Restrictions on residential investments maintained
The coalition government is set to introduce changes to the Overseas Investment Act 2005, according to Housing and Associate Finance Minister Chris Bishop (pictured above).
The amendments are designed to facilitate foreign investment in build-to-rent developments, a move that aligns with the government’s 100-day plan objectives.
“Build-to-rent housing offers an opportunity to increase the supply of secure, affordable, and quality rental developments in New Zealand, placing downward pressure on rents,” Bishop said in an RNZ report.
Understanding build-to-rent developments
Build-to-rent developments, a relatively novel concept in New Zealand’s rental housing landscape, are characterised by their medium- to large-scale and strategic locations near essential transport links.
“The sector is currently small in New Zealand with only 22 registered developments, but there is great potential for growth,” Bishop said.
These developments, which are more common internationally, often provide longer leases, appealing to tenants seeking stability. Institutional investors and developers, including pension funds, typically finance and operate these complexes.
Streamlining overseas investment
Acknowledging the potential for growth within the build-to-rent sector, Bishop pointed out that the current complexity of New Zealand’s overseas investment laws has been a barrier.
The proposed legislative changes aim to simplify the consent process for overseas investors, enabling them to either initiate new build-to-rent projects or acquire existing ones.
The revised act includes a ministerial directive letter, signalling New Zealand's openness to foreign investment in these developments.
Maintaining restrictions on residential investments
While encouraging overseas investment in build-to-rent housing, the government reaffirmed its stance against foreign investment in existing residential properties and land, with certain exceptions.
Bishop said the legislative changes are focused on increasing housing supply and facilitating easier access for Kiwis to “warm and dry” homes, RNZ reported.
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