).

only leasehold in China

That would be Article 139 of the China FTA negotiated by the previous Labour Govt and signed by Phil Goff.

http://www.stephenfranks.co.nz/house-buying-ban/

They agreed to this clause so its only fair they negotiate its removal.

up
17

Yes, Labour put in the China FTA that they won't get a lesser deal than others.

National then went and threw in the crappy term in the Korean FTA, preventing the limiting of foreign ownership.

up
13

Don't you going around truthing here, people might have to understand what actually went on. I also understand that our relationship with Australia is different from a treaty, per se.

up
14

China only cares about treaties when it suits them, and flouts them when it doesn't (UNCLOS/South China Sea, anyone?) They have a map with some dashes on it which = historic rights which = do whatever the hell they want. Just tell them you have a historic relationship with Australia that trumps any treaty. Done and done.

Another feeble attempt at pro-Lab spin ; under China FTA they signed Chinese investors cannot be treated any worse than nationals of any other 3d country ( that includes Australia , making the later Korea FTA irrelevant in the context ) .
You know this of course .. but it is a bit inconvenient therefore que in the usual lies.

Will be fascinating to watch Jacinda et al try to wiggle themselves out of a headline commitment they will not be able to come close to meeting.

up
14

You are missing that the earlier reciprocal agreement with Aussie does not apply. That's your error.

Under the FTA negotiated by Labour, any future New Zealand government could ban the sale of farmland or houses to Chinese investors. China can do the same, and since the FTA it has indeed banned non-residents, including New Zealand investors, buying houses in some of China's main cities.

The FTA requires New Zealand to treat China no less favourably than other countries.
This is under the most-favoured-nation provision - article 139.

This allowed New Zealand to ban the sale of farmland or houses to Chinese investors, but requires New Zealand to treat China no less favourably than other countries (for example, South Korea).

Clause 3 of article 139 means earlier agreements with Australia and Pacific Islands are not affected, and do not flow into the New Zealand-China FTA.

And...this from the article 139

The Parties reserve the right to adopt or maintain any measure that accords differential treatment to third countries under any free trade agreement or multilateral international agreement in force or signed prior to the date of entry into force of this Agreement.

You might be watching Hosking too much. It's probably time to lay off accusing others of lying, or at least fact-check first.

up
10

Awesome rebuttal and thanks for the informed post.

My question is why are they(apart from making headlines) risking TPP when they could just do what Aus, Singapore, UK and HK have done and introduce a 15% stamp duty to price foreigners out the market?

Because they don't actually guarantee that there will be no foreign purchases. If you really want to implement a NZ only policy, you just have to go for NZ residents and citizens only.

Just make it a 100% tax then. As I say it is pretty stupid to put the TPP as risk. Not a lot of common sense being applied from what I see.

TPP should not be put at risk. To strongly discourage or stop purchases of houses by foreigners.
A 20% stamp duty is one option.
The other option is put a ban on house purchases by foreigners, and change the definition of sensitive land under the Overseas Investment office to include all residential land. Then say no to all potential foreign buyers after they have been through a time consuming and expensive process.

China do not allow NZers to buy houses in China
Even Chinese only lease the land their home stands on
Kiwis have never been able to buy a rental property in China. We know already
NZ needs China as a trading partner but the CCP would never stop any NZ government from preventing
Chinese speculation in NZs housing market
The Chinese government is pragmatic and classes NZ as the couple of islands at the bottom of the world it is
They won’t stop NZs government preventing Chinese residents buying NZers homes for land banking

The intention though, Graham Adams, is that after this is passed that Australians (unless they are permanent NZ residents) will no longer be able to buy houses in NZ. A labour spokesman said during the campaign that they would retain the right, but Peters said that they would not (in a recent statement).

Labour would also introduce a number of programmes to assist long-term unemployed into work, like its Ready for Work scheme

Well, Someone has to get busy planting all a them 1 billion trees. What the 'long-term unemployed' will think of working long hours in the hot sun on 45 degree slopes, living in hastily slung up workers camps at the foot of the range, with packed lunches of tofu, lentils and lettuce (Greens....) and expected to plonk in 100 trees per day, is another matter altogether.....

I'd pay good money to do that.

We’ll just put some bleachers out in the sun

And have it on Highway 61

(Dylan, who else...)

Workforce aside, that's about 1m Hectares of land needed to plant those trees. The North Island is about 11m Hectares, and a lot of that is either cities, already forests or unsuitable to plant trees on for a multitude of other reasons.

