Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill

I move, That the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill be now read a third time.

This bill amends the Overseas Investment Act to create a streamlined pathway for overseas investment in existing build-to-rent developments. It addresses a key concern of build-to-rent developers that they need certainty they’ll be able to on-sell their developments. Given the size and complexity of these assets, this can be challenging when limited to the domestic market.

The build-to-rent sector does have significant potential. I think it was yesterday we were talking in the committee of the whole House stage about just how much potential that is. I was intrigued to get an email overnight—in fact, it might have come in this morning, actually—from someone who was following the committee stage debate last night. She specifically wanted to email me to say that she’d heard the question to me from the Hon Julie Anne Genter in the committee stage debate. I think the question was about how many build-to-rent developers have been turned down through the existing benefit to New Zealand test.

I didn’t know what the answer was, and neither did the officials, but I’m advised by one of the top lawyers working in the area that there is substantial interest in this bill passing, and a number of people following it, because they are quite interested in doing that, but the existing test is a barrier. That, actually, perhaps a day later, directly addresses the question from the member. There is interest out there in this.

I’m not going to pretend it’s the answer to New Zealand’s housing woes, as various members in the House who have been housing Ministers and housing spokespeople know. There’s no one silver bullet, because if there was, we would have fired it by now. What we need to do is make a whole series of changes, and build-to-rent is part of it. Medium- to large-scale residential housing developments is a small proportion of the market, but it has the potential to play a much bigger role. If you look at the UK, for example, there’s 240,000 build-to-rent homes in 2022 in the UK. There’s similar success in the US and parts of Europe. Often what you see with build-to-rents is longer leases to tenants, making them a popular choice for renters looking for secure, long-term housing. This is a small and important contribution.

What the bill does is create a streamlined pathway within the Overseas Investment Act. Under the current rules, overseas investors in build-to-rent have a streamlined pathway to develop new housing, but they can only purchase established housing developments if they meet the onerous benefit to New Zealand test—so they don’t have certainty. Therefore, they’ll be able to sell their assets when they’re complete or if they face financial distress. International investment is critical in this sector, but these are large and complex assets, and, internationally, institutional investors such as the pension funds, the big players in the sector, can provide stable returns over an extended period of time. The pathway addresses this issue and gives developers the certainty they need.

The streamlined pathways in the Act have specific criteria or thresholds to ensure they’re used appropriately. In this case, the new pathway enables investors to purchase established large-scale rental developments in circumstances where there are one or more buildings which total at least 20 dwellings. They must also continue to make at least 20 dwellings available for rent—and we had a bit of a debate in the committee stage of the House about whether or not “at least” or “more than” was the same thing; Mr Xu-Nan from the Greens struggled to get there, but we got there in the end. That is indeed the case: they must continue to make at least 20 dwellings available for rent, and they may use an intermediary to lease their build-to-rent developments, which is likely to be a common business model.

There was a change at the select committee. I want to thank the Finance and Expenditure Committee for their work. The new test was designed to enable the use of intermediaries. The existing test that supports investors building new housing does not appear to, so you could have had build-to-rent developers who built 200 new dwellings being forced to sell those because they wanted to contract a property manager. Thank you to the committee for sorting that out. There’s been quite a bit of good will on the committee.

I have taken some comments from the Opposition in relation to some amendments, which I did take some advice on, and as we had an extended discussion in the committee stage last night—we’re not proceeding with those amendments at this time, but we’ll keep a watching brief on the issue and I thank the constructive comments from the Opposition in relation to that.

International investment is essential for growth. We have low capital intensity relative to other developed economies. We do need international capital to bring in expertise, connections, and just capital. This bill is just one small way the Government is supporting high-quality international investment. Of course, the Hon David Seymour is working hard on the Overseas Investment Act changes—very important for the future of the New Zealand economy. This bill creates a streamlined pathway. It’s one small change, but we do need broader reforms as well, of course.

It’s been a pleasure to take this bill through. I want to thank everyone for supporting it. I think it’s going to pass almost unanimously. It’s a small contribution to fixing our housing crisis, and, of course, there’s always more to do. Thank you.

