Deputy Prime Minister Winston Peters says he may be willing to allow overseas buyers to purchase some property in New Zealand, but only above a high threshold.
In 2023, National campaigned on overturning a Labour–NZ First Government regulation which blocked most non-residents from buying residential property
The party proposed allowing overseas people to purchase houses selling for more than $2 million and taxing the transaction at a 15% rate.
This may have helped to facilitate foreign investment in productive assets and would have raised some revenue to help fund the income tax cuts promised in Budget 2024.
However, it was eventually ruled out in the National–NZ First coalition agreement which said the tax plan would “not include a repeal of the foreign buyer's residential property ban”.
While that phrasing seemingly rules out lifting the ban, Winston Peters seemed open to some changes in a recent interview with Bloomberg.
He told the financial news organization that he would consider relaxing the rules for ultra-high net worth foreigners that were looking to invest more broadly.
Someone who was interested in investing closer to $50 million could be permitted to buy a home, despite the coalition agreement, as it would be in the nation’s economic interest.
Already there has been at least one deviation from the twin coalition agreements National struck with the Act and NZ First parties.
Restoring interest deductibility for commercial landlords was supposed to be phased in faster than it eventually was, according to the National–ACT coalition agreement.
ACT Party leader David Seymour said the slightly faster track ultimately wasn’t worth the complication of applying the policy retroactively.
This may imply there is room for some movement in those coalition agreements, where the three parties can be convinced.
Unbanning ultra-high net worth home buyers may help with plans to attract more foreign investment, but it is unlikely to be a reliable replacement for income tax revenue.
In the interview with Bloomberg, Peters said lifting the ban for purchases at some threshold set meaningfully higher than $2 million “might be an inevitable conclusion”.
Budget 2024 will be released on May 30 and is expected to include income tax cuts, as well as spending cuts and revenue measures to fund them without taking on any extra debt.
Crown accounts are already expected to remain in deficit until 2028, which means the Government will be borrowing to cover the cost of ongoing expenses.
Finance Minister Nicola Willis has promised the tax package will not make the deficit any worse than it would have been without it.
67 Comments
It's a spreadsheet, probably riddled with a bunch of circular references, missing absolute cell references where needed and incorrect parenthesis structure resulting in a borked order of operations and incorrect results.
She's checked over her spreadsheet dozens of times and it keeps spitting out the same numbers so claims there's no hole. Too proud to have someone eyeball it over. She should upload to Google Docs so we can peruse.
The coalition is about to find out the hard way that ultra-high net worth individuals are particularly good at avoiding taxes. The only tax revenue this lot can count on from such transactions is the GST paid by wealthy foreigners on services received from their tax lawyers/accountants in NZ.
I heard Brooke van Velden claim that re-opening the 2m+ market to such investors should boost premium housing construction in NZ, which will cross-subsidise cheaper housebuilding for younger Kiwis.
These people are no less spin doctors than their predecessors, somehow linking all their policies that directly benefit the super-rich as a huge favour to the commoners.
"I heard Brooke van Velden claim that re-opening the 2m+ market to such investors should boost premium housing construction in NZ, which will cross-subsidise cheaper housebuilding for younger Kiwis."
And there we have it ... The roundly debunked "trickle down" theory!
Brooke van Velden needs to read up on why the trickle down theory is nonsense before making a fool of herself (again).
I know - lets get these wealthy people to actually build some housing for community housing providers and then we'll talk about they may get.
By the way ... Buying an existing house - irrespective of it's value - does not make you an 'investor' as you've created nothing.
The economic impact of the policy is likely to be many times more lucrative for the handful of rich list property owners (likely including the largest political donors in NZ) than any tax received for the country. I wouldn't put much weight to the $700 million figure.
If you are genuinely interested this is a good place to start: https://en.wikipedia.org/wiki/Laffer_curve
You linked to an article debunking "trickle down economics". Still no source for this theory that is getting debunked however. Could it be a straw man creation? For such a widely used term (only used by people debunking it) it sure is difficult to find the source.
I believe hope has been taken away from a huge amount of young people with where our property market is. Many will never be able to buy a house.