Where exactly is that land coming from??

then 'pine beetle' or 'Pitch Pine Canker' turns up and the industry is in big trouble

"Fusarium circinatum, the fungus that causes pine pitch canker, a disease that threatened to make radiata pine extinct in its homeland in California, and that has caused Spain to replace radiata pine with eucalypts in some regions.
Phytophthora pinifolia, a previously undiscovered organism that causes needle blight disease in Pinus radiata, and has recently threatened Chile’s forestry industry."

http://www.nzffa.org.nz/farm-forestry-model/the-essentials/forest-health...
"

Typical Radiata planting rates are about 8000/hectare (initial, thinned down to about 3-400 later on) with cost about $3-4000/hectare from planting through to maturity. Other tree types are likely to be pretty similar. So that only needs about 12500hectares/yr at a cost of about $50million per annum (excluding land cost), and maybe only 1000 workers.

went from trees with a Growth Factor ( GF) of 11-12 to a GF of 35 in no time, then cloned everything.
Their mothers never told them about the fool who had all his eggs in one basket.
At least the Chinese read the three little pigs and like brick houses.

I agree. It's about time we diversified from just dairy.

I don't have an issue with dairy or pines so much as the commodity dependence they have lead to. Some Nelson and Northland pruned logs are fantastic. They all end up in some Korean or Chinese high tech sawmill, when we were promised the jobs and valued add, that never eventuated.
Grass feed dairy is out in front, however trying to tell others that ours is better than theirs just ends up with protectionism.

Initial stocking is usually between 800 to 1000 stems/ha so that suggests over 100,000 ha/year. I doubt this is possible given existing nursery, land, and labour constraints. 50,000 ha/year might be but landowners would need incentives and planting is physical and remote which does not suit today's workforce.

People need work to feel worth
Self worth that is
I would rather plant trees than work in a office tower all week
Maybe the value of labour is preserved by going back to the feeling of self worth gained by carrying out agricultural work
Maybe working outdoors is why hobby farms are so popular on the city fringes
There’s an honesty to working with your hands outdoors
Even JK obviously knew this by incorporating hair pulling whenever he could into his day

Lets hope that the regime in China doesn't have retaliation on their mind as they are ,imo,very well equiped to hurt us financialy.

up
19

Why would they retaliate when we are helping the CCP's current policy. They are trying to stop bleeding foreign currency, and they've already been fining people for sneaking money out of China for illegitimate reasons, like buying property.

up
14

Yes quite right China wants to further clamp down on money laundering and is also trying to slam the breaks on their out of control property markets within China by building new cities. HK being one of the most extreme property markets at around 20 times income ratios.

So they should be very much in favor of this move by NZ. By the way it does get a mention on this BBC radio article: China's New Leadership Team Unveiled
http://www.bbc.co.uk/programmes/w172vhw19fy81sw

Quote: Jacinda Ardern has pledged to curtail rising house prices by banning non-resident foreigners from buying homes in the country.

What the China regime say and what they do, imo are totally different.

If you're a regular person you can't move money offshore. If you're mates with the boss anything is possible.

Perspective
1.3Billion Chinese
Only approximately 100Million (on a good day) are wealthy enough to even consider buying a house in NZ and most choose other parts of the world like the US Canada UK Australia etc so that limits the numbers interested in NZ but the demand was extreme enough to cause
the current Auckland home price expansion bubble which took off around the third quarter of 2013 in a big way
It continued like a Ponzi scheme with predominantly Chinese offering crazy prices on Auckland property
I knew a student Chinese midwife who had no problem obtaining 750K out of China at less than 1% interest
to buy a 2nd home in Auckland
How could she possibly do that ?
NZs government knew full well what was happening because the foreign exchange was flooding into NZ for one reason Speculation in Auckland homes for untaxed profit
The fact we had a extremely smart ex Forex guy as PM at the time shows to me there was not only knowledge
but extreme tolerance of the Auckland house ponzi

Only 100 million wealthy people? Not many then?

most choose other parts of the world like the US Canada UK Australia etc

That "etc" is obviously pretty much just NZ. Like what do all those countries have in common I wonder? What's the next country on that list? Five Eyes.

Lol, that a bit too tinfoil.

It's not like the Chinese are sending over trained spies to infiltrate various levels of Government. oh wait...