Thank you, Mr Speaker. The Labour Party supports this bill, the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill, but we wouldn’t support the bill if went any further. It’s a pretty specific proposal, and it is backed up by a pretty sound argument.

Build-to-rent, as an asset class, was quite a significant inclusion under the previous Labour Government, and it’s good to see this Government is building on that. It will play a part in ensuring that there are suitable options for those that need a home, which is pretty much all of us. The thing, though, is that we should never give up on the dream of people being able to buy their own homes. We don’t ever want to look like, as a Parliament, we are saying to people, “Look, we will support this, but that’s your lot. You can stay there for a long time, but you’ll always be a renter.” The sad reality is, for a lot of people, that is what they face—we should never give up on that—but, in this instance, it’s clear that build-to-rent does play a part.

What will be interesting is any subsequent proposals around the change to overseas investment in existing property, because, in this instance, the rationale made sense at least—that those that were looking to invest and specifically build build-to-rent developments were being restricted because those potential buyers, some of them were from overseas, and so they didn’t have the confidence to build in the first place. Now, if we want this to work, we don’t want there to be a lack of confidence in investing in such developments. Will the Government look to extend that to existing properties, is the question.

Now, if they do, we will strongly oppose that, because if we see what we’ve seen previously, in that the residential market gets unaffordable, then the only option they will have are rentals, and we need to avoid that, and part of that is disincentivising competition on existing stock. This Government has done that by reversing the interest deductibility rules to back to where they were, and already we have seen the number of consents for new builds fall, and we have seen the level of lending to investors increase. Already there is increased competition on existing stock, but, in this instance, there was a case, and so therefore, we agree.

I also want to take the opportunity to acknowledge the work that Dr Megan Woods did when she was housing Minister in encouraging build-to-rents in this country. I think she can be really proud of that.

I want to touch on something the Minister of Housing said in his contribution. He was very vague about it, and I think he’s very vague about it because he knows, deep down, that we have a point, and for whatever reason he chose not to pursue it. I think it was a missed opportunity, the fact that he didn’t. The threshold for this bill to kick in is 20 units. Regardless of the size of the development, as long as 20 remain build-to-rent, then they would qualify for the provisions, if you like, within this bill. That is fine; we’re comfortable with that. It’s consistent with what’s been in the past, but what was disappointing was just the sheer unwillingness from the Minister, officials, frankly, and some other members to really dive into this; disappointing because I think that for areas outside the large urban centres—let’s say Auckland, Hamilton, Tauranga, Wellington, and Christchurch—a 20-unit development is massive. You might see even an eight-to-10-unit development as quite a large one, relative to their area.

Well, they will never have the benefit from this bill, and I think we’re unlikely to see build-to-rent become a feature outside of our largest cities. That is a shame. Why should the regions miss out? All they needed to do was to look at a two-tier system: that the 20-unit minimum applied in the cities, and a proportional threshold outside of that; so as long as it’s above six units and 100 percent. So that we don’t get gaming of the system, it has to be specific build-to-rent development, but just at a smaller size. Then we’ll see your Nelsons and we’ll see your Wairarapas benefit from this as well, but we’re not. Now, the Minister says, “Oh, don’t worry about it. We’ll revisit it at three years’ time.” But why? Why couldn’t we have just done it now? Anyway, look, it’s done now. I’ve got that grizzle out of the way; I’ve put it on the record. We tried to help the regions; the Government didn’t want to. It’s there on the record—that’s fine.

People will benefit from this. The Labour Party supports this. It makes sense to go through. That support won’t extend to any further loosening of the overseas investment rules. It’d be very interesting if what we’re hearing—that they’re looking to loosen those for properties $5 million and over. We’ll be keeping an eye and an ear out for that, because once you open that door, it’s all on. At least this is limited to a specific asset class that doesn’t then move on to the residential property market, because, in doing so, that would be disastrous. But this bill makes sense, and that’s why we support it.

