
New Zealand to ban foreigners from buying existing houses - wslh
http://www.independent.co.uk/news/new-zealand-foreigners-buy-property-ban-coalition-talks-prime-minister-jacinda-arden-a8017261.html
======
kjksf
Auckland is the largest city in New Zealand.

75% of Auckland is zoned for 1 or 2 story buildings (according to
[http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&o...](http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11562709)).

Of that 33% is the most restrictive single house ("The Single House zone
currently covers around a third of residential Auckland and is very
restrictive, allowing for only one dwelling on sections smaller than 600
square metres." according to
[http://www.stuff.co.nz/auckland/75219048/Aucklands-
controver...](http://www.stuff.co.nz/auckland/75219048/Aucklands-
controversial-new-residential-zoning-maps-released)).

5% is zoned for apartment buildings.

Here's 97% of your house pricing problem. Not foreigners, not low interest
rates, not land taxing policies.

New Zealand has total population of ~2x Paris and land 1000x of Paris.

This is Venezuela style of fixing problems: instead of addressing underlying
economics (limited supply meeting increasing demand causing raising prices) by
increasing supply, find a political scapegoat (all nations are xenophobic so
outsiders are always a good target) to get people to vote for you and create
ineffective rules.

The real fix is politically unpopular. Unsurprisingly, Aucklanders are NIMBY
with the best of them. The plan to upzone is "controversial" and anti-upzoning
arguments are the same you see in SF and everywhere else where that comes up.

~~~
tmnvix
Melbourne is not much different in that regard (geographically massive with a
relatively sparse population for a city of its population size). Sydney too.

Melbourne is also experiencing a housing crisis similar to Auckland's due to a
boom in prices.

So should Melbourne also pull out all the stops to encourage new building?
Interestingly, Prosper Australia has been tracking Melbourne's true vacancy
rate for over a decade now, publishing their findings in their Speculative
Vacancies Report[1].

Before you look at the report, a couple of questions:

1) Do you believe prices are being driven up due to a shortage of homes?
_(Your comment suggests you do.)_

2) If prices were being driven up due to a shortage of homes, would you expect
the areas that experience the highest capital gains to have the lowest vacancy
rates? _(I think most people would agree with this.)_

Now, the most interesting finding from the Speculative Vacancies Report for me
was that in fact, contrary to what most people would expect, areas with the
highest capital gains correlate strongly with those areas that have highest
number of empty dwellings.

My own suspicion is that the demand that is driving up prices is not demand
for homes, but demand for investments. _A speculative boom creates extra
demand_.

In 2007, the Irish thought they had an undersupply of housing. A short time
later it was revealed that they actually had a massive oversupply (once
investment/speculative demand was removed). The RBA in Australia is pointing
to the same thing in Melbourne (Docklands has a vacancy rate of ~25%+, other
sought after areas are approaching 15-20% according to the report mentioned
above).

The best thing that Auckland can do to tackle house prices is to address the
demand side of the supply and demand equation. There are tonnes of options for
doing this but mostly this is an issue caused by easy credit and tax
incentives for investing in property. That's the place to solve this problem.
It would be folly to encroach on green areas or otherwise spoil our
environment in a mad rush to build. If we do that... Ireland here we come!

[1] [https://www.prosper.org.au/2015/12/09/speculative-
vacancies-...](https://www.prosper.org.au/2015/12/09/speculative-vacancies-8/)

~~~
jaredklewis
All seems perfectly consistent with the OPs point to me.

Speculative real estate investment is a direct result of restrictive zoning.
Consider for example an already developed area of a city that is zoned for
single family residential. This makes it illegal for a developer to increase
supply in this region by building, say a duplex. A developer is allowed to
rebuild a house, but not increase supply.

So of course there is speculative investment! Owners have a legal guarantee of
resource scarcity. It’s the reason governments everywhere try to avoid
deflation; it causes everyone to hold onto their cash.

Now contrast the situation when a developer can turn a house into a duplex.
Supply is elastic. There’s no legal guarantee of scarcity. Of course real
estate is still an investment vehicle, but there is no longer the artificial
constraint on supply.

I also think it’s weird to lump this in with environmental protection.
Preserving natural areas is an unassailably important priority for any nation.
What does that have to do with home owners that feel they have a legal right
to not live next to a condo? I don’t think the parent (or really anyone here)
is advocating we develop undeveloped land.