Why a ban? why not milk non-NZ passport holders for fees, duties, levies etc. Each dwelling should have a rating which relates to its accommodation capacity and this be the basis for such. Res zoned bare land being "banked" can attract a quarterly charge of which a portion can be used to offset development fees as the build happens. This so that new entrants are discouraged from speculation and current owners encouraged to sell as these costs are deliberately set to suck out all profit. Use the funds for NZ public benefit projects specifically in transport, health and education infrastructure. Then there is no "ban" but they pay for the privilege of holding a slice of our land.

Leasehold if anything, but Im for a ban. Once the land is gone its gone. NZ will become tenants in our own country, we are a small tiny nation, that can be bought up by all the wealthy people and nations of the world. Chump change for most. We are in a prime position being on the arse end of the world, away from all the trouble.

This ban will add more value to the NZ Passport surely.
Think we will see more proxy buying of houses here for non-citizens/non-residents once the ban is in place ?
You know some believe in very extended families/friends taking care of assets...

Quite right! I'm sure a market-price will develop for the right to use a NZ passport for property purchase....Just like shorting shares, I guess - Borrow the suckers and use them as you wish....

A perhaps surprising statistic is that Japan has almost 70% of its land still forested. A lesson for NZ.
https://data.worldbank.org/indicator/AG.LND.FRST.ZS?locations=JP

Interesting, but not surprising to me having lived there. Only a small area of the country is urbanised - it's just it's urbanised to very high densities!

Yes, it is high density living in Japan, but not as oppressive as I thought. Spent a few years living in central Osaka commuting to the rust belt (Panasonic, Sanyo, etc) by train (only 20 mins or so). Furthermore, my apartment was close to Osaka Castle park. Could even go to nice public swimming pools that were not excessively crowded.

Could never understand the purpose of the mass planting of cedar in Japan. Any idea?

Self sufficiency in wood for houses. And they have imported wood in order to preserve their stocks.

My question is this: the 'official' figures in terms of proportion of total property sales comprising offshore buyers is 3%. But anyone 'in the know', knows that there is a lot more activity than that occuring through local fronts.
Would this policy change be able to account for this?

In setting up that register, there is the possibility that a more clear picture of offshore ownership will be established.

What's the point of a register

Sounds good, but, what will it achieve, what will its purpose be, who will see it

Will it be a searchable database available in the public domain - To be of any "value" it has to be

Well, it's probably still worth measuring so at least you can be more informed when considering issues. It really didn't help having National being willfully blind on the issue for the last decade.

It will tell us the extent of the cover up that National managed over the years stating foreign buyers were not the issue

Are you trying to prove national was lying Fritz. You have a mean streak fritz haha . I guess we know the answer tho when for 2 years and only in Auckland auction rooms are full with Chinese people. Bus loads drive up and down your streets , houses empty, then in October of last year and January of this year when the Chinese government made it hard to get money out of their country changes happened here at the same time and houses stop going up $20000 a month, yeah locals jumped in with a buying frenzy but 3% , come on. And all the way threw this immigration kept going up with housing going down and rentals prices hardly changing. National have some questions to answer alright

Yes 04Norm
On the day of a neighbours 2014 auction a full van load of Chinese with clipboards and headsets for translation purposes arrived an hour late to the auction
Poor neighbour had to settle for a provincial farmers bid and hence the property probably sold for 25% less than it would have if that vanload of Chinese had made it to the auction on time

up
11

the 3% figure has been debunked. Bryan Bruce did an excellent investigative journalism piece on it. Here's the docco in case you missed it.

Thank you fat pat I did miss that , great to see why and what

Does the proposed ban extend to residential land and or productive land (farms etc)

I think I read somewhere that the OIO (or its regulations?) is to be amended such that it applies to all overseas purchases of land/property above 4 hectares.

Good stuff Kate thanks. I'm pleased my kids might be able to buy a farm sometime if they want before it's all gone.

I'm actually hoping that this government takes up that National policy to sell off some of the Landcorp assets to aspiring young NZ farmers.

I hope so. It would be sad to see Kiwis no longer able to be owner-farmers but having to be content with lifelong sharemilking/farming. It would have wound NZ back to the 1800s before land tax was used to break up land bankers and get land into the hands of Kiwis.

There is a lot of undeveloped/underdeveloped land in Auckland between 5000 square metres and 3/4 hectares that is just being landbanked by Chinese interests.

Yes it's amazing to see lots of empty property lots opening up around Auckland even in the expensive areas. Where house have been left empty and abandoned, eventually have to been demolished.

Most of the time these owners have no interest to develop. They have just parked their money.