Tēnā koe, Mr Speaker. Housing is a human right. We in this Parliament have a responsibility to ensure that the policies that we put in place are leading to a situation where people have—every person has—access to secure, affordable housing that’s safe. It makes sense for it to be energy efficient; that affects human health as well as energy use. This bill, the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill, as the Minister himself said, isn’t really going to make a massive difference one way or the other.

Let me be very clear: the Green Party supports build-to-rent, and we think there should be incentives in place to ensure we get high-quality build-to-rent homes. We don’t believe that owning a home has to be the pathway for people to get access to safe, secure, affordable housing. We need better renter protections, and, most of all—the thing that would make the biggest difference to the housing crisis in this country, and we know this from looking at other countries who actually have achieved more affordable and secure housing for people—there is a really important role for the public sector, whether that’s at a central government level or  at local level, in the provision, in building and supplying public housing. That has to be a major part of it. For whatever benefit the Government thinks it’s going to get through this technical change to the Overseas Investment Act, which means that, actually, build-to rent as a specific asset class can be invested in—not only by foreign investors, but they can also be sold to other foreign investors, whether by people who are domestic investors or foreign investors.

That’s what this bill is doing; it just makes it a little bit easier to do that. It’s not going to address the severe shortage in housing supply that has been now worsened by the existing Government cancelling all the planned builds from Kāinga Ora. Kāinga Ora was just ramping up to the point where it was going to be able to deliver. It’s really important to have a large “for public good” public sector player in the development space. Just in my own electorate of Rongotai alone, I talked to a builder who said they had $70 million worth of new builds, redevelopment of public land, that would have supplied more homes into Rongotai, cancelled now by the existing Government. That affects the building and construction sector. That’s why, in part, Engineering New Zealand came out earlier this week and said hundreds of engineers have lost their jobs and are leaving New Zealand.

That is a direct consequence of this coalition Government’s actions, because they are ideologically opposed to something that is demonstrated to be practical and the right way to help achieve affordable housing. Not to mention the fact that at the same time they’re saying, “OK, we’re going to do build-to-rent and we’re going to make it easier for foreign investors to invest and sell to other foreign investors build-to-rent housing.”, they are taking away protections for renters and bringing back no-cause evictions. Where is the security in that for renters? Nowhere. If we don’t have proper protection for renters, increasing the supply of rental properties isn’t necessarily going to provide the affordable, secure housing that we need. That’s the truth, and that’s why, if you look at other developed countries that have much better outcomes than us on a whole range of issues, they have much better protection for renters. They have a higher proportion of their population renting, because it’s not a bad thing. You can have a secure home and have some agency over what the home looks like; you can actually determine—you know, it’s like a permanent home, because there’s protection for renters.

It makes sense as a society to ensure that everybody has a healthy, affordable home. Stop with your moralistic—this Government is very, very much like punish the poor, blame them for all their problems, don’t do anything to actually help people. That’s the reality. Every problem that we face in society, rather than actually investing in our country ourselves, is “Let’s sell it off. Let’s sell it off to the foreigners; let’s get some more money from the foreigners! Let’s get some foreign capital.” Guess what? When people from other countries who have money come and invest in infrastructure in our country, whether that’s roads or whether that’s housing, they expect a return for it. On the one hand, in their personal lives, they know that they retain autonomy and build wealth by buying homes and owning their own home, but governing on behalf of the country, they’re like, “Let’s just sell it all off to foreign investors and put future New Zealanders on the hook to pay back at high interest rates the cost of providing that infrastructure.”

The Green Party is not going to support this bill. We have real solutions that will actually address the supply of housing, and we come from the point of view of care for our community. That’s what everyone in this House should be doing, really. I mean, we’re here to represent all New Zealanders, not just the top 1 percent, not just the wealthy and sorted, like the Prime Minister. We’re not here to line the pockets of foreign investors when we ourselves could be investing in rental properties, when we could be resourcing our councils to build council housing. There was an inquiry into the future of Auckland’s governance way back—2008, ’09, ’10. A royal commission came back and made it very clear that, actually, there’s a really important role at the local level for councils to be involved in social housing, and that’s strongly evidence based.

