Environment Minister David Parker says ACT’s suggestion for a carve out to be made in the foreign buyers ban for build-to-rent accommodation is unnecessary and will open the door to speculators.
ACT is calling for the Overseas Investment Act to be tweaked to specifically exempt build-to-rent accommodation from restrictions on foreign investment.
Asked by interest.co.nz whether he would consider making the change, Parker said: “No, we are not planning to change the law. There is adequate provision in the existing law for overseas investors to build-to-rent homes if they are adding to the supply of houses available to New Zealanders."
Under the existing law, foreign investment in non-sensitive residential land is allowed if the investor intends to increase the number of dwellings on the land.
The investor can hold on to the dwellings if they build 20 or more. If they build any less, they have to on-sell.
Parker said: “That hardly seems like an onerous test for anyone building new dwellings that add to supply.”
Foreign investment in a “long-term accommodation facility” is also allowed. The law specifically says this includes retirement villages, rest homes and student accommodation. ACT wants build-to-rent accommodation added to the list.
This would mean the foreign investor wouldn’t have to add 20 new dwellings to be given the thumbs up to own the dwellings. They could own the “long-term accommodation facility” if they add just one new dwelling to it.
Parker therefore accused ACT of simply being “interested in opening the door to overseas speculators”.
However, ACT said the existing law limits investment, as investors who build long-term rental accommodation struggle to sell their property on to other overseas investors.
“We should aspire for New Zealand to be a place where people want, and are able, to send their money, to provide for more development opportunities and choice of housing," ACT's housing spokesperson Brooke van Velden said.
She couldn’t provide interest.co.nz with an example of an overseas investor, interested in developing build-to-rent accommodation in New Zealand, who had been blocked from doing so.
Directing some GST revenue to local government
ACT has also released a new policy aimed at funding infrastructure.
It suggests central government shares half of the GST collected on a newly built house with local government.
ACT said this would incentivise councils to encourage more house building. Currently, new developments, requiring roads, water and sewage connections, are costing ratepayers.
“These costs act as a disincentive for councils to approve new houses and subdivisions,” ACT said.
Housing Minister Megan Woods declined to comment on the policy suggestion.
The Government is trying to address the same issue as ACT by inviting councils to apply for funding for infrastructure to support housing from its new Housing Acceleration Fund.
Rather than give councils the ability to generate more revenue themselves, the Government effectively wants a say in who gets what, and what it’s used for.
The first draw-down from the $1 billion contestable part of the fund was made today (Tuesday), and will support a housing development in Porirua.
The Government has also passed legislation enabling property owners who benefit from new infrastructure to contribute to the cost of that infrastructure through targeted rates.
However, the powers under this Infrastructure Funding and Financing Act 2020 haven’t been used yet.
33 Comments
Agreed, we got rich people here and we have money. We just need resources and labor. So it all makes sense if RBNZ tighten up monetary policy, as a result we can have stronger NZD to import resources and labor to help with increasing housing stock.
"New Zealanders 'fourth-richest in the world'"
https://www.stuff.co.nz/business/300340466/new-zealanders-fourthrichest…
Go figure: the only work experience outside of the Parliament he seems to have is as a policy stooge for climate change denying, right-wing populist lobby groups in Canada.
The worst part is he believes in all the traditional right-wing doctrines (gun rights, low tax 'burden' for the ultra-rich) but none of the good ones such as more local ownership. He has often voiced his idea of labour market flexibility being no limits to immigration.
I've always thought there must be some way that GST revenue could go back to councils. Most other developed countries have a way whereby local consumption taxes stay local.
I'd previously thought about the GST collected on rates, that could simply be waived (allowing rates bills to drop by ~13%) or keep rates bills the same and refund the money to the council, giving them large cash injections they could then prioritise for spending. Or I guess you could split the difference and have the government refund all GST money on rates to councils, but require councils drop their gross rates bill by ~7% at the same time, to give rates relief to residents.
Giving half the GST back on houses sounds like a sensible idea, although it might be hard to implement effectively. Perhaps giving GST refunds for all consenting work to the councils, as well as works related to infrastructure, would be an easier to administer compromise? Lacks the incentive of being a new money stream though.
I'd be in favour of it if there was some extra spice on councils - if we do this and then they just continue to increase costs ahead of household income inflation, then there's little to be gained out of it. I think people would want some assurances that we'd see the end of council charges increasing at many times the rate of inflation, perhaps a formal mechanism would be useful.
Something like fee maxima that limited Councils to the rate of inflation +0.5% PA only. Otherwise we are effectively giving a bonus to local authorities who have incentives to keep operating costs in line as things stand - in Auckland you get the rates increases AND the deferred infrastructure, which you likely don't get at all. That has to be part of any additional revenue stream conversation.
Rates have not been increasing enough to cover the massively increasing costs of infrastructure and councils have been underinvesting for years. Rates are not that expensive really. Our rates are around the same cost as insurance or power: that seems like fairly good value to me for roads, footpaths, public transport, rubbish, parks, playgrounds, events, town centres, storm water, etc.
Is that infrastructure councils should have been providing for, or is it infrastructure that they never had a hope in hell thanks to our population policies (or lackthereof)? I'd shudder to think what Auckland rates would be if we'd been providing for the population base we've taken on, but the reality is we had little control of that.
As for 'good value' - the fact my area has a hugely elaborate new playground in a park a few km from my house matters little to me if it takes me an hour and a half to get home each night and there's few alternatives to driving, and the only planned improvements to that have been pushed back two years at least (but let's be honest, it's indefinitely). Still paying that sweet regional fuel tax though.
Lanthanide, you echo my earlier comment on the other column here on infrastructure. Virtually it is a tax on a tax but it consists of ratepayers’ money and it should be dedicated to those communities surely. Don’t get me started on the inequity of calculating a service charge largely pro rata on values, but at least that would even that out somewhat if the money stayed in the locality. A couple of reservations though, firstly if the reduction was given to the rate payers, hard to see the councils just not clawing that back to previous rates levels & secondly some constraint on councils surel necessary to ensure extra funding ended up where it was needed, ie basic services. Perhaps central government retains it on n a pool and releases funds as/when required relatively.
The GST idea is not bad, although the first question that springs to mind is how would that significant revenue loss to central government be plugged?
Easy answer for Act - cut back public services etc - not so easy for the government of the day, whether Labour or National
Just why are ACT and National so keen on letting foreigners have a foothold in our property market? It’s been a disaster so far, with many properties bought by proxy for overseas investors/money launderers. Such a policy isn’t a vote winner with so many families, including middle NZ ones, fretting about how to get their kids into a house.
It is because:
A. National MPs own multiple investment properties and want their portfolio to rise to the moon
B. All the people giving donations to them are overseas rich listers who want NZ Citizenship.
C. It has never been about the collective good of NZ with them. Always been about what is good for their individual bank accounts.
Local government has been asking for this for a long time. It's hardly half baked. Government expects local government to borrow or raise rates to pay for infrastructure needed for homes. (These are the same councils who haven't been maintaining three waters infrastructure because they promised to keep rates down.) Rate payers won't have a bar of it which leaves councils between a rock and a hard place.
ACT voter too, but not re. open slather immigration. I prefer libertarianism that applies to people already here, not the whole world. (It really is hard to find a political home these days.)
These are the same councils who haven't been maintaining three waters infrastructure because they wasted ratepayers money for decades of white elephant vanity projects for vocal minority special interest groups (including cycle lanes) that were visible spends not hidden underground.
Fixed that for you.
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