Finally, I wonder if this is all moot, because the issue at hand is a
restriction of foreign ownwers. Won’t native NZ real estate companies be glad
to step in to fill the void? Can’t these companies then just shell shares to
international investors?

~~~
camelite
> Speculative real estate investment is a direct result of restrictive zoning.

By definition, it's not. It's a term coined to separate out the impact on
prices of people buying-to-live vs people buying-to-sell/rent-and-profit. And
if foreigners are more likely to buy for speculative purposes, barring them
from doing so will decrease speculative increases in house prices.

~~~
jaredklewis
Right, but things with fixed supply make perfect investment vehicles, and when
people investment in real estate that is speculation.

Imagine if the stocks of public companies were not fixed in supply. The
company at any time could simply decide to have shares for 200%, 300%, or
1000% without compensating existing shareholders in any way. If that was the
case, stocks would be total garbage as an investment. Prices would plummet to
0.

The reason metro real estate is so attractive as an investment is because
supply is inelastic. If we want to encourage usage, as oppose to hoarding, we
should do like we do with fiat currencies and allow more of it to be made.

Banning foreigners might have some tiny effect, but honestly seems a bit like
arranging deck chairs on the Titanic. We can check in after a year, but all my
money is on Auckland continuing to have an expensive housing market (unless
they allow more rezoning). Further, banning foreigners of course is also
banning a valuable export and will cut off a stream of foreign money that was
previously flowing into the local economy.

~~~
tmnvix
> when people investment in real estate that is speculation.

Investing in real estate would be purchasing property for its income earning
potential.

Speculating would be purchasing for capital gains potential.

You might argue that people do both at once but if you would only make the
purchase if there is a potential for capital gains and not otherwise, then you
are speculating.

~~~
gnaritas
Investment and speculation are not different things, all investment is
speculation.

~~~
tmnvix
From the definition of financial speculation cited elsewhere in Merriam-
Webster:

> _Speculation is a method of short-term investing whereby traders essentially
> bet on the direction an asset 's price will move._

This is what most people would assume speculation to mean in the context of
this discussion. It is quite normal to compare this type of speculative
investment with other - especially productive - investment.

~~~
gnaritas
I'm very well aware of what he means, that's obvious from my response, one can
be clear without misusing words and it's entirely appropriate to correct
someone who's using those words wrong as if they're unrelated when they're
actually both a type of investing. Try understating what's going on before you
start quoting a dictionary.

------
ACow_Adonis
Speaking as an Australian, , where we already have nominally similar policies,
and keeping in mind the metro house price phenomenon is repeating in several
places in the world in a similar fashion, there's just one small problem with
these policies:

There's limited evidence available that it's foreign buyers primarily
responsible for our high house prices :/

The primary cause has always been local steady employment, low interest rates
combined with liberal access to debt with households culturally disposed to
pumping that into housing.

It's very easy to blame this on Chinese money (which I'm sure is a common
story in many parts of the world where house prices are taking off), but the
far bigger cause had always been leveraging afforded by local households
combined with a low interest rate environment.

~~~
ACow_Adonis
Just replying to myself now to add: the solution to high house prices is, like
much transport policy, boring and well known but not implemented for political
reasons. On the housing front: tax capital gains, limit leveraging ability,
implement a land based tax and zone/invest appropriately to encourage new
supply. This will bring housing far more in line with what people expect.

This brings us to the other awkward point though: truthfully, I'm sure many
New Zealanders, just like many Australians, neither want their housing
prices/investments to drop in relative price or to return to closer
relationships with local use.

Which leads us to the policy/political pantomime game so often involved in
these areas where people want to have their cake and eat it too: "I want
afforable housing for my children that doesn't make my property prices drop!"

~~~
justinmk
> the solution to high house prices is ... tax capital gains, limit leveraging
> ability, implement a land based tax

Your solution to high real estate prices is to make the investment less
attractive by increasing taxes? What does this gain for the new buyer?

~~~
elyobo
Well yeah, obviously. Anything that reduces the profitability reduces the
appeal to investors, which decreases price pressure, which leads to price
falls, which ideally falls into a virtuous cycle of falling prices and falling
investor demand until you have sane prices again. You'd have to hit it pretty
hard to actually get that going though; this policy won't do it alone.

For new home buyers lower prices is great. For the economy lower prices is
great (the initial massive losses will be rough, but going forward it means
far less overhead on all Kiwis with that interest money going elsewhere in the
economy, and in general the money going into non productive real estate
speculation will go to more productive areas of the economy).