We have now several decades of a legacy of the pressure for councils to sell that off, even under the last Labour majority Government. They put the Wellington council in the invidious position of having to transfer council housing to a community housing provider in order to access the income-related rent subsidy, which private landlords, private providers of rental properties, can access. Why shouldn’t our local communities be able to do that through council housing? There’s not a country in the world that has become a successful country, with high levels of wellbeing for the people, with health for their people, who’ve done it through privatisation, foreign investment, tax cuts for landlords, tax cuts for the rich. You do it by investing in all the people, because the people are our greatest resource.

We bear the brunt of it when there are households with children where parents are working—they’re in poverty, they’re in insecure housing, they’re in unhealthy housing, and they can be booted out of their rental property for no good reason. Then the people who own those rental properties are able to benefit from the lower interest rates by leveraging more debt and buying more property—property prices go up—and it leads to more inequality in society. But we pay for it—we all pay for it. We’ll pay for it because higher child poverty levels, insecure housing for children, and children living in poverty when their parents are working is not good for us. That is what leads to more crime. That is what leads to us having bigger bills in terms of our health system. Everybody knows the health system is under enormous pressure, in no insignificant part caused by road crashes, which will be made worse under changes by this Government, but also because people live in unhealthy housing. Then we suffer with rheumatic fever and preventable childhood illnesses.

It just makes sense, it just makes sense, but the reason the coalition Government—well, they just seem incapable of understanding evidence, doing basic maths, and understanding that what is best for the wealthiest individual is not necessarily best for the collective, for the group, for all of us in the country. The way that we as a society become better off is that we look after each other. We make sure that those who are the most vulnerable are looked after, and in the end we will benefit, because those kids will grow up healthy and able to be their best selves and contribute more back to society. We’re not paying the big health bills, because, if we put people in healthy, secure, warm, dry housing and secure housing, we don’t have as many emergency departments admissions, we don’t have as many chronic diseases, we don’t have as much asthma.

It just makes sense, but the Government comes here and says, “Yeah, well, we don’t think public housing—there’s no silver bullet, but we’re going to tweak some tiny things around the edges. Our real agenda is making it easier for foreign investors to make a buck off New Zealand.”

Thank you, Mr Speaker. Look, no one in this House is denying that New Zealand has got a massive housing problem, sometimes called a housing crisis. I think what we just heard is a complete fairy tale for how that could actually be. When you have, as the previous speaker alluded to, house prices going up and becoming more unaffordable, that’s an incentive for people to build. People actually want to build and deliver housing. The real problem we have in New Zealand is that we have just harsh and unworkable, sometimes unmovable, and designed-to-say-no legislation and problems in this country that this Government is working incredibly hard on addressing, through things like reforming the Resource Management Act, and doing things like allowing products to be brought into New Zealand to build our houses, which the Minister for Building and Construction, the Hon Chris Penk, is shepherding through the House quite well. That will lead to more houses being built.

I hope that this bill will contribute to allowing another piece of the puzzle, which is capital. We need capital to pay for subbies, to pay for builders, to pay for the drapes, curtains, underfloor. We need that money to actually purchase the goods. Yes, there’s a return, because someone’s putting something up and they need a return. When you actually provide the capital—as people who save and work and put it away for a rainy day and want to get a return on it do, as we all do with what we put away—those people deserve to get a return. That’s the sort of thing that people want when they invest in something like a build-to-rent. On one side, you get people providing capital and getting a return; on the other side, you get long-term, stable rentals, which, as the previous speaker has talked about, are something that we want to see in this country. Our system disincentivises investment from overseas in a lot of ways.

