Overseas investment laws don't need fixing: NZ Institute
New Zealand’s Overseas Investment Act is already ridiculously restrictive in respect of sensitive land, and a falling dollar is no reason to clamp down any further, the NZ Initiative says.
Friday, October 10th 2014, 12:00AM
by The Landlord
As the Kiwi dollar has started to track down, there has been speculation that it could prompt more foreign buyers to snap up New Zealand land and assets.
Property commentator Olly Newland said: “If the New Zealand dollar drops considerably we’ll have an influx of buyers. They’re holding back but pulling the dollar down will have an inverse effect on foreign buyers. If it drops 10% their money will be worth more.”
An opinion piece in the New Zealand Herald said there might be a case for the Government to take a closer look at the settings of the Overseas Investment Act.
“Even without wholesale legislative overhaul - as we've seen with the IRD in the past few years - there is wide scope for change if a new enforcement approach is demanded from a ministerial level. If we do indeed face another extended period of lower currency value - then that kind of renewed focus from the top may now be needed.”
But NZ Initiative research assistant Khyaati Acharya said that argument confused price with cheapness.
“If the New Zealand dollar has fallen because global investors have become more nervous about New Zealand's economic prospects, the fall does not make New Zealand assets ‘cheap’. Usually a lower price indicates a loss of confidence in the value of an asset. Whether that is misplaced or not is a judgement call.”
She said if returning New Zealanders or intending migrants bid up house prices, it would reduce the wealth loss for emigrating - and other - New Zealanders. "These are normal adjustment processes in a healthy market."
Acharya authored a report earlier this year which she called on the Government to alter the Overseas Investment Act to provide a more attractive investment climate, adopt a policy of non-discrimination towards overseas investors, protect New Zealanders' freedom to sell their property, create a presumption in favour of the proposed transaction, narrow the definition of sensitive land and abolish the requirement to demonstrate business acumen or financial commitment.
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