~~~
justinmk
> For new home buyers lower prices is great

Increases taxes to "lower" the price doesn't lower the total cost of
ownership, it just hides it by reducing the potential gains (which are _priced
into_ the sale price).

I wonder how society functions at all, with the "solutions" I see ...

~~~
elyobo
> Increases taxes to "lower" the price doesn't lower the total cost of
> ownership, it just hides it by reducing the potential gains (which are
> _priced into_ the sale price).

That is true, but you're missing the point. Given that the reduction in
potential gains means that speculators will (to some extent) exit the market
this means that demand and therefore prices will drop further.

Additionally non-investors cannot typically realise their "gains" (they don't
exit the market to cash them in, they move to other houses which have had
similar gains and so have no net gain) and so they're useless to them. Losing
those gains doesn't harm them, but the lower price does help them.

I wonder how society functions at all, with all of the poorly "thought" out
criticisms of solutions that I see...

------
aceon48
Vancouver would like a word with you. Foreigners were buying homes sight
unseen to park cash. Vancouver passed a foreign buyer luxury tax for those who
arent living in their homes full time... and Lo and Behold! Sales decreased a
ton and things have been cooling down.

~~~
gorkish
I believe this is a much better solution to the problem, but I don't think it
should have anything to do with whether or not a buyer is a foreigner.

~~~
scott_karana
I agree. Speculative land purchasing by wealthy boomers at the expense of
their (grand)children is just as bad and much more common.

------
0xADEADBEE
The real reason this is happening is in fact much simpler than outlined in the
comments: Kiwis quite simply don't have an asset class in which to invest
sensibly that isn't property [1]. In America, I'd cheerfully put the majority
of my income into an index fund tracking things like the S&P 500 but New
Zealand tax laws heavily penalise this and incentivise property ownership by
giving a pass on capital gain tax. The result? House prices are driven up
artificially; a problem adroitly obscured by not appearing on an RPI index.

The current political developments present an interesting situation; a Labour
campaign pledge was to impose capital gain tax on personal property investment
(already sanely capped for anyone considered a property developer). I don't
see other asset classes being taxed differently to compensate, thus
exacerbating the already dire talent drain the country is experiencing.
Ironic, given the endemic NZ aspiration to 'get ahead'. It's certainly an
interesting time to live here, but I'd prefer bubbles to confine themselves to
the Bay Area!

[1]
[https://www.fsc.org.nz/site/fsc/files/Releases/Releases%2020...](https://www.fsc.org.nz/site/fsc/files/Releases/Releases%202014/FSC-
Taxation%20and%20Savings%20Paper-Final.pdf)

------
mustntmumble
Title is too broad.

"We have agreed on banning the purchase of existing homes by foreign buyers,"
said Ms Ardern

My point is that non-residents will still be able to build new houses. This
policy brings New Zealand in line with Australia which already has a similar
policy.

~~~
elyobo
Australia's is toothless though, in that enforcement is minimal and so are the
penalties. NZ's may be equally crap or it may be quite effective, but I
haven't seen details on the above and so it's hard to compare the policies at
this point. A policy like Thailand's, where those found to be buying against
the rules have their property taken off them without compensation, would be
ideal.

The next step would be to require that those that do not meet the rules sell
up, which should put a bit of supply into the market and achieve some
meaningful price movement.

Another good step would be to finally bring in a decent capital gains tax,
ideally charged annually on paper profits at whatever your marginal tax rate
is, and with no family home exemptions. Ironically taxing the family home
would, in this case, actually make them more affordable by exerting further
pressure to move speculators out of the market.

~~~
charlesdm
> A policy like Thailand's, where those found to be buying against the rules
> have their property taken off them without compensation, would be ideal.

You can't do that in an open, globally connected economy though. As great and
beautiful as Thailand is, it is still for the most part a corrupt developing
country. You want to hold Australia or NZ, which should be open for business
and wants to attract global investment by better protecting investor rights,
to a much higher standard.

~~~
elyobo
I'm not proposing that we take on board the corruption, but of course you can
have a law with appropriate penalties for violators of it in an open, globally
connected country.

We want people to invest; we don't want them to break our laws. Their rights
(and the penalties that would apply to them) would be laid out under the law,
so no problem at all.

------
CodeSheikh
As an immigrant New Yorker, I welcome this step and kudos to the local
government of NZ for taking such initiative. For example on NYC foreign
investors have ruined the prospect for an average hard working New Yorker
couple to purchase a property at a reasonable price. Foreign investors
(Chinese, Russians and Middle Easterns, nothing personally against all of
these demographics) have been pouring in capital via greedy American
established real estate management agencies. Often owners do not want to deal
with the hassle of loan approval, waiting times etc and they mostly take the
offer whoever pays the quickest cash. Same thing is happening in Vancouver and
other major metropolitan cities across the nation and the world.

~~~
rukittenme
Oh bullshit. New York City is the poster-child of bad housing policy. It's
amazing Tokyo can fit 38 million people into its city but New York City can't
find room for 1/5 of that.

You look at any major city and you'll see rent control and stabilization,
restrictions on building and eviction, and a thousand other well intentioned
policies that "help" the poor or "save" our "historic" neighborhoods. What a
great job its doing...

~~~
dreit1
You can't compare Tokyo and New York. Tokyo has wayyyy more land area than New
York. It's a build wide instead of build tall city. Source: Live in Tokyo

~~~
mashpotatos
Have you accounted for mixed-use zoning?

------
csomar
I'm just wondering: Can't foreign money create a company in New Zealand, buy
real estate with that company and then rent it out or just let it stay there.

It says it is banning non-residents. But a New Zealand company owned by a
foreigner is considered a resident entity, right?

~~~
Untit1ed
Probably - the equivalent law in Australia has enough loopholes to make it
largely pointless anyway... particularly sending one of your children to study
then buying through them.

It's a crowd-pleasing law, not an effective one.

------
charlesdm
Can't this easily be avoided by purchasing through a New Zealand company?

What stops NZ residents (or non-residents) holding RE through corporate
entities from selling their shares and indirectly transferring ownership?

Will be interesting to see how it's implemented.

~~~
gorkish
Nothing; this is what I was going to suggest. If you are the sort of person
who is wealthy enough to cause housing prices to inflate to the point that it
becomes a national crisis, I would be rather surprised to learn that you are
NOT buying your real estate through a local shell company of some sort.

------
pascalxus
Why not just allow more or denser housing to be built? You could take all that
foreign cash and turn it into high paying jobs! I mean sure construction jobs
aren't high paying, but with enough automation, those jobs could turn into
high paying software jobs. Just get rid of all the building and zoning laws
and allow companies to innovate as much as they want.

Optionally, you could still ban foreigners from buying in places where things
are already built out.

It just seems such a shame, to see so much economic loss on both sides (both
for purchasers and those who'd have benefited from more jobs or higher paying
jobs).

This is a disturbing pattern I've been seeing playing out in many countries:
politicians and the sometimes the voters that elected them have insufficient
economic education to make optimal decisions, leading to economic losses - the
prime example being what happened in Venezuela.

~~~
BronSteeDiam
Construction jobs are already very high paying jobs in New Zealand and
Australia, maybe even more than software.

------
xupybd
I'm a New Zealander that was deeply concerned by the new government winning
the election but this policy gives me hope.

~~~
contingencies
Why? It already cost foreigners NZD$30,000 in extra foreign buyer approval
fees (no guarantee) which was a cash cow. This will kill that cash cow. The
best thing about NZ has been immigration. This is just going to funnel money
to large construction companies building apartments, and turn NZ in to an
apartment farm.

~~~
FooHentai
That's not correct.

>New Zealand’s overseas investment legislation only affects transactions that
include sensitive New Zealand assets, including land that is considered
sensitive.

[https://www.linz.govt.nz/regulatory/overseas-
investment/find...](https://www.linz.govt.nz/regulatory/overseas-
investment/find-out-if-you-need-consent-invest-new-zealand/answers-about-
overseas-investment)

~~~
contingencies
Sensitive includes half the country, eg. anything naturalesque with
"covenants", government proximity, foreshores, historical sites, etc. Source:
Real estate expedition to NZ, 2015.

~~~
FooHentai
Update: It's about to mean a lot more:

[https://www.stuff.co.nz/national/politics/98417459/labour-
wi...](https://www.stuff.co.nz/national/politics/98417459/labour-will-make-
all-existing-homes-sensitive-effectively-banning-foreign-buyers)

------
andrewstuart
In Australia this just gets gamed so existing houses are knocked down then
rebuilt and sold as "new".