This bill—and yes it is for one asset class—will do a lot to increase the interest in investing in the things that New Zealand needs to house our population. It’s creating a streamlined pathway for overseas investors to purchase already existing large-scale rental developments. Look, this coalition Government is working on broad changes to the Overseas Investment Act, as I’ve already said. ACT has pushed for this for a long time. I’m glad to see this happening. I think it’s going to address concerns that have been bubbling away in the community about stable housing for people who need a rental community with a professional—there’s a lot of concern about having professional property managers and professional businesses. This is what we are talking about here: professional companies employing professionals to house people that maybe couldn’t find it somewhere else or want to have something that is a long-term customer relationship, rather than what we have historically done in this country.

Look, I just want to reiterate the point that I made in my second reading speech: fixing the housing crisis that we have in New Zealand is not an easy task. There are so many different elements that flow into it, as I just outlined: planning, infrastructure, the way we deliver services to places where we want to build, what we use to build, the skills we need to maintain in this country and grow. All of these things take a lot of getting right to get that whole soup together so that you can have a delicious boil-up at the end of the day.

This is what this Government’s working on: getting all those ingredients in the right place so that we can get a housing situation in New Zealand that means New Zealanders and people who want to become New Zealanders can see somewhere that they can not only invest their capital but invest their life in, somewhere they can see a stable future for their families, a stable future for their businesses and their lives and their careers, so that everybody in this big boat we call New Zealand or Aotearoa—we all are paddling in the same direction, we all feel like we have a place here, and New Zealanders can look at their country with pride when we have the places to house New Zealanders. I commend this bill to the House.

I think we all agree that there is a housing shortage. What we seem to disagree on—certainly in the speech from the Green Party member—is what the solution to that might be. It is always a pleasure to follow after, particularly on housing issues, Cameron Luxton, who I think is probably the only person who has actually built houses with his own hands. He is our resident builder.

SPEAKER: No, sorry. You’ve got to be accurate if you’re going to start making those sorts of statements.

ANDY FOSTER: OK. Sorry, Mr Speaker. Sometimes we flush hidden talents out of the House when we make statements like that, which need to be corrected. I know we have people who contributed to parts of a house, anyway.

I, first of all, want to start off with the Greens’ solution, which seems to be to go down the public housing track. Julie Anne Genter stood up and said that Kāinga Ora (KO) public housing was the answer to everything, and she said it’s $70 million. Well, how many houses? We didn’t get a reply from her at any stage on that. I can bet your bottom dollar that the problem with those is they were inordinately expensive. When I was the Mayor of Wellington, I saw KO projects, and most of them were sitting at around $900,000 to a million dollars—for the building; probably excluding the land. That is for a one- or two-bedroom house—maybe three if you’re lucky. They were very, very expensive. Clearly, they were getting the model wrong.

This bill, Madam Speaker—you won’t correct me, will you, on whether you built a house or not? This bill is just a small part of the answer to a very big, complicated problem. What it does is it opens a new pathway for foreign investors to be able to build or buy new housing or long-term housing for rental purposes, where you have 20 or more dwellings all in one place, all contiguous. It’s not a big part of the market, but it’s an important part. It doesn’t say they have to build them, but what it does tend to do is make it more likely that a developer in New Zealand might build something, knowing they’ve got more likelihood of being able to sell it to an international investor or, indeed, to a New Zealand investor. It streamlines the investment process.

I want to talk a little bit about the reasons we have a housing shortage, and there are two parts to it. One is supply; one is demand. Obviously, supply has gone up and down a little bit in terms of the amount that’s been built over time. In fact, it was obvious what was going to happen in the last little while, during the COVID situation. Interest rates went through the roof, the cost of building went through the roof, and house prices which peaked then suddenly plummeted. In that situation, are you, as a developer, going to build a house? The answer is probably not, because you can’t make money on it. The reality is that unless you’re going to step in, as the Green Party suggested, and just have the public sector throw enormous amounts of money at housing regardless of what the cost of it is—and that seemed to be the model that KO was operating under—the market is going to decide when it’s going to build and when it’s not going to build. Obviously, they backed off in that situation.

