Budget 2022: stamp duty on foreign buyers of residential property should be considered

New Zealand Sotheby’s International Realty managing director Mark Harris argues for a stamp duty on foreign buyers of residential properties.

Following yesterday’s Budget 2022 announcement, Harris believes a stamp duty would help increase the government’s tax levies to offset proposed additional spending of $6 billion.

Labour’s ban on foreign buyers was put in place in 2018, but has not had the intended effect on house prices. In New Zealand, the average house price has risen by 25% since then, and much more in some areas.

While inflation is rising across the board, house price inflation has recently slowed due to government policies aimed at reducing demand and increasing supply of housing. House prices are starting to fall at the bottom of the market and price caps have been lifted for first-time buyers to qualify for subsidies, and price criteria have been removed for applying for a first home loan. The government has also announced significant investment in more social housing for the 2022 budget.

NZSIR Managing Director Mark Harris said: “At the high end of the market things are still very dynamic as the wealthiest customers tend to ride through these down cycles. If there are still concerns about protecting the homeownership market, a stamp duty, which is used successfully in many other countries, could be geo-targeted or price-targeted. For example, it could be set up in the Southern Lakes and start at $3 million. And it could skyrocket from the first investment as a foreigner to 10%, then up to 20% for any additional property.

“Current policy settings are frustrating – for potential overseas buyers and for us as agents – and, as has been demonstrated here and abroad, they have not played a significant role in driving down prices. real estate, so a stamp duty would allow foreigners to invest in the market in the right way, without overheating it,” adds Harris.

“Geopolitical issues are also driving growing interest in New Zealand property as it is seen as a safe haven, it is economically stable and our successful response to Covid has helped cement the idea of ​​a ‘Fortress New Zealand’ at home. expatriates and foreigners. We need to exploit this perception, lower the drawbridge and let more foreigners invest in real estate here – for their own benefit and for the benefit of the public treasury.

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