Tuesday 10th May 2016
|Text too small?|
A new official survey intended to show the extent of foreign investment in New Zealand property has produced data with "clear limitations" that are "not ideal", Land Information Minister Louise Upston says.
Touted originally by the government as a response to fears about the level of foreign investment in New Zealand property, Upston was at pains to stress the Land Information New Zealand Property Transfers and Tax Residency data released today was "not a register of foreign buyers."
"This is not that kind of report. There aren't dots you can join," she said of the six months of data, which LINZ chief executive Peter Mersi said was being released, despite misgivings, to avert any suggestion of a "conspiracy theory", even though the survey required further refinement.
LINZ has been collecting information on the tax residency of property buyers and sellers since October last year, when the government started requiring tax information in response to concerns that foreign, particularly, Chinese buyers were a major factor in house price inflation, especially in Auckland. However, statistics collection in the first three months was hampered by the fact that half the property transactions captured had gone to contract earlier than Oct. 1 and before tax information was required.
In the second three-month collection period, it became apparent that large numbers of foreign tax residents were misinterpreting elements of the LINZ questionnaire relating to work and student visa holders.
LINZ also warned it was impossible to know how many of the 50 percent of transactions between Jan. 1 and March 31 involving New Zealand tax residents might involve a foreign buyer since they could use New Zealand-registered businesses and trusts, which were included in the figures as New Zealand tax-resident.
Upston's media statement played up the fact that, according to the survey of "transfers where buyers stated an overseas tax residency", just 3 percent were to foreign taxpayers. It found 1,158 transactions from a total of 45,114 property sales nationwide in the first three months of the year were identifiably undertaken by an overseas tax resident.
Of those, Chinese taxpayers were the largest group, at 321, followed by purchases involving 312 Australian resident taxpayers. Another 162 were mixed tax resident buyers, where one of the buyers was New Zealand-resident. Other large Asian buying groups were Singapore (36) and Hong Kong (33), although British and American taxpayers were larger buyers, at 99 and 51 purchases respectively.
Some 37 percent, or 16,572 transactions involved a New Zealand citizen or permanent resident migrant buying a main home or making a transfer not requiring tax information. A further 10 percent, or 4,830 property sales in the first quarter, settled before Oct. 1, before data requirements were in place. The next three months' data is expected to include few or no pre-Oct. 1 purchases, eliminating this source of uncertainty.
Some 22,554, or 50 percent of all transactions involved a buyer who claimed New Zealand tax residency but for whom the purchase was not their main home. This was where the use of trusts or businesses registered in New Zealand made it impossible to delve into the nationality of the ultimate purchaser. Nor could it be assumed that all those properties were bought as investments rather than main homes, since the category would include situations such as a parent buying a home for their child, Mersi said.
She stressed that foreign tax residency did not equate to foreign nationality. A New Zealander permanently living in Britain who bought a house in Auckland would be counted as foreign tax resident.
Upston said: “While we can’t read too much into just two quarters, it indicates that overseas tax residents are behind a relatively small proportion of property transfers."
No comments yet
ASB reviews ownership of Aegis
Auckland Airport kicks off next phase of expansion
Cashed-up Plexure eyes acquisitions to accelerate growth as loss shrinks
Tower turns to 1H profit, lifts FY guidance
IRD should have doubled claim against Watson's Cullen Group - Professor
Investore FY profit falls 16% on smaller valuation gain, signals flat dividend for 2020
Synlait receives cease and desist letter regarding Pokeno plant
21st May 2019 Morning Report
NZ dollar steady ahead of central bank speeches
Auditors need to come out of the shadows and explain the value they add: FMA