After months of negotiations, NZ First has agreed to let wealthy investors buy a home here – but only one, and only if it’s really, really expensive, writes Catherine McGregor in today’s extract from The Bulletin.
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Foreign buyer ban eased after Peters’ change of heart
The NZ First leader, once the foreign buyer ban’s loudest champion, has now helped crack it open – if only a sliver. Under changes unveiled yesterday after months of coalition wrangling, holders of the Active Investor Plus visa will be able to buy or build a single house worth at least $5m. Rural, farm and other sensitive land remain off-limits, and the general ban on home-buying stays in place.
National has long opposed the current ban and campaigned on allowing the sale of houses worth $2 million or more – a sum Christopher Luxon has since admitted was too low. Now Peters has agreed to a limited carve-out designed to attract the global 1% to our shores, saying he’s confident the adjustment to the rules will not push up prices elsewhere. Alice Neville has a fun and useful explainer of all the changes, and what they could mean for house prices, on The Spinoff this morning.
Luxury real estate sector celebrates
While critics like Labour leader Chris Hipkins said the rule change would inevitably lead to higher prices throughout the market, those who work with cashed-up foreign buyers were jubilant. Former Labour minister turned immigration adviser Stuart Nash called the change “hugely positive”, despite having been a member of the cabinet that approved the original law. He stood by its intention, he told The Post (paywalled), but it had turned out to be “a very blunt instrument [with] unintended consequences”. He added that he planned to reach out to clients who’d given up on resettlement due to the inability to buy a house, in hopes of luring them back.
Another former politician, Hamish Walker, who now sells luxury property in Queenstown, said the $5 million threshold would protect buyers further down the price scale. “From my experience these clients are not looking at properties worth $1,2,3 million – they’re looking well north of $5m, up $10- 15m in some cases”.
New visa aimed at prospective business owners
The loosening of the foreign buyer ban comes just a week after the unveiling of the new Business Investor Visa (BIV), a fast track to residence for people buying into existing firms. Investors can achieve residency in 12 months with a $2m business purchase, or in three years with a $1m purchase. There are other criteria prospective investors have to meet, including the number of staff the business employs and how long it has been in operation.
Immigration advisor Tobias Tohill told RNZ the BIV could be a godsend for baby boomer business owners looking to retire. He said many long-established operations struggle to find buyers with the capital or expertise to take them on, and the visa could be a win-win for both sides.
Where the golden-visa money actually lands
While the Active Investor Plus visa, aka the Golden Visa, was designed to fuel the New Zealand economy, early evidence suggests most capital is flowing into managed funds and private credit rather than venture capital or direct company stakes. According to immigration lawyer Simon Laurent, who spoke to The Post’s Dita de Boni (paywalled), the small size of New Zealand’s venture and angel capital ecosystem is a stumbling block. The inflow of cash could amount to $3 or $4 billion by this time next year, he said, and “I don’t know if we have enough startups and businesses to soak up that capital – it’s almost too much of a good thing.”
As for where the money is going instead, Rebecca Stevenson at BusinessDesk (paywalled) reports that private credit funds have been major beneficiaries. The CEO of one said that the golden visa cash might be taking a circuitous route, but it was still going where it was needed. As a result of the increased funding, “firms were able to invest by hiring more staff, acquiring new businesses or increasing capital spent,” writes Stevenson.
