Agents support foreign investor law change

Prime Minister John Key indicated the Government would gather foreign investor information prior to this year's budget, announcing requirements for buyers to have a NZ bank account and an IRD number. Photo / Jason Dorday

Lawyers, real estate agents, accountants and landlords have expressed support for the Government's moves on foreign property investors buying residential property from October.

Evidence was presented by them this morning to the Parliamentary select committee on the Taxation (Land Information and Offshore Persons Information Bill), sitting at the Novotel Auckland Airport.

The foreign investor issue rose to prominence on Saturday after Labour released leaked data from one major agency which pointed to foreign buyers from China having a huge effect on Auckland's housing market, far out of proportion to the resident Auckland Chinese population.

Housing spokesman Phil Twyford accused the Government of inaction, leaving Aucklanders unable to compete or buy residential properties which are being snapped up by Chinese not living here.

However, before the Budget in May, PM John Key indicated the Government would gather foreign investor information, announcing new New Zealand bank account and an IRD number requirements.

That will give Land Information New Zealand and IRD the first hard data on the size and scope of foreign property investors, particularly in the heated Auckland market - an issue some people deny is a problem.

Whether that data is made public and precisely when has yet to be announced.

At today's hearing, lawyer Bryce Town of the Auckland District Law Society's property law committee said his organisation was broadly supportive of the law change, although he questioned some practical aspects of enforcing it.

"On a positive note, the committee does congratulate the Government in putting in place (and some would say it is long overdue) the ability to statistically analyse foreign ownership of residential homes in New Zealand. That statistical data should enable more accurate information to be obtained about foreign ownership in New Zealand," the committee's submission said.

Colleen Milne, Real Estate Institute chief executive, said REINZ would be assisting Land Information NZ and IRD to provide education on the proposed rules to her 13,000 members.

"The broad policy of the bill is to improve compliance with the Income Tax Act 2007 with the focus on gathering better information for tax compliance," her submission said.

"REINZ agrees that the required information should be collated by conveyancers from property vendors and purchasers to complete settlement of property transactions as part of normal conveyancing process."

Chartered Accountants Australia and New Zealand said benefits outweighed disadvantages.

"Although we have some concerns regarding the costs imposed by the proposals on vendors and purchasers of property, on conveyancing on offshore persons in particular, we do not believe those costs will outweigh the benefits for the community as a whole that will arise from easier and better enforcement of the property taxing rules and the availability of more accurate information about property market activity," the accountants' submission said.

NZ Property Federation president Terry le Grove and executive officer Andrew King were also broadly supportive but sought changes to the Bright Line Test, shortening it from two years to one so that property traders were captured but not longer-term investors who sold shortly after buying, but for reasons other than property traders.

Read the ADLSI Property Law Committee submissions on Taxation (Land Information and Offshore Persons Information) Bill here: