Our Terms & Conditions | Our Privacy Policy
Photo: RNZ / Mark Papalii
Labour has come out swinging against the government’s plan to let so-called ‘golden visa’ holders purchase property, saying New Zealand homes should be for New Zealanders.
But it has already realised a repeal may prove difficult, as re-imposing a ban could breach international trade obligations – the same obligations Labour warned National’s tax on foreign buyers could breach.
That tax was abandoned in coalition negotiations with New Zealand First, along with the $2 million minimum value on property National set before the election.
Instead, changes announced on Monday meant holders of an Active Investor Plus residency visa would be able to buy or build one home, worth at least $5m.
Updated in April, the visa required a holder to put $5m into ‘high-risk’ investments over three years to get residency.
A secondary ‘balanced’ category required a minimum investment of $10m over five years, and allowed for lower-risk investments.
Real estate firms and venture capitalists have already welcomed the changes, saying they would make people more likely to stay and invest in New Zealand.
The Labour-New Zealand First coalition introduced the foreign buyers ban in 2018, with the support of confidence-and-supply partners, the Greens. National and ACT opposed it.
New Zealand First also kiboshed National’s foreign buyers tax in 2023, believing opening up the market and allowing “deep-pocketed foreigners” to purchase a bolt-hole would distort the market.
Now, Winston Peters was convinced the new eligibilty criteria under the Active Investor Plus visa sruck the right balance, and was at pains to stress the foreign buyers ban remained.
“This change will allow individuals who have been through the rigorous process of getting an Active Investor Plus Residence Visa to invest in the country and in an ultra-high-value home, because they will have already invested millions of dollars in the growth of the New Zealand economy,” Peters posted on X.
New Zealand First leader Winston Peters.
Photo: RNZ / Samuel Rillstone
Active Investor Plus visa holders did not need to be in New Zealand for six months of the year, meaning under the existing ban they would not meet the threshold for buying a house under the Overseas Investment Act.
Labour leader Chris Hipkins said if those investors were truly invested in New Zealand, then they would not need the exemption.
“They would be here enough to be able to buy a home already. These are people who are going to be buying houses, but spending less than half of the time living in New Zealand, which means those homes are going to sit empty most of the time,” Hipkins said.
He said more pressure at the top end would pull up house prices at the lower levels.
“The advice that we had in government is that you can’t disconnect the houses at the top end of the market from houses further down the market, because if you push up the price of homes above $5 million, the people who might otherwise have wanted to buy those move to the next bracket down,” Hipkins said.
“That pushes up the price of the next bracket down, which means further buyers push down into the lower bracket, and you actually push up the price of all homes.”
The risks of a repeal
Unlike National’s 2023 election policy, which was to impose a 15 percent tax on homes worth over $2m, the new announcement set a higher threshold and no stamp duty.
Luxon’s reasoning behind the change was blunt.
“We didn’t see any need to,” he said.
“We really want to make sure we’re doing everything we can to incentivise them to make the investments in New Zealand.”
National believed the foreign buyers tax would raise $740m a year, on average.
But the 308 applications for the Active Investor Plus visa could bring a potential total minimum investment of $1.8 billion.
“We’re hooking that up, not just to go buy a house and hang onto a house as a bolt-hole here in New Zealand. This is actually about you making a commitment to invest in our businesses,” Luxon said.
Prime Minister Christopher Luxon said the foreign buyers tax would raise $740m a year, on average.
Photo: Nick Monro
In 2023, Labour warned that lifting the ban but imposing the tax could be discriminatory and break New Zealand’s double-tax treaties and fair-trade agreements.
If Labour were to get back into government and re-introduce the ban, it could also be a breach of those agreements.
Hipkins acknowledged it was a tricky issue.
“We know when we introduced the foreign home buyer ban, we did that before the CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership] came into force, and a number of those other free trade agreements came into force, so we’d need to look very closely at whether we could reverse it and still stay compliant with our international trade obligations.”
Changes already spark interest
Real estate agents have already welcomed the changes, though in some cases would have liked to see the thresholds change.
Bayleys national director of residential Johnny Sinclair proposed keeping the $5m threshold for Auckland and Queenstown, but lowering it elsewhere.
“Looking at the stats, there were 963 properties sold over 3 million, of which 20 percent of those properties were sold outside of the Queenstown-Auckland regions. Therefore, I would have had the thresholds at five mil in Auckland and Queenstown, and then I would have reduced it down to three mil for the rest of New Zealand.”
He said the change would inspire confidence across sectors.
“With luxury properties, a lot of industries get a lick out of this. What I mean by that is tradies, lawyers, accountants, mortgage brokers, they will all benefit,” Sinclair said.
Sotheby’s International Realty managing director Mark Harris said the $5m threshold protected the lower end of the market, but also said there may be some Wellington vendors wishing it was slightly lower than $5m.
“This is a good place to begin, and then let’s say in a year’s time, if it’s not working as they expected, possibly they could tweak it or geo-target it so that it has different value points in different parts of the country. But I think this is a nice, simple way to approach it in the first instance,” he said.
Sotheby’s did not expect to be “inundated” but would be contacting some interested buyers it had previously had to turn away.
Harris said Sotheby’s had 68 properties over $5m at the moment.
“I think what will happen is this will encourage listings, so we might see a few more in that $5m-plus bracket come to market now because of this certainty now around the rule, with everyone knowing what it is and how it’s going to work.”
About 40 percent of the Active Investor Plus applicants were from the United States.
Caleb Paterson says some foreign buyers want bigger properties.
Photo: Supplied
Caleb Paterson from Paterson Luxury real estate said they may want bigger properties than what was on offer.
“I’ve been dealing with a couple of American families that don’t really like the style of homes that we have here, and they will look at engaging architects, builders and designers.”
He also believed the change would encourage more listings.
“I believe it’s a good thing for the New Zealand economy. My challenge at the moment is you’ve got the biggest conglomerate of wealth in that baby boomers category that haven’t been able to sell. So we’ve got this trapped up wealth that hasn’t been able to move through the economy. So that’s a positive.”
Contrary to Hipkins’ assertion that investors would just use the house as a bolt-hole and spend most of their time abroad, chief executive of venture capitalist firm Icehouse Ventures Robbie Paul believed most would spend their time staying in, and contributing to, New Zealand.
“These investors open so many doors, right? First, they just normalise that companies can be built and run from New Zealand, which was not the perspective many years ago. And then they bring their friends and their co-investors and their partners and folks from all around the world and all different walks of life to support and invest in the companies they’ve backed here in New Zealand.”
He said there was a difference between property speculators and people who wanted to invest and stay in New Zealand, and the change fixed one of the risks of the Active Investor Plus visa.
“There has always been a risk that people can park their money here for four years, take it out and leave, and never come back and always have a visa. I think most people want to avoid that, and one way to do that is for people to actually lay down roots and own property here,” he said.
“I would say the emotional attachment to a beautiful house on Waiheke or elsewhere is way more significant than a portfolio of investments in New Zealand.”
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.