Nick Smith says IRD data on foreign ownership of rental properties show it's lower in NZ than Australia

This confirms the level of poor data. What is "relatively low"? Lower than Australia or lower than Fiji? Of the approx 20,000 retal owning taxpayers, just how many houses did they each own? And what about those rental property owners NOT paying tax?

We need an evidence base from which to draw proper conclusions.

National are digging this hole deeper and deeper.

"He also noted the Australian parliament was holding an inquiry into foreign ownership rules, 'which are not working and are not credible'."

They are not working because they don't stop foreign buyers, not because there isn't a foreign buyer problem in Australia! Talk about twisting the facts.

Hang on. We know from census that the number of New Zealanders that own their own house is decreasing. While the IRD may be indicating that the number of non-resident landlords that have made themselves known to the IRD has not changed much, this says nothing about home many properties are owned.

To claim negative gearing on NZ property investments an Australian would, I assume, have to declare that investment to Australian authorities in some manner. I don't know if the Australian's have an equivalent of our freedom of information act, but possibly a query from someone in Austrlalia  of "How many Australians admit to the AU government to owning NZ property (and how much do they admit to owning)" could be matched to a request to NZ authorities of "How many Australians are known to the NZ government to owning NZ property (and how much are they known to own)"

2011!?

Nick Smith: “Well, ah the IRD tells me that 3 years ago it wasn’t a problem so everything’s fine, nothing to see here folks.”

Seriously where is the up to date data when you need it?

"Of those, 88% were residents, 11% were non-residents and 1% were of unknown residency.

Treasury said in the briefing paper that non-residents included New Zealand citizens living overseas, including those who moved overseas but rented out their homes while overseas."

So when you take out the Kiwis living overseas for a while, and renting their houses while they're gone, you're looking at a VERY small percentage of foreign ownership. 

National is getting a little bit panicky... they don't want to spook property owners who want to see their properties double in value each year or so... at the same time they realise that the growing number of non-property owners is reaching a tipping point and that creates a little bit of a conundrum for them... so the likes of Smith say silly things like... We actually don't know how many properties are owned by overseas investors, we certainly aren't going to do anything realistic to find out, but we can promise you there aren't that many... or something similar....

THIS IS 2011 DATA!!!!!

It does not tell us, how many houses are foreign owned including ones that are not rented, it does not break it down into areas, you can almost guarantee it is far more in Auckland. It does not tell us how much of this 11% has part or all of the rental paid by the govt in the form of topups and other benefits. 

11% is actually quite a lot to my mind, anyway and dollars to doughnuts it will be more now, 3 years AFTER these figures.

For months now you lot have been asking for data on foreign ownership and now that you finally get it you try to reject it because it doesn’t say what you’d hoped…  Unbelievable. 

Yeah, more misdirection, smoke and mirrors here from folks very determined to maintain culpable deniability. Questions arising include, number and value of properties owned, ownership by companies with foreign shareholding, origin of funding and locals/residents holding property for non-residents.

If you can be required to show photo ID to buy beer at any outlet in the country I fail to see how this would be an inconvenience when completing the screeds of paperwork for property purchase. This ID should clearly show nationality of all parties, including listing all shareholders and all directors of all companies and declaration of source of funds.

Better still this could happen as part of the foreign investment process where incoming money is vetted before it can be spent here. Only funding from legitemate sources may be cleared for property purchase. It would also allow control of the level of investment overall.

Assuming there is some credibility to the figures supplied, there may be a real problem if the number of foreign buyerrs substantuially exceeds the number of like sellers. That is the increased number of them. That increase is preventing a resident family from owning that property or is increasing the value of the stock for sale.

Similarly the number of investors as a whole is probably increasing and that means again more competition for stock where immigration numbers also add to the demand against the available supply.

We need a combination of policies that deal with demand as well as the one sided supply issue that ignores demand pressure used by the National led government

1. Deal with immigration numbers based on need and only need

2. Stop foreign buying and incentivise them to liquidate.

3. Change tax rules to balance between investors and occupiers.

You will not get any of these factors to be dealt with by the present adminisration and only a little more likely by any alternative but at least they may recognise the problems and move along rather than stay asleep as now.

Even if you accepted the validity of the calculation, which I don't, you would have to then make a judgement call on the 11% figure.

Mr Key says 11% is low.

My view is that 11% is huge, - huge.

And 11 % is more than enough to have a major influence on the whole sector

I am a little confused. So we have 20k odd overseas owners incl expats declaring rentals, we don't know what % are foreign, we don't know how many houses they own and we don't know how many more foreign owners that don't rent or declare them.

