Published in Insights, The New Zealand Initiative’s newsletter, 22 June 2018
It is hard to introduce populist policies without hurting the economy.
That is the takeout from the Government’s decision to water down its planned restrictions on foreign property buyers. Because the new rules would have been detrimental to new residential development, we will now have a law that is tough and permissive at the same time.
Unfortunately, it will also be a highly complicated piece of legislation.
Where previously foreign-based buyers would not have been allowed to own any residential property in New Zealand at all, they shall now be able to do so in multi-unit housing developments. This probably means apartment blocks.
However, not just any apartment blocks but only those with a minimum of 20 units. And only when the foreign owners do not occupy the units themselves. And only if not too many of these units would be sold to foreigners. Any questions?
Well, I actually have a few. Why would any foreigner want to jump through such bureaucratic hurdles? And why the minimum of 20 units? Why not 15 – or 25? And why would it matter if any or all such units are owned by foreigners? Would that make them any less inhabitable? Considering that their foreign owners would not be allowed to live in them, they would all be let to residents anyway.
The foreign buyers ban has always been a piece of symbolic activism. Rather than fixing the underlying causes of our housing crisis, the ban only pretends to do so by scapegoating foreign buyers.
So in a way it is a sign of progress that the Government is now at least allowing foreigners to increase the housing stock by developing new property. Hooray for not shooting ourselves in that foot!
But seriously, what the Government should do is to come up with some real policies that would make a genuine difference to housing development. Simplifying planning processes, incentivising councils for development, allow greater private funding of new residential infrastructure: These are measures that would have a massive impact.
Instead what we are getting is a piece of populist activism from which only the most offensive elements are now pulled. It will also require more bureaucracy to monitor compliance. Should we be grateful for that?
Or should we not rather remind the Government that they were elected on a platform of promising radical housing, planning and infrastructure reform, not populist gimmickry?
