New Zealand is looking to change its Overseas Investment Act and classify residential land as “sensitive”, meaning those who are not citizens will have to consult the Overseas Investment Office if they are looking to purchase property in the country.
According to Business Tech, the bill will allow non-resident foreigners to invest in new construction, but they will be compelled to sell once the structures are up.
This has not gone down well with the International Monetary Fund (IMF), who slammed the proposed change and labelled it as “discriminatory” and unlikely to improve housing affordability.
The amendment was prosposed by the ruling Labour party, in an effort to fix the country’s housing crisis. To achieve this, the government proposed measures such as a ban on non-citizens buying property.
This is however not supported by data, as only a tiny percentage of homes sold are purchased by non-citizens.
Critics of the proposed bill believe that this will have an adverse effect, and might only succeed in making New Zealand less attractive to overseas investors.
“The proposed ban in the draft amendment to the Overseas Investment Act is a capital flow management measure (CFM) under the IMF’s Institutional View on capital flows,” the statement read.
“The measure is unlikely to be temporary or targeted, and foreign buyers seem to have played a minor role in New Zealand’s residential real estate markets recently. The broad housing policy agenda above, if fully implemented, would address most of the potential problems associated with foreign buyers on a less discriminatory basis.”