How is 11 or 12% small???  That's 1 in 8 or 1 in 9 rentals!!

We know about a third of properties are rentals so say 1.8m homes or something of that order, then 600,000 rentals means about 70,000 are owned by non residents!!

70,000 homes owned by non residents that's like the whole of Otago!  That's a big number not a small one...

This is absolutely bizarre.  Presuming that their "take a stab" figure is correct, how can you say that 11% is "very small"?  What then would be a "large" proportion?  50%?

Plus:  What proportion of the tax claimed does this represent?  These won't be cheapo rental properties in the sticks, it's million dollar houses in Auckland.  This will magnify the distortion.  And it raises a new issue:  So we are giving generous tax breaks to foreigners for rental properties, and then not claiming a CGT on their proceeds? 

National might call it piffling; I call it staggering and unacceptable.

What I want to know is, while we might now have some 3 year old data on what proportion of landlords are foreign, how many actual properties are owned by them. A huge number of landlords are made up of individuals that may have one or two investment properties.

Theoretically it could be that 88% of the landlords own 50% of the property while just 11% own the other 50%.

This actually tells us nothing useful and again, IT IS 3 YEARS OLD

Oh and the one we have ALL missed.

These figures are based on just those that submitted a tax return, who is prepared to bet that EVERY single foreign landlord puts in a tax return here, then?

Smith is very very silly indeed, to expect people to fall for this, as it will be pulled to bits in the end and then some

Okay so 11% foreign property tax returns in 2011.  Each return could constitute a multimillion dollar property portfolio consisting of dozens of residential houses.  According to interest.co.nz (here) our accommodation supplement is projected to blow out to 2.2 Billion dollars by 2016 with a lot of that going to foreigners!  Not to mention that foreign owners can claim depreciation on chattels, tax free capital gains, and other little tax minimization gimmicks.  At what point does middle class New Zealand start marching in the streets because they're getting raped by rent seeking foreign capital.

The figures also do not tell us how many houses are also actually owned by recent immigrants that continue to stream in.Auction house feedback tells us of the massive Asian presence and yes many of them are possibly Kiwis now following their nationalization but where is the benefit to New Zealand. National tells us they are helping to build the housing required by all the immigrants - well hello. No immigrants - no housing problem.  Also no traffic problem, no health problem, no education problem. I really fail to see how we benefit here from the immigration going on. There is actually a revolution going on with social change in Auckland.

I am told there is a point system immigration uses but surely a major point would be how the applicant skills will fill a gap. 2$ shops, station attendants and cafes can be managed quite well by our own unemployed youths. Going through the malls these days on the Nth  Shore it is quite noticeable that Asians are running a lot of the cafes and they do not seem to be employing any non-asians at all. How is that for assimilation?

Also quite noticeable is that a lot of these cafes are cash and carry with little record keeping. Asking for an invoice recently at a food hall threw the young girl into a tizzy as she did not know how to enter the bill up on the register. Little wonder that the tax take is not as high as expected.http://www.3news.co.nz/Govt-tax-revenue-up-but-less-than-expected/tabid…

I think an important point you are missing is that I am a non-resident for tax purposes and have multiple properties in NZ. I was born in NZ to NZ parernts and am a NZ citizen living overseas so does that mean I am a foreigner? Probably half of that 11% are Kiwi's...

Things don't look good. We've got an unproductive economy with an unprecedentedly high dollar and consequently an uncompetitive labor force.  Rising unemployment which could get a lot worse.  Property prices in provincial centers like Palmerston North, Gisbourne, Tauranga, etc are atrophying as are wages in those locations.  It's a reflection of the endogenous deflation which is occurring because of the depression that we're in.  Superimposed on that is the exogenous inflation in asset prices, primarily Auckland residential, which is indirectly caused by massive stimulus / monetary easing going on overseas.  By raising the OCR, the RBNZ gave the NZ economy the "beat down" when it was already on its knees.  I guess the baby boomers (aged 59-68) are deleveraging en masse and if you read Steve Keen you'll know that means a contracting money supply and reduced aggregate demand.  Perhaps then massive foreign investment is a necessary evil, but surely it can be redirected somewhere other than residential property?  It's not xenophobia, it's common sense.  Tax cuts, austerity, government surplus, rent seeking foreign capital.  Its all a guaranteed recipe for inequality and poverty.  Auckland is turning into a gloriously wonderful place to be rich, but an utterly miserable place to be middle class or less.    

