New exemption to foreign buyers' ban

Craig McCulloch, Acting Political Editor
craig.mcculloch@rnz.co.nz

 

Wealthy foreigners on a so-called "golden visa" will be allowed to buy a luxury home in New Zealand once more, with the coalition government confirming a new exemption to the foreign buyers' ban.

The announcement ends months of negotiations between National and New Zealand First - given the latter helped introduce the ban with Labour in 2018.

Under the change - unveiled by Prime Minister Christopher Luxon on Monday afternoon - holders of the Active Investor Plus visa will be able to buy or build one home worth at least $5 million.

"It's a happy compromise," Luxon said.

"We're doing everything to make sure that it's not just frothy speculative... driving a property market. It's actually genuinely about supporting more investment which drives more jobs."

In a post on social media website X, NZ First leader Winston Peters said the government had ensured tight restrictions around the policy including excluding the sale of rural, farm and sensitive land.

Peters said the $5m threshold excluded more than 99 percent of New Zealand homes on the market, "protecting the vast majority from sale to foreigners".

"This is a common sense move that provides a balance between protecting New Zealand's housing market supply and affordability, and ensuring we allow people who are wanting to invest millions of dollars into our economy to rightly be able to own a home and live in it when they are here."

Foreign buyers have been largely locked out of the housing market since 2018, when the Labour-NZ First coalition imposed a ban amid rising concerns about affordability. Exceptions have been made for Australians and Singaporeans under trade deals.

Speaking to reporters in Auckland, Luxon said the change would not inflate the property market given the small numbers of people and property affected.

Only about 10,000 houses across the country would currently be eligible for purchase, Luxon said, 80 percent of them in Auckland and 10 percent in Queenstown.

"We've found the balance," he said.

"We don't want to drive up property prices."

The government's Active Investor Plus or "golden visa" programme includes two pathways to residency, requiring either a minimum investment of $5m over three years in higher-risk ventures, or $10m over five years at a lower-risk threshold.

Latest Immigration New Zealand data shows there have been 308 golden visa applications, covering 1000 people, representing a potential minimum investment of $1.6b.

Almost 40 percent of applicants are from the United States.

 

Standing alongside the PM, Immigration Minister Erica Stanford said she expected more interest in the programme as a result of the announcement but she was "not expecting it to blow out".

"We are talking about hundreds of people, not tens of thousands," she said.

Deputy Prime Minister David Seymour, who's in charge of the Overseas Investment Act, said he expected the changes would be added to legislation currently before select committee and would pass into law before the end of the year.

"We can't afford to turn our nose up to friends around the world that want to bring money and know-how to New Zealand," Seymour said.

National campaigned in 2023 on letting foreigners buy homes worth more than $2m subject to a 15 percent tax, but was forced to abandon that plan during coalition negotiations with NZ First.

Luxon has since conceded National set its $2m property price threshold "too low".

The two parties have since been locked in negotiations over the issue.

In October, NZ First leader Winston Peters told NewstalkZB he would consider changes for the "right person with the right investment," but it would need to be far more than "a lousy $20 million".

Both Labour and the Greens have characterised the policy as the government "rolling out the red carpet" for mega-rich overseas investors.

Labour housing spokesperson Kieran McAnulty said Luxon was clearly "out of touch" with the reality of New Zealanders struggling to buy a home.

"Homelessness is up, unemployment is up, and people cannot afford the basics at the supermarket, but Christopher Luxon made it his priority to drive up house prices again anyway."

Green housing spokesperson Tamatha Paul said, contrary to the government's claims, the move would make housing more expensive.

"Real estate agents will have every incentive to boost prices to $5m in order to sell to this new wealthy market, further shunting struggling renters and home-buyers out of contention."