Twyford and Labour have gone full retard again; never go full retard

The government should follow Australia’s lead and stop foreign investors buying existing houses, Labour says.

Housing spokesman Phil Twyford says Australia requires foreign property investors to build new houses.

“It’s channelled $30 billion into new home construction in the past year,” he said on Tuesday.

Mr Twyford thinks that would be more effective than “some complicated land tax idea” that Prime Minister John Key has floated.

Mr Key on Saturday said a land tax on residential property bought by foreigners may be considered, but he didn’t think it was necessary at the moment.

Opposition parties have been calling for action to curb foreign speculators who are cashing in on Auckland’s overheated housing market.

They believe they’re adding to the pressure that’s forcing prices up, but until now the government has said their impact is insignificant.

So let’s think this through.  

Foreigners who want to buy property here must build something on it.

Don’t we have a shortage of places to build things?

So how is that going to solve anything?  It still leaves foreign investors competing in the same market where supply is, has been, and is expected to remain, fairly restrained.

As for the “complicated tax idea”, it may be complicated to Twyford, who makes policy decisions on Chinky-sounding names, to keep it all understandable for himself, but the rules behind a non-resident land tax would be simple:

  • it would be imposed on foreigners who buy residential property or land in NZ,
  • it would be charged annually and
  • it would be charged as a percentage of the value of the property.

Someone had better organise a weekend Hui for Labour’s Caucus to get their heads around that one.

 

– NZN via Yahoo!

 


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  • Not Clinically Insane

    Still blames central Govt for a land supply issue that sits solely with Auckland Council. Talk about ignoring the elephant in the room

  • iera

    I can understand a land tax on single story housing, but how does it work with anything else like a multi-story apartment building?

    Council seems opposed to expenditure on new “green-acres” developments but is there any research to show that cost related to upgrading old facilities for upward expansion (“the compact city”) with new pressures in established suburbs?

  • KGB

    Someone please tell me what I’m missing?I’m happy to look like an idiot if I’m missing something!
    The NZ Free Trade Agreement with China, written and signed by Labour, does not allow us to ban Chinese buying NZ houses. Yet they demand JK do so, and blame National for not doing so?

    • STAG

      That’s Thought Crime!!

      I can’t believe Labour are really suggesting the elected government breach a FTA. Why would anyone want to enter in to another with NZ if we’re seen to cast them aside as inconvenient?

  • Second time around

    A land tax only on selected people would be messy. For example, would a Kiwi with a Chinese partner pay the tax if they bought the property while overseas, or went overseas before settling into it, or would they get a 50% discount? Would Helen Clark pay it on her property while she lives and pays taxes overseas? It really has to be levied without exception on all property. Years ago the recommended rate was 0.5%, but at that time Key was not enthusiastic.

  • Anthony

    Who exactly are the foreigners the tax will be directed at?
    Non-tax residents? I think this would be a good start.
    People not living in NZ? How long an overseas holiday would be permitted? OE? To be fair, tax residency should capture enough people.
    People without residency? This also sounds reasonable.
    People without citizenship? This would be equivalent to Chinas ban on foreign ownership.

    • Observer

      The more fundamental issues, that Mike Reddell points out, are land supply and net inward migration targets (currently about 50,000 per year). The data on the impact of foreign buyers isn’t that clear.

  • I think there is a good chance that New Zealand first or the Greens over take Labour at the next election.

  • Observer

    Foreign speculators is part of the issue, although as Reddell notes not as much is known about this compared to issues like land supply and inward migration targets (I think he suggests reducing the target from 50,000 to about 15,000 per annum). From interview last year:

    “MICHAEL Immigration in conjunction with supply restrictions, the difficulty in bringing new land to bear – yes, it is. I mean, the Reserve Bank has done modelling work itself in the past. It suggested something like a 1% boost to population will lead to around 10% lift in house prices. Reasonable people can come up with a variety of different model estimates of those numbers, but there’s no doubt, looking back through New Zealand history, looking at cross-country experience, looking at the experience within New Zealand, that when unexpected population pressures happen, it has a big impact on house prices.

    SIMON Immigration’s one thing. What about foreign buyers – the ones who aren’t resident here? Should there be curbs on them?

    MICHAEL I’m slowly coming to the view that we should be considering that. I mean, I think we are in this difficult situation at the moment where we don’t have concrete data as to how large that impact is. I’ve pointed out on my blog that even if it’s quite small, then it’s hard to bring new houses into the market, to build new houses. Even a small addition to demand can have quite a big impact on price. And it’s not as if there are any obvious gains for New Zealand as a whole for allowing those offshore purchases, particularly if the houses are being left empty here. So we don’t have enough data, but I certainly wouldn’t rule out the possibility of controls being appropriate.”

    http://www.nbr.co.nz/article/fatal-combination-immigrants-building-shortage-causes-housing-crisis-ck-176135

  • Abjv

    Huh? Twyfords argument goes “the chinky money is too much and is forcing ordinary NZers out of the market in the Auckland area”. So his solution is to make the chinky money only buy greenfield housing, thereby under his reasoning making it impossible for ordinary kiwis to buy a bit of bare land in the Auckland area and build on it. The chinky money will have priced the NZ’ers of the bare land market. Maybe his policy is then for the unitary plan to make sure there is no bare land therefore nothing the chinky names are allowed to buy?