------
lwhsiao
Why not link directly to the full story [0]?

[0] [http://www.independent.co.uk/news/new-zealand-foreigners-
buy...](http://www.independent.co.uk/news/new-zealand-foreigners-buy-property-
ban-coalition-talks-prime-minister-jacinda-arden-a8017261.html)

~~~
dang
Thanks! Url changed from
[http://marginalrevolution.com/marginalrevolution/2017/10/see...](http://marginalrevolution.com/marginalrevolution/2017/10/seems-
will-ban-foreigners-buying-homes-new-zealand.html).

------
1897235234
Every single article about housing affordability on HN has the same comments.
I don't know who actually writes these comments, but their solution is to just
reduce the quality of life of people by increasing housing density. They think
that somehow this idea has escaped everybody and they are geniuses for
thinking of it. Everybody who doesn't want to smell other people's shit is
called a "nimby", and infinite population growth is supposedly the only
rational path forward.

Are the people making these comments the same people that will happily live in
this situation? Are they rich people that will never live in this environment,
or are they young progressives who think they want to live in a high-rise and
have sex with robots or whatever despite being 20 and not knowing anything? Or
are they immigrants trying to get into a country?

~~~
namlem
Yes, I do support slightly reducing the quality of life for rich people so
that poor people can afford rent. I see no problem with this.

~~~
1897235234
No. New Zealand's most common form of housing (not "rich people") is a stand-
alone house. The solution always proposed on HN is to increase density. To
convert housing into apartments. Meaning the new standard in a decade will be
apartments. You are decreasing the quality of life of the average person and
not the quality of life of rich people, who live in a mansion with a giant
yard.

~~~
namlem
Not across the whole country, just in the area around Aukland's urban core.
And I'm not convinced it actually decreases the quality of life of the average
person. In fact, I'd wager that it increases it, by reducing cost of living.

------
zach417
This debate is simply that of liberalizing or controlling a nation's capital
account. There are benefits to both.

The benefit of liberalization (i.e. no limits on foreign investment) is that
it can provide "a higher rate of return on people’s savings in industrial
countries by increasing growth, employment opportunities, and living standards
in developing countries." [1]

The benefit of controlling (i.e. limit foreign investment) is that it can
reduce market volatility and risk. "International investors are willing to
lend to them in good times but tend to pull back in bad times, thereby
amplifying swings in the domestic macroeconomy." [1]

[1] -
[http://www.imf.org/external/pubs/ft/fandd/basics/capital.htm](http://www.imf.org/external/pubs/ft/fandd/basics/capital.htm)

------
caf
I don't understand the concern with foreigners wanting to buy real estate. If
a bunch of people want to import money from another jurisdiction and use it to
buy something that is literally impossible for them to repatriate, more fool
them! Let's take as much of their money as they'll offer.

~~~
derefr
They don’t want to repatriate it; they want to get it out of their country as
the first step of getting themselves out of their country. (Though, they want
to stay as long as possible to squeeze as much dirty money out of their
corrupt regime as they can before they do, which is why they aren’t just
arriving alongside the money.)

------
rm_-rf_slash
Why not simply introduce foreign ownership surtaxes instead of this ham-handed
(and loopholed) approach? Wouldn't that be a win-win? Either you have more tax
income, inflating housing prices cool off, and/or more vacancies for citizens.
What's not to love?

~~~
elyobo
It's not really loopholed; those that actually live in NZ _should_ be able to
buy property there (our voting laws are similar, those with permanent
residency are also entitled to vote).

~~~
rm_-rf_slash
Perhaps I should have clarified. Too much prime real estate in almost every
country is purchased by wealthy foreigners who either sparsely live there or
hold it for purposes of speculation. The result is chronic housing shortages
and economy-ruining rents. In that case a hefty surtax is certainly justified.

~~~
nugget
I saw an interesting proposal that called for hefty property tax surcharges
that could be rebated against annual personal income taxes.

~~~
elyobo
While overseas investors (or even local students etc) would have no taxable
income to offset against, why would this be preferred over simply banning it?

------
justicezyx
I like this approach.

Try the obvious and simple approach first. If not working, revise.

Instead of trying to balance between too many factors, slumping in decision
making and consensus gathering, and in the process, all the smart people
already exploited or even corrupted the system.

~~~
elyobo
The main obvious thing is to make property speculation neutral with regards to
tax, rather than the tax avoidance hole that it currently is. Hopefully
they'll address that too, but given that Adern has been quoted as saying
they're not looking to push down prices in AUckland I'm not all that hopeful
that they'll actually take the steps that need to be done.

~~~
xupybd
The tax loop hole in housing is something that needs to be addressed. If we
have income tax we really need to tax all profit, including capital gains.

~~~
elyobo
TOP's policies with regards to taxation were very interesting; no change in
overall rate of taxation but broadening the tax base in such a way that would
have significantly increased the tax on assets and decreased it on income. Too
painful for the National base to take on and too radical for Labour to
consider (even though it would significantly benefit their base) though.

~~~
xupybd
Yes TOP made a lot of sense. But did not do well enough to get in. Politics is
often more of a popularity contest than a way of selecting the best party
based on policy.

~~~
elyobo
The 5% threshold has a lot to answer for; needs to be either removed entirely
(minimum threshold to be whatever the % is required at the time to get a
single list MP into parliament) or, to appease those terrified of small
parties, at least to have a transferable vote so that in the situation where
your first preference fails to cross the line at least your vote transfers to
your next preference.

Both would improve support for minor parties, the first directly and the
second by reducing the risk that your vote gets "wasted". Implementing both
would be ideal (and, to add to that, adding an STV system for the electorate
vote as well).

------
colordrops
Wish they did this in Los Angeles.

~~~
thrden
it'd likely be found unconstitutional on the basis of discrimination against
someone due to nationality.

~~~
colordrops
There is no constitutional law against discrimination based on nationality.

~~~
LgWoodenBadger
What about the Fair Housing Act?

"The prohibitions specifically cover discrimination because of race, color,
national origin, religion, sex, disability and the presence of children."

~~~
toomanybeersies
National origin and nationality are different things.

------
odammit
I don’t live in New Zealand, but I assume this is good for locals. Would love
to hear your thoughts if you live there!

I live in LA and I’d welcome it here - not for all “foreigners” but at least
to block foreign investors in residential homes and condos (not the actual
buildings but the units). I bought a home last year and I put in 36 offers all
5-15% above asking and was outbid by investors on all but one that I ass-
backwarded into.

I feel like this is something that would also be welcome in Barcelona with the
issues they are having with investors buying up all the housing and renting it
on AirBNB.

------
epx
Price of real estate is insane everywhere. Here in Brazil there are not many
foreigners buying houses but prices are completely unrelated to income since
2010. It has more to do with cheap money, lack of other investment
opportunities (at least the perceived lack of) and the good old Ponzi scheme
("la vivienda nunca baja"). Government loves that because it is an easy way to
swell up the economy (now we are paying the price for this kind of
disingenuous measure) and also the payment of certain taxes like property and
real estate transfer.

------
Lachy01
Someone suggesting relaxing zoning restrictions is not inherently suggesting
no restrictions. It doesn't mean "sky scrapers" at all to suggest zoning could
be relaxed from single story. It certainly doesn't mean sky scrapers as far as
the eye can see. Nor does it mean you should be able to build a toxic waste
dumps. You can move the line without removing it, to suggest otherwise is
irrational and weakens you argument IMHO.

------
bertil
I’m surprised that no one is considering taxing (highly) unoccupied flats. The
issue is that foreign (I’m assuming that’s dog-whistle for Chinese) money is
looking for investments but that those crowd out people who work there. By
making renting meaningfully advantageous, you can keep the investment (and
have modern, state of the art real estate) and housing for families.

~~~
naasking
> I’m surprised that no one is considering taxing (highly) unoccupied flats.

It's the logistics. How would you police it?

~~~
bertil
Detection via water, gas or electricity consumption; postal mail to the
address with a suggestion you might have to pay the higher rate; challenges of
that letter lead to visits where you are expected to provide evidence of
living (water, gas, electricity, internet bills).

Similar things are being monitored rather effectively: TV fee in the UK, child
welfare, cannabis cultivation.

The point is not to be perfect but to tell people that they can’t own an asset
with large externalities and not use it.

~~~
naasking
> Detection via water, gas or electricity consumption

So we punish people who might just be conservative environmentalists? These
are all metrics that can be spoofed if the expected return is high, which it
certainly seems to be in real estate.

