The National Party proposed a foreign buyer tax which was to be introduced in July 2024. This did not survive the coalition Government negotiations in November 2023. The proposal was that on homes priced at $2 million or more, foreign buyers would have to pay a 15% tax on the property purchase price.
The foreign buyer tax would have been applied to people who didn’t hold a resident class visa in New Zealand. The foreign buyer ban was introduced by the Labour Government in 2018 which was concerned that foreign buyer activity was having an adverse effect on house prices.
Other countries whose property markets attract strong international buyer interest have also used this taxation method. British Columbia in Canada applies a 20% tax on residential property purchases in Vancouver, for instance, and in Australia, New South Wales applies an 8% tax on residential property purchases by foreigners.
National said foreign investment was needed to grow the New Zealand economy, and lifting the ban would lift productivity as well as support business and innovation. For investors and potential migrants, being able to own a home in New Zealand was a major factor in deciding whether to bring their companies and talent to Aotearoa New Zealand, it said.
The party gave the example of Rachel, a tech entrepreneur from San Francisco, who had an entrepreneur work visa to start a business here and wants to buy a $3 million apartment in Auckland to live in. She would pay $450,000 in tax on this.
National has said that international evidence suggests that foreign buyer taxes are more effective at controlling property price growth than a foreign buyer ban.
Australian and Singaporean citizens wouldn’t have been affected by the foreign buyer tax due to free trade agreements between them and Aotearoa. It noted that sensitive land tests, which include the likes of iwi land and heritage buildings, would have still applied.
Property analytics company CoreLogic estimates that around 3% of the country’s housing stock is valued at $2 million or more. It believed that the new tax revenue policy could have affected property markets which were particularly attractive to overseas buyers, or had a lot of homes in the $2 million plus price range. Queenstown-Lakes, for instance, has around 10% of its properties valued at $2 million plus, while Auckland is another property market with a reasonable proportion of homes worth $2 million or greater – an estimated 6%, according to CoreLogic.