    • Observer

      I think that already happens to an extent anyway with changes to the “Investor 2” category in 2011. This allow foreigners to gain New Zealand residency if they invested $1.5 million in the country for a minimum of four years. The change was to include investment in residential property, provided it is in the form of new developments.

  • Vlad

    I can see what happened here: the Herald with Twyford were organizing one of their hits on John Key with a campaign aimed at hyping up housing issues, climaxing with the big reveal of Labour’s solutions. This seems to be their current interpretation of “journalism”. But JK gazumped them with his suggestion of a possible land tax. Leaving Twfyord yapping and snapping at a passing bus that had suddenly accelerated down the road.

    • Time For Accountability

      I was almost going to run a sweepstake to choose when Twyford would pop up after the Herald deluge of housing articles.
      The only question I have is, is Twyford jumping on Herald bandwagon or did he and the backroom fed the Herald?
      I am waiting to see how he and the Herald explain to voters and readers how their campaign has cost them a few thousand if their campaign succeeds to drop prices succeeds.
      Alternatively how they explain to middle earners why they will be asked to subsidize housing for the overspending millennials.

  • Rebecca

    The tax needs to include land owned by trusts, companies and any other entity with non-resident beneficiaries or majority shareholders. Non-residents already shield their purchases in trusts with NZ lawyer trustees or in NZ companies and will laugh if this disguise also protects them from a tax.

  • Keanne Lawrence

    KGB nails it by pointing out there were no land purchasing restrictions in the China FTA while most are already aware that Labour were already in the Chinese pocket then. Twyford’s claim of “some complicated tax is another dose of hypocrisy since their proposed capital gains tax which even they had no idea or details to support this lead balloon. That would be done retrospectively by a panel of “experts”.
    The idea from across the Tasman might however might only be applicable in the regions since Auckland Council have thwarted every other attempt to speed up house construction. Aided to a large extent by him. They still don’t get it. It is a localised supply problem and has never been a buyer problem. If you build them, they will come.

    • NO ONE can purchase land in China. Not even the Chinese.

      • Brian Dingwall

        Techically true but note:

        “Individuals cannot privately own land in China but may obtain transferrable land-use rights for a number of years for a fee.

        Currently, the maximum term for urban land-use rights granted for
        residential purposes is seventy years. In addition, individuals can
        privately own residential houses and apartments on the land (“home
        ownership”), although not the land on which the buildings are situated.

        Real estate may be transferred through sale, gift, or
        other legal means.

        When real estate is transferred, the land-use
        rights and home ownership are transferred simultaneously.

        Restrictions that may apply to the transfer of real estate include prohibiting transfer when the land-use rights are reclaimed by the state in accordance with law, or when the property has not been properly registered and certificates of ownership have not been obtained.

        Both urban land-use rights and home ownership are
        subject to registration. The registration is performed by local
        authorities at or above the county level; certificates are issued to
        confirm the rights and ownership.”

        Note also that rules for rural land use rights are also being loosened.

        A 5% tax is levied on properties held for less than 2 years.

  • one for the road

    Where i live (a new housing area in Auckland NW), if they restrict foreigners to only buying new houses (as Has been the case in Aust for some time) then the price of these new houses will go up 20-50% within a year (and keep rising at that rate year after year) as there is not enough supply and off shore investors will compete heavily – already 10-15% of the new houses in our area (and most prob across greater Akld) are empty as offshore investors are happy to wait 2 years and make a capital gain (which will hugely outpace any rent they would have gotten- better to keep them in near new condition, locked up)..

    • Bartman

      Shhh, don’t give Labour policy ideas – they’ll want to force absent landlords to offer their house to market or else pay fines! A sure fire way to drop the bottom out of the investment property market.

  • Metricman

    Yet another example of Labours’ inability to see anything past the end if their noses as a consequence of their off-the-hip strategic spraying (ahem sorry – Shooting)

  • OneTrack

    Have Labour said whether this restriction would/should apply to investors with chinky names that have residency?

    If not, how many offshore investors does that leave us talking about? If so, what does residency mean if you aren’t even allowed to buy a house for your family?

  • Left Right Out

    “The government should follow Australia’s lead and stop foreign investors buying existing houses, Labour says.”

    Heck, maybe we should follow the lead of Oz in other area’s to Phil….. like deporting undesirables who break the law…… you guys will be ok with that

  • redeye

    Duncan Garner was rabbiting on about the things Australia has done that we haven’t. Stamp duty, taxes, more taxes, and more taxes. And not once did he mention that Melbourne and Sydney house prices are still as unaffordable as Auckland.

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