Foreign investors parking their money in a currency that is falling (NZD) may start to keep a few of them awake at night. More for sale signs maybe?

Fritz that’s one of the down sides of a city and government having policies that thinks house prices are best high. Land banking. If a government and city and RB gave up this silly idea of a economy on rising house prices and we make stuff and export, with house prices keeped at reasonable levels focks would be better off and land banking would be a waste of time . Imagine having small mortgages with good wages and plenty of money to buy beer

Just like in Germany.
:)

What is the definition of "Non-Resident"? Does it mean people who are not living in NZ? Does it mean anyone without Permanent Residency? Does it include temporary residents like foreign students and those here on work visas?
And what is the definition of "Foreign"? Does that mean nationals of a foreign country still located in that country? Does it include foreign nationals that have Visas and are now living in NZ? Last time the Govt did a study on "foreign investment" it only looked at investments made by people living offshore, and did not include investments made by foreign nationals living in NZ.

Could someone clarify? The success of this policy all depends on how artfully one defines the terms being use.

Make it easy. Passport or only money earned and taxed in NZ. Show tax trail for cash in purchase or no deal.

What is the definition of "Non-Resident"?

Anyone who is not a NZ permanent resident, or NZ citizen.

But where is this stated? It could also be the IRD definition - a Resident is anyone who is in the country for 183 days.

Ardern to high school students "next years on me". One day in office and the arrogance of the left is already showing. Next year is actually on the tax payers lady.

https://www.stuff.co.nz/national/politics/98268025/prime-minister-jacind...

More toys out of the pram!

Come on Delboy, don’t be a curmudgeon. Join in the party.

up
27

Well done Jacinda. Finally NZ has a government which actually values and seeks to protect NZ and NZers rather than asset stripping every farm, business and house & selling.
Taking responsibility for governance of our assets - that’s what good governments seek to do.

Any view on the Fliway announcement today? The main guy wants out to an overseas buyer. What should we do? Get NZ Super or Govt to outbid? NZ is reliant on a free market economy. If we shut the doors it goes back to subsistence living. I guess we have to make our choice and live with it but some ugly potential outcomes.

Flog everything and the outcome is much the same

IPO. The NZX could do with a bit of fresh blood

its not going to be a problem, flyway dont own any buildings or land and lease everything, they only own machinery and trucks
i can not see any problem with OIO,
meanwhile another bigger trucking co will list soon TIL

Excellent Post. Great time to be a kiwi

If it's any comfort, it's not just us who have been effected by the withdraw of foreign property investment.

Time to close the door on a false economy.

Better dwelling article: Canadian Real Estate Dollar Volumes Are Dropping, Especially In Toronto
https://betterdwelling.com/canadian-real-estate-dollar-volumes-dropping-...

Still hiding behind Year on Year data Zachary. Thing is property inventory is rising both here and in Canada, with little overseas top end buyers to purchase them.

That leads to declining prices and well you know it.

One week does not make any useful statistics. Indeed this property spruiking is becoming pitiful as events are swamped by the juggernaut that is the labour led coalition.

"with 35 sales between September 11 and 17 registered by September 28, compared with 18 houses the week before."

This article is commenting on statistical noise.

Zachary,

I have just spent a month in Canada,including both Vancouver and Toronto. I read a lot on the property market and overall,my impression was that the detached home market has largely stalled,while most of the activity is in the apartment sector.
It looks as though the imposition of a foreign buyers tax has had some effect in cooling the market,but has not led to a price collapse.

Yet.

up
11

How happy is Tony Alexander with the new government. It was a pleasure to read his weekly summary.

What a great new government we have. They have done more for NZ housing in a few days than National managed in 9 years

I am not his biggest fan but this week his piece was very good and really quite balanced.

Yes totally agree with you Joe and Fritz. :)

Agree as well. Historically centre right Governments have to clean up the mess left by centre Left governments. Expect interest rates to go up. Some Businesses to close. Investments in the regions to the reversed at some stage to their detriment.

Pray tell what was the positive in his message? It reminds me of the Avril Lavigne lyrics. Chill out, what you yelling for? Lay back. It’s all been done before.

Btw Kiwi $ still on the gentle slide down.

Nats taken to quoting Avril Lavigne. Someone call a doctor.

Safer than quoting Eminem, I'm guessing?

Centre Left = National under Muldoon?

@ Ex pat - yeah never let the truth get in the way of personal bias...looking at this timeline it doesn't look that way to me?

http://www.treasury.govt.nz/government/financialstatements/yearend/jun16...

