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Key blames Labour for barrier to foreign buyer ban

Monday 27th July 2015

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Prime Minister John Key has blamed the way the Labour-led government of the 2000s structured the free trade agreement with China for making it impossible for a future government to impose a ban on land sales to foreign investors, even though he doesn't support such a ban.

Labour had included "most favoured nation" clauses in the 2008 China FTA, which meant improved conditions in subsequent trade and investment pacts would have to apply to China as well as the country the new pact covered.

The recently concluded FTA with South Korea prevented bans on foreign investment, so China would expect to be covered by those provisions, said Key, who also made it clear the government has received advice on measures such as imposing stamp duty or land taxes on real estate purchases to discourage house price inflation in Auckland, but remains opposed to such policies.

The issue in Auckland remained the under-supply of houses rather than an influx of foreign buyers, said Key. He expected that to be proven when data to be collected from Oct. 1 started to become public, probably early next year.  Legislation before Parliament at present will require foreign buyers of real estate other than their primary place of residence to have both a bank account and an IRD number before being able to complete a land transfer.

His comments follow growing calls, including from real estate agency bosses in Auckland, for the creation of a foreign buyers' register.

With respect to imposing stamp duties on foreign buyers, Key said that could be applied "potentially in some cases, but not in all", because of both FTA requirements and restrictions created by double tax agreements with other countries.

"We're not considering it at the moment," he said.

Key also acknowledged the debate about whether the provisions of Auckland Council's draft Unitary Plan for the city's long term development would allow enough houses to be built to meet demand.

While new areas for residential development were reasonably easy to identify, it was clear some established areas would resist intensification more than others.

More intensified urban living in the central business district was likely to be less controversial than in the suburbs, especially when the proposed new urban rail loop was in place, Key said.


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