Foreign home buyers' ban passes first hurdle

The Coalition government’s bill to ban overseas buyers from buying New Zealand homes has passed its first reading, with 63 votes for and 57 against but following harsh opposition criticism over the rush.

The Overseas Investment Amendment Bill now goes to a select committee to be further discussed by MPs, who will receive submissions from interested parties.

The bill will amend the Overseas Investment Act (OIA) to classify residential housing as sensitive and it will mean non-residents or non-citizens cannot buy existing residential dwellings.

“Foreign buyers will not be able to buy residential property unless they are either increasing the number of residences and then selling them or converting the land to another use,” Land Information Minister Eugenie Sage says.

“They will need to be able to show that this will have wider benefits to the country.”

Ms Sage says the bill will go through, what she called a “truncated select committee process” and will be in force in the first quarter of next year.

Speaking in support of the bill in the House this afternoon, Regional Economic Development Minister Shane Jones said he was “sure the bill would pass” into law, given the numbers of MPs supporting the bill in the House.

“Irrespective of which select committee it goes to, irrespective of what mischief [National MPs] might get up to – the reality is once this bill gets there, it will affirm  New Zealand is not for sale,” Mr Jones says.

Why the rush?

However, National’s finance spokesman, Steven Joyce, says he is “disturbed” by Mr Jones' comments on the bill’s progression through the select committee process.

He is critical of this “truncated” process, saying it is rushed and is a “load of rubbish.”

Usually, the process of getting a bill through the select committee process and subsequent readings can take months and, in some cases, years.

This was a concern the Treasury detailed last week when it said the government’s rush to ban overseas buyers from buying homes could have “sub-optimal” or “unintended consequences.”

“When the Treasury says to a government, ‘we have some concerns about this, we think the process is too rushed and we think there could be some unintended consequences’ – then it’s important the government of the day listens,” National's foreign affairs spokesman, Gerry Brownlee, says.

But Ms Sage argues the government had no choice but to get the bill passed as quickly as possible before New Zealand signs the newly named Comprehensive and Progressive Agreement for Trans-Pacific Partnership (which replaced the Trans Pacific Partnership) trade and investment pact.

 There is a need to move swiftly to ban existing house purchases by foreign buyers ahead of ratification of the CP-TPP.

“There is a narrow window and we need to be able to have this legislation introduced and considered by Parliament before that agreement is ratified," she says.