Another thought is that if we sell our best properties to foreigners it may even take the hope and drive away from our most successful as they will be less likely to be able to compete with foreign money. Our best properties should be able to be bought by our best people (ideally those bringing in new export money though innovative businesses, not just property people).
The shallow, small mindedness and petty collection of comments above is embarrassing for NZ. Of course allowing ultra rich people to buy a house in NZ is beneficial for NZ, these people spend large, and that's especially good at a time when Kiwis are closing their wallets. Some will settle here, open up a business and employ people, but no "we don't want people that are richer than us, or of other ethnicity here", we prefer the status quo, and complain about every new policy proposed.
The shallow, small mindedness and petty collection of comments above is embarrassing for NZ.
Yvil, it seems like 90% of your comments these days are you complaining about other commenters. People are perfectly within their rights to disagree with policy proposals, whinging about them having a different opinion to you isn't exactly adding much to the discourse.
Indeed, and I'm "perfectly within my rights to disagree with the incessant whinging" about everything by so many commenters. I beg to differ about "having a different opinion not adding much to the discourse". I think the constant negativity about everything on this site is detrimental, firstly to the authors themselves and also to the general daily mood.
I get that you're fed up with the constant griping on here, but don't you think that turning around and griping about the gripers is a bit, well, ironic? Everyone's got their take on things, and that's fine. It's what makes a discussion interesting. But when you're just commenting on the comments, it's like we're going in circles and ends up being pretty divorced from the topic itself which leads to generally worse discourse.
Some will settle here, open up a business and employ people
You're clearly confusing the right to buy property in NZ with the right to live in NZ. Being able to invest in property doesn't automatically qualify you for residency. Maybe try and understand policies before you spew off on other commenters.
If the real benefit to NZ from rich is more businesses and jobs, why aren't we opening up the investment visa channels again instead? Get a business visa by employing 5 or more people in NZ, then residency if you run the business for at least 2-3 years. They are free to buy as many houses as they want at any price thereafter.
For the record, I am not at all opposed to foreigners buying houses in NZ provided the government also slaps a tax on capital gains for non-residents at the point of sale, no exemptions.
Implementing a land value tax (ᵐᵉ ᵇᵉᶦⁿᵍ ᵇʳᵒᵏᵉⁿ ʳᵉᶜᵒʳᵈ ᵃᵍᵃᶦⁿ) could be more advantageous, providing a consistent source of revenue instead of a fleeting boost. I think part of the issue people have with introducing foreign buyers lies in the inadequacies of our tax system regarding residential properties. Introducing more participants could potentially worsen an already not ideal situation.
If they settle here then they can buy a house, so I really don't see the point you are making.
Blind Freddy can see that this will be expanded to the average house before you can blink.
You have to love the coalition, so bereft of idea's that they are back-tracking on the foreign buyers ban already.
Yvil, I agree with you that allowing ultra-rich people to buy would be beneficial and I'd personally love seeing Elon Musk enjoy a cuppa at our local coffee shop (not that I think he ever wastes a minute of his life sitting in a coffee shop).
The problem was perhaps that National initially proposed lifting the foreign buyer buy for properties priced above $2 million. You barely need to be a slightly-rich foreigner from another first world country to be able to afford that. And considering $2 million barely buys you a modest family home in a decent school zone in Auckland, proposing a $2 million bar was always going to be a horribly bad idea. Anyway, allowing this would cause all $1.8 million houses to be priced above $2 million instantly, which would drag up prices for the lower levels.
If Winston said he'd allow foreigners to buy houses of, say, above $50 million, or even $15 million, the comments might have been different. So I think National's ridiculous $2 million cap is to some extent to blame for the comments on the article. Nobody wants to see that bad idea resurrected, especially not to give 'relief' to a few local property parasites (investors, REAs, etc). OK, except perhaps mentioned property parasites..
"Of course allowing ultra rich people to buy a house in NZ is beneficial for NZ, these people spend large,..."
Actually, they spend bugger all in the local economy. Might I suggest you have a look at the economic progress of much of the Caribbean for an example. They too were told how beneficial it would be.
The only people in NZ who would benefit would be the wannabe rich who love to name drop while pretending they move in the same social circles.
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