Thursday, February 1, 2018

Overseas Investment Amendment Bill

Here I sit ready to embark on a detailed analysis of the discriminatory Overseas Investment Amendment Bill, and outline how terrible the legislation is.  Of course, it's a strange inclusion into the government's programme, because it is not part of the coalition agreement.

But as I trawled through the Parliament website, I noticed this:
This bill proposes to focus on residential land, but also makes more general changes to the Overseas Investment Act 2005, including enhancing the information-gathering and enforcement powers of the Overseas Investment Office. The Bill would limit overseas persons who are not resident in New Zealand from buy existing houses or other pieces of residential land.

This bill originally had a report back date of 20 February 2018. This has now been extended to 31 May 2018. The committee have resolved to reopen submissions on the bill, with a new closing date of 16 February 2018.
That's interesting for a couple of reasons.  First, the reason given for the government pushing this through under extreme urgency, and put it out for submissions over the Christmas period (a common tactic to avoid too much interest) is to implement it before the CPTPPA is finalised.  Maybe that's not much of a worry anymore.  Second, numerous parties, including the Law Society, have criticised not only the onerous and draconian provisions of the Bill, but also the abridged timeframe under which it is being rushed through. 

So my criticism of it will have to wait.    

In the meantime, there is media coverage of some criticism here, here and here.

I've made a personal submission, which I'll link to once online.  A part of it referred to the discriminatory nature of the Bill.

Section 21(1)(g) of the Human Rights Act 1993 makes it unlawful for anyone to discriminate on the basis of nationality or citizenship.  Section 3 confirms the Act binds the Crown.  If an individual property owner told his or her selling agent not to bring a buyer from any other nationality than New Zealand, that person would fall foul of the Act.  If someone included such a term in a sale and purchase agreement, that term would likely be discriminatory. 

Yet the Government is forcing this discrimination on property owners under this Bill.  Through this legislation, owners are compelled to discriminate.  They have no choice.  Lawyers are complicit in it, as they have to enforce the legislation through their property practices.

Where is Golriz Ghahraman when you need her? 


26 comments:

Anonymous said...

If it satisfies your conscience Nick try and buy a house with land in Singapore or China...one word CAN"T, not allowed , verbotten. A foreigner can buy a house or apartment but the land is always leasehold owned by a citizen of that country. These rules apply in Thailand and most of Asia and it is from most of Asia the money is coming from to snap up real estate....not houses. Perhaps if we evened out the playing field and suggested that real estate can be sold only to citizens in whose country we can buy land Aus, UK, EU etc.........but that is discriminatory. Land...they are not making it any more.

Lord Egbut

Adolf Fiinkensein said...

Poor Ledgut just doesn't seem to understand that a long term lease entails just as many rights and privilege as does fee simple title. Sorry Ledgut, I forgot you wouldn't understand 'fee simple' mean freehold.

Anonymous said...

Troll...you just make it up as go along...https://en.wikipedia.org/wiki/Fee_simple

Leasehold with onerous conditions attached is not freehold and certainly not yours. As an example the sale of the leasehold of the London US embassy took nearly two years because the lands owner had to vet any new buyers and to which use the building was put. I understand several buyers were reject by the Duke's estate. Stick to walking around golf courses.

Lord Egbut Nobacon

Anonymous said...

It's funny how the main opponents are all lawyers and lawyers interest groups. Reminds me of when the UK Govt. scrapped quarantine for pets from the EU in 1999. The "professionals" Vets and lawyers, using the media, forecast a rabies epidemic and the sky would fall. Of course none of them believed it, the loss of income was uppermost in their minds. Last UK rabies case...1922.

It looks like the mayor of London is following PM Arden's lead. http://www.dailymail.co.uk/news/article-5339013/Sadiq-Khan-plans-block-foreign-homebuyers.html

Lord Egbut

Nick K said...

Egbut, I object as a lawyer because it adds significant compliance costs to my business. That means I charge people more, in some cases a lot more. That includes first home buyers.

I guess you don't care about that.

Anonymous said...

Nick...I find that hard to believe, unless you are in a cartel prices will remain the same because of competition. If property prices fall there will be more activity meaning you might just have to work a bit harder for your dollar...just like the rest of us you will adapt.

Lord Egbut

The Veteran said...

In Russell and Paihia (and I guess in other holiday destinations) there are a substantial number of holiday homes owned by 'foreigners' who live in them only part of the the year. These homes generate rate income for Council and, more importantly, create local jobs ... house sitting, maintenance, gardening, security. These homes do not exacerbate the housing shortage. They are not the type of homes in demand by first home buyers.

This legislation is but a sop to xenophobia. I expected nothing less from this motley crew who just a few months ago were targeting people with 'chinky' sounding names as denying New Zealanders their birthright (even though most turned out to be resident New Zealanders).

Never mind the quality of the legislation ... feel the width ... and bugga the law of unintended consequences.

alex Masterley said...

Nick K is correct when he says that the OIO (and other requirements being imposed on lawyers and others FATCA, CRS and AML) will add significant compliance costs to business which will in turn mean the client gets charged more.
I am picking that many of the rack-em, pack-em and stack-em conveyancing practices will fold and those firms that exclusively service the chinese community will likewise suffer.

Nick K said...

I agree with all of that Alex.

Anonymous said...

Russell...Industrial powerhouse of the north. Give me break. It seems that they don't have the housing shortage in Gore either. You are displaying the well known ostrich effect by ignoring the evidence that mainly Chinese purchasers have bee targeting the property markets of the western world as an investment opportunity.If the mayors of Vancouver, London Melbourne etc show concern then you better write informing them that things are Hunky Dory in Russell because Jim the Mower man is making a few quid.

https://www.theguardian.com/cities/2016/sep/29/inside-china-passion-foreign-property-investment-uk

https://www.forbes.com/sites/ellensheng/2017/01/31/chinese-investment-in-overseas-real-estate-hit-record-high-in-2016/#192d56277971

I could lay a few more down but I think the message is clear. It's not because the policy is bad, it, because it is a labour policy.