The other part that I wanted to mention is the demand side. The reality is that over many, many years, the last decade or so, COVID aside, we’ve had very, very significant population growth, and that now is no longer driven by New Zealand births over deaths. It is driven very much by migration. One of the things that has always irritated me, I might say, is that we’ve had successive Governments, both Labour and National, saying to councils, “We want you to provide for 30 years of population growth in terms of housing.” Given that most of that now is migration driven, who’s in charge of that? Well, it’s not the councils; it’s the Government. The Government needs to have some sort of clarity around what sort of level of population growth there is going to be.

It was interesting—and I’ve said this before in this House—that the Infrastructure Commission, who, thank heavens, as a responsible organisation, are now saying that we need a population demographic strategy for the country—because if you don’t have that, how many houses do you need? What sort of infrastructure do you need? How many schools? How many hospitals? All of those things. The absence of that becomes a real problem. What they said about stats, because we rely on stats for these sorts of things about the projections—they said stats are “flying blind”, because they don’t know, because they’ve got to put the estimates on the basis of, essentially, past practice, but they don’t know what future practice is going to be, and neither does the Government. It doesn’t matter whether it’s a Government on that side or the Government on this side. We need to do a lot better in that place.

To go back to supply, this is about providing another avenue for the supply of houses. New Zealand First has always been very wary of foreign investment in New Zealand. What we want to do is to make sure that where there is foreign investment in New Zealand, it is to the benefit of New Zealand. That’s what we’re about, New Zealand First. It’s about the benefit to New Zealand. It’s not about the benefit to foreign investors. We’ve always been a little bit wary about that, but what we want to do is make sure there is a good benefit. If you’re going to buy something, what’s that benefit going to be?

We heard mention—I think it was Kieran McAnulty—that there’s a suggestion that maybe $5 million might be the sort of price at which somebody might be able to buy a house in New Zealand. Well, I’m not aware of that as being a definite proposition, but I would say—and I think our view will be—that if you’re going to buy a house, it’s got to be something that doesn’t compete with the New Zealand market, and $5 million probably does that. But $2 million, which was the suggestion, of course, from the National Party, was one that New Zealand First said no to, because you are then starting to compete with New Zealand homeowners.

It was interesting, actually—I had a quick look last week at the number of houses which are $2 million - plus which were listed on TradeMe. I did cherry-pick here. The property market in Wellington has been, obviously, pretty terrible recently, as 3 to 3.5 percent of the 3,249 listings were $2 million or above. In Auckland, out of 15,196 listings, approximately 12 percent were $2 million or above, or could be quite close to $2 million, and there’d be whole lot there. In Queenstown Lakes, it was 45 percent of the 469 listings. My point is that, in some parts of the country, $2 million becomes a real competition with New Zealand buyers, and the other part of that, of course, is that what it would tend to encourage is, if you were thinking about listing it just under $2 million, you might just go, “I’ll push it up a little bit so that I might get a foreigner buying it as well.” That is a real issue.

If I might return to the $5 million—and I think we would be very strong on this—you don’t just want to sell a house; you want to sell to somebody who’s got a lot of money. You want to sell something to someone who’s also going to invest significantly in this country, in productive development, in building new businesses, expanding businesses, and employing Kiwis, because that’s a really important thing.

Let’s just focus, again, on this build-to-rent. Is it going to make a difference? It will make a difference at the margins. We’ve seen that there is a growing market in other jurisdictions—the US, Europe, etc. Will that be as big a benefit here? At the moment, I think the Property Council said that our build-to-rent market is very small. It’s about 0.1 percent of the overall market. They think that if the policy settings are favourable, within a decade it could be 25,000 dwellings. It sounds quite a lot, but it’s still one only 1 percent of the market, so it’s still relatively small. I suspect the reason for that is that those bigger markets—Australia, UK, Europe, and the United States—have got big domestic investment in this. We don’t, and so it’s likely still to remain a relatively modest contribution.

