Some changes might be coming to the New Zealand real estate sector. Restrictions on overseas sales of property may be set in stone soon and many foreign investors are hastening their paces in picking up properties.
Proposed amendments to Overseas Investment Act may happen soon
New Zealand’s latest government which came into power in 2017 has vowed to tackle the issue of affordable housing. Proposals to amend the Overseas Investment Act have yet to be set as new laws but are now passing through Parliament. Some of the measures proposed include a ban on foreign speculators buying residential property.
The cases of home transfers to non-New Zealand citizens and residents have been on the rise. In Auckland, the proportion of transfers in Q1 rose for the second consecutive quarter, in some popular suburbs by 19%.
In the South Island resort town of Queenstown, these type of transfers were at 10%. The concern comes at the rate of increase, doubling in one quarter. The average home prices in Queenstown rose 9.6% and now stands at NZ$1.15 million ($1.1 million). Home prices here are now one of the highest in the nation.
Definition of “residential land” and citizenship may also change
The criteria used to determine what is “residential land” may also change, hence affecting the purchase of certain property types. One of the proposed changes is to treat properties classified as “residential” or “lifestyle” to be valued as “residential” or “sensitive” land. Licenses in flat or office-owning companies will also count towards being residential land.
The other considerable change is the definition of ‘ordinarily resident in New Zealand’. Should the bill be passed in Parliament, buyers who are not of natural New Zealand descent will require a permanent resident’s visa, at least one-year’s residence in New Zealand, and presence in New Zealand for at least 183 days in the past year.
Overseas buyers may also be tested to see if they meet the requirements to purchase a property in New Zealand. The tests will check for commitment, increased housing, and benefit.