New Zealand Passes New Legislation To Prevent Foreigners From Buying Real Estate

New Zealand parliament passed the Overseas Investment Amendment Bill on Wednesday, banning foreigners from purchasing real estate in New Zealand. The new legislation comes as the country tries to combat rising real estate prices. Many in the country blame foreign buyers for inflating the market and edging out New Zealanders.

New Zealand Prime Minister Jacinda Ardern ran his campaign partially on an initiative to address foreign buyers in real estate, reports Money CNN.

“If you’ve got the right to live in New Zealand permanently, you’ve got the right to buy here. We believe it’s the birthright of New Zealanders to buy homes in New Zealand, ” said Trade Minister David Parker as reported by Money CNN.

The Guardian reported earlier this year on a trend of Silicon Valley elites investing in property in New Zealand in preparation for doomsday. The trend was started by billionaire co-founder of eBay, Peter Thiel, who called New Zealand, “The Future.” In 2016, a story leaked that Thiel had arrangements with other Silicon Valley entrepreneurs to avoid apocalyptic disasters by retreating to his property in New Zealand, says Mark O’Connell of The Guardian.

Though buyers from California may be on the rise, statistics from New Zealand Stats show that the highest percentage of foreign buyers of real estate in New Zealand come from China, followed closely by Australia.

Some are skeptical of the outcome of the legislation. Official statistics from New Zealand show only 3 percent of homes in the country are owned by persons without New Zealand citizenship or residency.

Others saw the legislation as an attempt to blame foreigners for internal problems. Among them, the National Party politician Judith Collins who voiced opposition to the bill.

“This bill in many ways is like using a hammer to try and crush a teeny weeny little nut because it is about saying that every house, every residential house, is now apparently sensitive land. It’s a nonsense,” she said, according to Al Jazeera.

The legislation was also denounced by the chief executive of Real Estate Institute of New Zealand’s (REINZ), Bindi Norwell, who doesn’t believe the ban will have “any impact on house prices, nor will it help young people into their first homes.”

Al Jazeera reports that foreigners who already own property in the country will not be affected. Furthermore, the law will not affect foreigners who wish to buy land for house-building projects.

The new legislation would not apply to Australia or Singapore due to prior arrangements between the countries, according to Money CNN. Technically, the law is not in effect until it receives “royal assent”, a formality.