I want to finish off, finally, with some comments on the minority reports. I think Labour said they’d support this proposition. Good; they’re quite clearly trying to differentiate themselves somehow, so we’ve got the idea of having some different number. Kieran McAnulty said a proportional number, but I don’t know how you do a proportional number when Auckland is a lot bigger than Wellington and bigger than Christchurch, and New Plymouth and Masterton are very different sizes. It would be complicated. You might choose another arbitrary level, which is, I guess, what he was suggesting. OK. I think what I’d say is let’s just try what we’ve got at the moment, and let’s see how it goes, and if it goes well, maybe have a look at that going forward. That seems to be where we’re at, at the moment.

It was the Greens, to me, who were really confused, because what they’re saying, effectively, is, “We’ve got enough money in this country to build all the houses that we need.” I don’t know where that money’s coming from, because, at the same time, they want a capital gains tax and they want to punish rental property owners, so they’re going to disincentivise people from building houses. I do not know which magic money tree, other than the State, they seem to want to raid to be able to build the houses this country needs. This bill is simply a small contribution, amongst a range of complex contributions, to fixing a big problem for this country in terms of housing, and I commend this bill to the House.

Unlike Cameron Luxton, who is actually a builder, I’m not a builder, but just before I started this job, I built 16 homes in a tiny little place in the very Far North, and I want to relate it to this bill. We built four-bedroom, three-bedroom, and two-bedroom homes on a piece of dirt in Te Kao. By building the homes, we then had to put a new road in. By putting the new road in, then we had to put in a brand new water treatment system, and this in the context of community development thinking, marae-centric thinking. All of this development happened because the community and the marae community decided we need homes—and, by the way, we know how to do this. Our tribe contributed to that investment, and Kāinga Ora also contributed to that investment.

The bigger context of this is managing around 4,000 hectares of farmland. We’ve got a truckload of farmland up in Te Kao. This is Aupōuri land: 3,000 bulls; a little mussel farm just down the way in Houhora. We put in 565 water tanks. What I’m describing here is the context—it’s not just about the house; it is about the community in which one resides. When I’m thinking about and reading this bill—which I’d like to support, but we’re not quite there yet.

Hon Members: Oh!

MARIAMENO KAPA-KINGI: I know—yeah, no, I know. We should talk more. It is important because it is about the significance of community design, consultation, and development. That’s the position I want to bring into this discussion—might be a wee bit late, but, nevertheless, here it is.

From our perspective, in the essence of this bill, yes, it does remove barriers for overseas investors to build-to-rent, but what it does then is replace the barrier and put it smack in front of hapū and whānau and tribal—iwi—investors. That’s what it does. It doesn’t, in my view, and in our view, look closely and understand enough the context of which I’ve just described in my opening context. The barrier’s placed squarely in front of Māori, in introducing what can only be described as a golden ticket for foreign entities to farm us for money, land, and prosperity.

Hon Member: Pfft.

MARIAMENO KAPA-KINGI: I know—I know—it does make people go “Pfft”, but stick with me.

I use the term “golden ticket” purposefully, right? You will all recognise that I use words really clearly. [Interruption] There’s not an accident in the way I describe our reality. Right, I’ll start again. I use the term “golden ticket” purposefully, understanding that in the context of this coalition Government’s overall policy platform, this bill cannot be viewed in isolation of a wider machine. The previous speaker talked about how, well, it’s a small contribution to a whole big network of things. That’s the bit we can simply not trust.

Ryan Hamilton: What?

MARIAMENO KAPA-KINGI: I know, I know, it’s OK. No, hang in there—we’re good. It’s Thursday—stick with me.

If it wasn’t already grim—I’m going to say it again: if it wasn’t already grim—for whānau to buy their own homes now, allowing overseas competitors—overseas competitors—to buy whenua and build rentals will make it more difficult, clearly. Now, just register that: for our mokopuna to own homes in their future. The smokescreen here is that this will assist with the rental shortage here at home. It’s going, “No, no, no, Mariameno, we’re going to get more—I mean, really, this is good for you. Go with us.” We are a nation of renters because the housing market is so inaccessible. So what do we do? The Government’s best answer is to sell our whenua to overseas investors and build more prisons and set up boot camps. Thank you for the housing strategy.

