Wealthy foreign investors allowed to buy luxury homes in New Zealand

Wealthy investors on a so-called “golden visa” will be allowed to buy or build a house in New Zealand as part of a bid to attract more investment and to grow the economy.

Prime Minister Christopher Luxon announced the change in Auckland and framed it as part of a broader strategy to lure productive investment.

“We must roll out the welcome mat and incentivise investors to choose New Zealand as a destination, not just for their capital skills and international connections, but in an increasingly uncertain and complex world, to also build a life for themselves and their family,” he said.

The decision marks the first major softening of the foreign buyers ban, introduced in 2018. Under the change, wealthy individuals on the Active Investor Plus visa who commit to investing at least $5 million over three years in New Zealand managed funds or businesses to buy or build one home in New Zealand with a minimum value of $5 million.

Standing alongside ACT leader David Seymour, Luxon described the move as a “happy compromise” between the three coalition partners. New Zealand First leader Winston Peters has previously opposed foreign home ownership, but Luxon said the parties had found common ground.

But Labour’s Chris Hipkins said the Government was betraying would-be home buyers. “This will force up the price of all homes,” he said.

He singled out Peters on Monday who while in coalition with the Labour Government in 2018 passed the original foreign home buyers ban.

Hipkins reminded Peters of his own words, reading from a piece of paper: “I'll quote directly from Winston Peters; ‘In a property owning democracy, the Government's first priority for home ownership should be New Zealanders - not allowing a gross distortion of the market by deep pocketed foreigners who don't care about struggling Kiwis.”

Peters later responded in a social media post, claiming the ban on foreign buyers remained in place and it was a “common sense move” to allow holders of a current existing Residence Class ‘Active Investor Plus Residence Visa’ “who are investing millions of dollars into our economy”, to be able to own a home in New Zealand.

“We have ensured that there are tight restrictions on eligibility and what these current residence visa holders can purchase. Including that existing restrictions excluding the sale of rural, farm, and sensitive land will still apply, as well as ensuring we do not get a repeat of the Canadian experience – where there is a constant recycling of the same investment funds,” Peters said.

“These Investment Visa holders will be restricted to only one home, either purchasing an existing home or building a new home, with the value of that home being a minimum of $5 million. This will exclude over 99% of New Zealand homes on the market, protecting the vast majority from sale to foreigners, and will not affect the wider housing market for Kiwis.”

Luxon was joined by Immigration Minister Erica Stanford and Deputy Prime Minister David Seymour in Auckland and shrugged off questions about why Peters,was not there.

Luxon said Peters, who was a key architect of the 2018 ban when he was in coalition with Labour, was part of a “really constructive” discussion on the issue at Cabinet and was also keen to attract overseas investment without driving up property speculation.

“Both of us don’t want to see what we have seen in the past ,” the prime minister said.

“This is how we create jobs, this is how we create higher incomes, this is how we create growth.”

Seymour, who is in charge of changes to the legislation, added that the country needed foreign investment. “We can’t afford to turn our nose up to friends around the world that want to bring money and know-how to New Zealand,” he said.

He expected the legislation to come into law before the end of the year.

Luxon said there were 300 active investor applications which, if approved, equated to $1.8 billion of new investment.

The majority of the high-value homes — 80% — are in Auckland, while 10% are in Queenstown, Luxon said. He did not expect the change to drive up house prices because the homes represent fewer than 1% of the housing market.