~~~
bertil
\- Would we punish people who consume so little water, electricity or gas that
they appear as not there?

Of course not, but people who save enough to not product garbage are still
quite rare; they still use water and electricity. Some people have their own
well and solar array/windmill, those rarely live in a densely populated city
where raising the level limit hits the local Nimbysm. Once again: that’s the
first step for detection, city inspectors would most likely be happy to flag
you for a medal if you actually save resources that aggressively.

> These are all metrics that can be spoofed

Indeed, but wasting water to save tax sounds quite egregious. Once again:
finding a renter that pays you is financially far more beneficial. The point
of the tax is to signal it’s not OK to sit on a property and speculate, not
collect more tax.

~~~
naasking
Sure, signaling is fine, as long as it's effective. Dealing with tenants is
tedious and laborious. Someone who can speculate on multiple properties
probably places a higher value on his time than the cost of utilities. But I
suppose we'll see, since some governments are going to try these controls.

------
alexasmyths
It's an interesting proposition that has to be taken up.

Globalism is having weird effects on certain urban communities.

'Free Trade' \- when applied to our personal domiciles - causes crazy
problems.

At least for residential property - it should be taxed much more heavily, and
possibly banned in some cases by foreigners.

------
mastazi
Australia has had a very similar rule (foreigners can only buy newly built
property) and prices kept soaring. The problem in Australia (and I suspect in
New Zealand as well) is that the offering is limited due to regulation.

------
mercurial
As a data point, here in Denmark, EU citizens need have been residing in the
country for at least five years in order to buy. I don't know what the minimum
time period is for non-EU citizens, but probably longer.

------
dogruck
Is this fairly common?

Once I casually shopped for houses in Bermuda -- but they had a similar rule.

~~~
Cyph0n
The UAE has a similar law in place, but with a twist: you can buy property in​
certain "free zones".

------
Ice_cream_suit
Homosexuality was illegal in New Zealand until the "New Zealand Homosexual Law
Reform Act 1986 " was passed in 1986.

New Zealanders are lovely people. However, the country is rather provincial.

------
sgt
The article isn't clear on the following; will this ban apply to all
foreigners, including foreigners with permanent resident permits?

------
PatientTrades
It would be nice to see the West do something like this in the major cities
like LA, NY, etc. Foreigners shouldn't be able to come in and buy competitive
property when they don't play by the same financial rules as us. seems unfair

~~~
vacri
What counts as 'foreign' to LA? An investor from SF? From outside CA? From the
east coast?

~~~
PatientTrades
Foreign as in an individual whos permanent residence is not in the United
States. i.e. A Russian millionaire buying a townhouse in LA

~~~
tetromino_
Why oppose a Russian millionaire buying an LA townhouse, but not a Texan
millionaire buying the same townhouse? After all, both millionaires earned
their millions thanks to low taxes and lax regulations in their native land.
Isn't it unfair for an LA native to compete against either of them?

Why oppose a Russian millionaire buying an LA townhouse, but not a Russian
millionaire buying a Degas painting? If LA residents deserve laws to help them
buy a townhouse in a good neighborhood, don't they deserve laws to help them
buy other luxuries?

Why oppose a Russian millionaire buying an LA townhouse, but not a Russian
tourist buying a ticket to Disneyland? Tickets to a venue of limited size are
the most inelastic of goods. If you ban foreigners, won't that help lower
demand for tickets (and therefore ticket prices) and reduce lines for native
LA visitors?

~~~
PatientTrades
You are comparing apples and oranges.

> Why oppose a Russian millionaire buying an LA townhouse, but not a Texan
> millionaire buying the same townhouse?

A Texan resident is subject to the same federal financial rules and
regulations when earning an income in the US as a LA resident. The Russian
millionaire can earn millions in a different country under unknown rules.

> Why oppose a Russian millionaire buying an LA townhouse, but not a Russian
> millionaire buying a Degas painting?

Buying a Degas painting is a luxury, having a home for your family to live in
is a necessity.

> Why oppose a Russian millionaire buying an LA townhouse, but not a Russian
> tourist buying a ticket to Disneyland?