Lord Egbut

Anonymous said...

Nick and Alex.....I am trying to find a little kernel of sympathy for lawyers deep in my heart...but no it's gone. I don't think the clients will be complaining about your prices if they can save 20 grand on a house.....the market is overvalued and has been hyped up for years.

Lord Egbut

The Veteran said...

Egbut ... perhaps a more intelligent comment might be to argue for the legislation (assuming it's needed) to provide for regional exemptions. But no, your mob clearly prefers the one glove fits all approach predicated on the fact the Russell and Paihia and Gore and Sodom (aka Auckland) are all the same.

Still, anyway who lives by the Guardian can be excused for tunnel vision thinking.

Anonymous said...

Veteran..that argument is valid had it been put forward at the beginning and not as an afterthought. However I'm sure Nick would have pointed out that it is discriminatory and would add many more compliance costs than now. Now the scales have fallen from eyes I will pen a quick email to Sadiq Khan and warn him about his tunnel vision.

Lord Egbut

Gerald said...

Changing the goal posts is an unfortunate trait.

Paranormal said...

Egbut, if you think this legislation is going to reduce Auckland house prices, I have a bridge you desperately need.

Wilbur said...

So what, some lawyers may have to carry around wallets that aren't quite so fat?

Stop. You're breaking by heart.

Anonymous said...

Para....that is just speculation or perhaps wishful thinking by some. Once again NZ is leading the pack in being used as a social experiment. Canada, Australia and some US cities are now watching with a great deal of interest. Best we just wait and see what happens and not speculate. Like all legislation it can be reversed.

lord Egbut

Paranormal said...

No, as unpalatable as the left think it is, it's a fact Legbut. This legislation will have zero impact on Auckland house prices

Overseas buyers as the cause of the inflation in the Auckland housing market is just xenophobic dog whistle politics. The only reason a small number of foreign investors are interested in the Auckland property market is the essentially flawed nature of our local body structure. The council has artificially restricted supply so it is no surprise prices are skyrocketing. Remove the MUL and incentivise council to issue consents, rather than acting as a small roadblock and see what happens to supply and as a consequence prices.

That's why Liarbour are targeting nasty furreners. They know to address the real cause of house price inflation will impact on Labour leaning councils power.

The Veteran said...

Egbut ... Heavens to Murgatroid ... we agree. New Zealand is leading the pack in being used as a social experiment and the world is watching. To whit ... the farcically named 'Electoral Integrity Bill' aka The Brendon Horan (Never Again) Bill.

Here's what the IPU representing 178 Parliaments around the world had to say about this piece of 'vanity' legislation ...

"These laws create political party dictatorships" and "While party loyalty and discipline are necessary, they must never impair the full and effective exercise of freedom of expression and association by any member of that party, since these are fundamental human rights."

Yep Egbut ... the world is watching and doesn't like what it sees.

NK ... apologies for threadjacking but Egbut opened the door a crack and I pushed it hard.

Nick K said...

No. I'm saying they'll be fatter at the expense of first home buyers and the less well off.

Anonymous said...

Veteran....I have no idea what you are talking about. What is a "never again" bill and how does it effect the property market?

Para....Why don't we just wait and see instead of speculating as to what might happen. If I were to speculate that if and when China hits recession or passes legislation on its citizens holding foreign property the property market would stagger under the weight of houses on the market I would quite rightly be called a scaremonger.

Nick K.....the less well off cannot afford to buy a house unless it is in the far North or Far South....some do but then go straight onto benefits because there is no work. We are inflicting unnecessary wounds on ourselves because of this love of the property game where we can be artificially rich. London Hospitals, fire service etc are permanently shortstaffed because the nearest affordable housing is an hour away on the tube and it's getting worse, a friend's son commutes by train 4 hours a day to his London job.

Lord Egbut

Lord Egbut

Anonymous said...

Nick K.....Try as I might I'm trying to see the economics of compliance when all a first time buyer needs do is show his passport and the conveyancing lawyer has it verified by Internal affairs by email. Can you tell me how much extra you are planning on charging for this service?

Lord Egbut

Psycho Milt said...

Overseas buyers as the cause of the inflation in the Auckland housing market is just xenophobic dog whistle politics.

And yet, funnily enough, the Chinese govt putting the brakes on its citizens' ability to put money overseas coincided with the brakes going on Auckland's skyrocketing prices. Foreign purchases of Auckland property is, like poverty, one of those things the previous government declined to measure because measuring it would have been inconvenienced government policy. That information vacuum allows right-wingers to blame local government for the property bubble, rather than the more obvious candidates: central government's lack of restrictions on foreign purchases and its lax immigration policies that see Auckland flooded with tens of thousands of new immigrants every year. Hopefully, now we have a less venal government we'll see those policies changed.

The Veteran said...

Egbut ... If you can't see the relationship between the coalition governments Electoral Integrity Bill and the view of the IPU and your comment that NZL was again leading the pack in world breaking legislation then I'm afraid I can't help you. Threadjacking perhaps but you opened the door with your slightly OTT comment.

Paranormal said...

The thing is PM, the Chinese government putting the brakes on citizens taking their money out of the country is very different to NZ stopping overseas residents buying property. As you can't or don't want to understand that, tht bridge is still available and at a special rate for a limited time just for you.

Adolf Fiinkensein said...

Paranormal

Quite so. Well spotted.