PS/ The dollar was actually lower 5 months ago...under National....and hit around .62c in 2015 under Key...Sooooooooooo??????

The dollar has been all over the place since it was floated. Under all flavours of Government. So what. I’m looking at the movements since this government was formed as it gives a sense as to what the financial world is thinking of the ‘new’ direction.

Yes it has...thanks for confirming what I just said - the dollar moves all over the place and not surprised it moved after a change of Govt - that's hardly startling. In fact we may even hit JK's Goldilocks value v USD.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1148...

No comment on Total Debt v GDP huh...

Hey, I can pull up productivity per hour per capita too if you want to see how that gone (here's a hint - gone backwards for the last 5 years).....but again, forget evidence based opinion.

Political tribalism = blind emotive bleating.

PS/ I've voted National since 1993 until the last election. This time the evidence just didn't support it.

Yes - this new lot may screw the pooch but I'm not going to hang them after a week....

Again, I'll look back and use evidence to form a judgement - not be Henny Penny now.

I've still got some money to move offshore so 'Harry hindsight' is no use to me.

the new government is looking good.........fresh and full of energy.........a change to the national government......was pretty sad looking........

Interesting to see this making news in UK. This Guardian article by Polly Toynbee illustrating how the free for all in London has kept locals out of the market there with astronomical pricing. https://www.theguardian.com/commentisfree/2017/oct/26/new-zealand-rich-f...

Good old WInston Like a Boss - Front and Center!

Something to ponder over is that the 'housing crisis' is limited to Awkland and environs (the osmosis effect). Down here in the Mainland, Queenstown and the Lakes excepted (it's been a haven-buyers market for 30 years) it's a wildly different story:

  • Plot prices start with a 1
  • House plus plot prices start with a 4
  • There are literally hundreds of plots for sale (Ms Market at work...)
  • There is a 20-odd% vacancy rate in commercial floor space (Ms Market....)

And the figures I've quoted are for wider Christchurch - out further those prices can be halved.....

So please keep in mind that all the housing angst is confined to Hamilton and points north.

hope the policy to ban foreign buyers ensures it looks at the "beneficial owner". And the practice of a NZ resident buying on behalf of others back in mainland china is hit hard. And while they're at it , take the IRD numbers provided during the conveyancing process and investigate whether their worldwide income is being declared on their NZ tax return.

The IRD recently announced a restructure that could affect 4,200 jobs. I’m picking that they won’t have the resources to police this. The easiest way to enforce it is encourage people to rat on them.

Are you kidding? They just spent 2.6 billion on an upgrade, should be able to pick our noses for that.
https://www.nbr.co.nz/article/ird-insists-business-transformation-projec...

I thought they weren't expected to be fully operational until 2026 or something. Remember 90% of large scale computer projects fail...

"For business leaders, the decision to embark on a large-scale IT initiative (that is, one with an investment of more than $10 million) is often fraught with angst. Their worries are justified. According to one large study, the chances of delivering such a project successfully—on time, on budget, and with the desired technical objectives met—are roughly one in ten"

https://www.bcgperspectives.com/content/articles/technology-business-tra...

I wonder if all the MP's rental houses, bought with Taxpayer funded deposits will be viewed as being beneficial to our way of living, in future?.

Will all Avenues of rort in the Housing Market be viewed in the same light of...Day....Today.

Or is the road to Hell, for poor people, living in garages, but paying taxes to benefit MP's, still OK.

It has been going on for many a year.

There are many truths that need to be...Fully Addressed, should they not?.

Just asking.

Any policy development should force property already/previously bought to be sold within 12 months.
I am told the Australians have allowed parents of students to buy property for personal accommodation but it had to be sold withing a reasonable period if residency was not granted. How true this is, I know not.
Something similar here would help recover our property.
This suggests that overseas resident buyers who are unwilling to try for residency be forced to sell. If they try a backdoor using locals as agents the property should be taken without any compensation payable.

Temporary residents are allowed to buy existing property in Australia, but they are supposed to sell them when they leave the country. Many never do, and there is no enforcement of the rule to sell at all.

This is why I am asking what is the definition of "non-resident"? If temporary residents like students, families, and work visa holders are still allowed to buy property, then the new rules will make zero difference.

Outstanding stuff from our new Government very very pleased

Hey there.
Don't ban the non-resident sales.
Tax them to hell. Both sides say 20% purchase tax in and 20% sales tax out.
That way we catch the ones already here.
If they are using local proxys then seize the whole yield.