Again buying a ticket to Disneyland is a luxury, not a necessity.

~~~
tetromino_
> having a home for your family to live in is a necessity

Yes, I agree with you that having (not necessarily owning) a home (of some
sort) is a necessity. However, my point was that owning the sort of city
townhouse that would interest foreign millionaires is a luxury and a choice.

------
harmlessposter
Good, we need this in Canada and all California cities.

------
jijji
How would countries like the U.S. implement something similar to this?

------
zsoprano
hope this gets to Australia at one stage.

------
thecodeboy
Subconscious racism?

------
dilemma
Great. Too many Americans in NZ that buy homes as vehicles for speculation.

------
msie
Canada closed down a foreign-worker program. Now I see help-wanted signs in
all these stores and some stores are closing down or scaling back service. I
don't think Canadians were clamouring to work at a Tim-Horton's, ski hill or
farm.

~~~
soperj
mostly because the pay is shit, raise the prices and pay people more, or go
out of business, and someone will replace you if the demand is there. That's
how it's supposed to work.

------
sparrish
That will pair very poorly with their incentives to get foreign tech workers
to move to New Zealand.

[http://markets.businessinsider.com/news/stocks/Foreign-
Exper...](http://markets.businessinsider.com/news/stocks/Foreign-Expert-
Workers-Wanted-for-Technology-Jobs-in-New-Zealand-New-Zealand-Visa-
Expert-1001862237)

~~~
ng12
It only applies to non-residents.

~~~
dzhiurgis
Which you only become after 2 years being on worker visa (with some
exceptions).

------
duncan_bayne
One of the main problems with this policy is that it's addressing something
that isn't actually a problem.

The main driver of house pricing is land use and building regulation,
unsurprisingly. If it's harder and / or more expensive to build housing,
houses will cost more.

[http://pc.blogspot.com.au/2014/01/australasia-world-
leader-i...](http://pc.blogspot.com.au/2014/01/australasia-world-leader-in-
excessive.html)

~~~
elyobo
The main driver in AU and NZ is property speculation, driven by terrible tax
and pension policies in combination cheap money.

~~~
duncan_bayne
That is certainly a driver, but I'm not convinced that it's the main one in
Australasia. Certainly, it's not the main one worldwide.

~~~
elyobo
I can't comment on the worldwide situation, but it's pretty clearly the main
AU + NZ driver and it's one that's very easy to address; removing the tax
perks would be fairer even if it had no effect on prices at all anyway, so
it's a win win scenario.

The only difficulty (and it's a biggie) is that actually doing something
meaningful on housing affordability requires knocking down prices and that's
political suicide, so nobody is willing to do it.

------
duncan_bayne
This is the result of negotiations between a party called New Zealand First,
led by notorious xenophobe[1] Winston Peters, and a socialist PM who has
described capitalism as a "blatant failure"[2].

In fact, Peters has already confidently predicted an economic crisis post-
election, and begun distancing himself from it[3].

My current bet is on the coalition collapsing, with new elections held in
October 2018. A few of my NZ friends and family are placing similar bets;
closest guess wins.

I'm glad I left for Australia in 2007.

[1] [http://thewireless.co.nz/articles/winston-why-are-you-
like-t...](http://thewireless.co.nz/articles/winston-why-are-you-like-this)

[2] [http://www.theaustralian.com.au/news/world/jacinda-ardern-
ca...](http://www.theaustralian.com.au/news/world/jacinda-ardern-capitalism-
has-failed-new-zealanders/news-story/d8dd86ac01419bcd6e8a1b7ebdbf03bc)

[3]
[https://www.stuff.co.nz/business/industries/98061685/Winston...](https://www.stuff.co.nz/business/industries/98061685/Winston-
Peters-played-it-down-but-economy-will-remain-strong-Infometrics-forecasts)

~~~
patrick-dd
Welp, Australia's coalition may collapse on Friday too!

~~~
duncan_bayne
Huh. Funnily enough I don't follow Australian politics; I checked out of
politics almost entirely after leaving NZ (where I was quite involved with the
LibertariaNZ).

Been doing a bit of reading about the last election in NZ, though, as you can
probably tell :)

It should be an entertaining coalition collapse. Apparently they have a 31-MP
executive!??!?!

[https://www.kiwiblog.co.nz/2017/10/strengths_and_weaknesses_...](https://www.kiwiblog.co.nz/2017/10/strengths_and_weaknesses_of_the_new_ministry.html)

~~~
elyobo
To be fair, it was likely doomed whichever way Winnie went, because both
outcomes would have still had Winnie in there.