I met an Australian couple in Mt Tamborine over summer (it's very nice by the way) who bought houses in NZ, gave them a lick of paint and on-sold them to kiwis for a nice tax-free profit.  This peddling of houses like stolen watches is the problem, not rentals.  And what about money laundering through NZ property?   Let's see some data on that Mr Smith.  Crims are hardly going to declare their rental income.

It's actually incredible that the best figure they could produce was 11%.  Shows how much of a problem it is.  This issue is causing as much damage to the government as the corruption allegations.

11% is actually a pretty big %...too big....not alone in causing the isue, but a fix.

regards

You (read we need) want up to date stats? Close to 100% of foreign owned properties would be managed by NZ property management companies and they will be paying BOND to Housing NZ. Get the paper work organized by Housing NZ via the bond payers.  Make it a legal requirement.  Not rocket science!  

probably over half of that 11% are non-resident kiwis like myself...

The figures that are needed are not some airy-fairy 3 year old ones that only take into account those who submit tax returns and identifies those that it can, as foreigners, but what is going on now. You don't need any huge house by house owner identification, all you need is to introduce a register where people MUST provide proof of citizenship and identify where the money for the purchase is coming from for house purchases now.

If you've been to an auction you'll know how influential 11% of the audience can be.

Its the marginal buyer that sets the price, 11% of people having more means to buy is significant. 

What asian buyers are to auckland, auckland PI's are to the rest of the country.  A small % is all it takes to influence an entire market, such is the way property is valued and sold (1 or 2 sales sets the price of the whole neighbourhood). This cycle a repeat of the last.

I suggest selling your Dart Energy shares I told you to buy 3 months ago (or better yet waiting until igas deal complete to get 19.1c AU) and buying a 7% yielding property in palmerston north.

http://www.interest.co.nz/property/68396/qv-says-annual-house-price-growth-slowed-96-past-month-average-price-4675k-auckland-p#comment-775897

Finance Minister Bill English repeated that the Government was focused on housing supply and was not taking any specific steps around foreign ownership.

...

Good luck:

M ai n F i n d i n g s

Over the last two decades New Zealand experienced a threefold increase in housing

prices. The largest surge in housing prices in recent years occurred between 1998 and

2007, a period of housing price growth in many developed economies. Since 2007,

housing price growth remained flat until 2011, and then prices once again embarked on

an upward trend. However, recent housing price growth has been concentrated in

Auckland and Christchurch.

The purpose of this report is to compare and contrast New Zealand housing trends and

policies with those of United States (US). The main findings of the report are summarized

here:

 Global forces, which were heavily influenced by US monetary policies and lending

regimes, led to significant housing price increases in the US, New Zealand and many

other countries during the 1998-2007 period. Between 2008 and 2012, US housing

prices tumbled in the housing market collapse, whereas New Zealand prices were flat

during the same period.

 Housing markets now appear to be recovering in the US, and prices in New Zealand

are also trending upward. However, the recent rise in prices in New Zealand is driven

by the Auckland and Christchurch markets; housing prices elsewhere are stable.

 Auckland housing pressure is partially the result of international in-migration and

limitations in the ability of housing supply to quickly respond to demand.

 Christchurch conditions are the result of housing supply problems resulting from the

earthquakes in 2010 and 2011.

 In the US, differences in regional housing price pressures are driven by population

growth coupled with supply constraints due to terrain, bodies of water and land use

regulations.

 US cities that are more similar to Auckland (high amenities, growing populations and

physical land constraints) experienced relatively high rates of housing price growth;

even if Auckland’s housing supply could quickly match demand, population growth

coupled with income-driven demand for amenities within a constrained land

environment can result in rising land values and thus housing prices.

 Appropriate responses to land value increases should be a combination of increased

urban density and new development on the periphery. However, in an effort to

preserve their quality of life, existing residents often impose restrictive land-use

regulations through their local governments. This constrains housing supply and thus

exacerbates the housing affordability challenge.

WP 14/11 |

Housing Affordability: Lessons from the United States

Ok if we have 20,000 non-resident landlords that the IRD know about, 50% are ex-pat kiwis, they own an average of 5 properties each that is 50,000 houses owned by non-NZers. If only half of these owners are declaring to the IRD that could be 100,000 houses. This was calculated with the help of a couple of boffins on the back of a ciggie packet .

@Value Added | 13 May 14, 11:42pm

They are liable for capital gain tax in Australia VA.  I have to pay CGT for our own home when I sold it in Auckland.  CGT is calculated from the time I bought my home here in brisbane.