Here we go—30 seconds left—we simply cannot support this. We’d like to be able to, but it doesn’t do enough and it doesn’t understand us enough. Thank you, Madam Speaker.

Thank you, Madam Speaker. I rise to tautoko the previous speaker, Mariameno Kapa-Kingi, but also the Hon Julie Anne Genter, in opposing this bill on behalf of the Green Party. Now, understandably, this bill is to remove barriers for overseas investment in build-to-rent housing. I’ll talk more about our housing crisis in a bit, but in terms of the bill itself, let’s first discuss what has happened during the committee stage. I would like to point out also my appreciation to the Minister of Housing for answering our questions diligently during the committee stage. That is much appreciated when that does happen.

If you’re looking at the policy statement, we can talk about the nuance in terms of some of the things that we mentioned in the committee stage around the exemptions when it comes to the Overseas Investment Act, the complexity of that Act itself, and the sort of exemptions and allowances that this bill has to make in order to make that particular Act work or to make this particular exemption work, as well as in terms of our international obligations through either our free-trade agreements or our comprehensive economic partnership agreements.

However, the basis of this bill is that we want to see more rental properties or more housing that is affordable for the people of Aotearoa. Does this bill serve that purpose? The bill itself is simply to buy existing, large rental developments, not in terms of creating or increasing the stock of the rental market but the existing ones. I think that, fundamentally, is one of the barriers or the challenges that we see with this bill—what is the actual likelihood of us increasing the housing stock, other than simply passing the issue from one party to another?

One of the things that did come up during the committee stage—and I think the Hon Julie Anne Genter was very accurate when it comes to the question around this—is that when we see that it’s not going to increase, and that domestically we do not have the capital or the resources to fund for things and we need people from overseas to actually come here and buy up the sort of large rental development properties, and there is no other way for us to do that, we must also realise that the revenue that is being made from these is also less likely to stay in Aotearoa as well. In many ways: who does this benefit and where is this money going to?

I think it’s really important to point out as well—and I think it’s incredibly ironic to point out—that for myself and for my communities, as migrants, we have been repeatedly told that we need to be grateful and fall in line, yet we have a system here which is looking overseas to help solve our housing issue that we should, as people from Aotearoa, be grateful for. I’m also, in this particular case, quite surprised that the very party who are interested in keeping everything within the country to benefit the people of Aotearoa seem to be OK with sending some of that money and the revenue that we will be making from this if we keep it within Aotearoa overseas as well.

I think, fundamentally, there are two major issues that we have with this. The housing crisis is real. We need more houses for our people and for our communities and to create that intergenerational connectivity. That is important. It will be the root cause, and it will help solve some of the root cause issues we are seeing in our communities around crime, around mental health, and around the cost of living, but this bill doesn’t really address that. The concern we have is that not only will it not increase the housing stock; it will send the revenue overseas, and at the same time, it will be what this Government will do as a pat on the back for a job well done when there are better ways for us to address the crisis.

What another great day for a Government that can now proudly claim and own the fact that we are the party for mum and dad landlords, we are the party for homeowners, and now this is just another step to confirm that we are the party for renters. It gives me great pleasure to rise and support this third reading of the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill.

Let’s just take an opportunity to recap some of the achievements in and around this, because we don’t want to over talk this piece of legislation, because it’s only a small piece of the puzzle. Let’s not forget that we’ve done a lot in and around making housing more affordable going into the future, and putting the downward pressure on rent increases going into the future. We’ve lifted the brightline test to 10 years. We’ve brought back deductibility, treating interest as a genuine expense. We’ve brought back no-cause terminations on 90-day contracts. Thanks to Minister Penk, as Minister for Building and Construction, we’ve put more competition into building products. We’re reforming our building consent regime, as Minister Penk is working on with the councils. We’re making it easier for building granny flats. And, of course, there’s the reforms that we will see unleashed this year on the 1991 Resource Management Act.

ASSISTANT SPEAKER (Maureen Pugh): Come back to the bill at some point, Mr Brewer.

CAMERON BREWER: Madam Speaker, thank you, on this Thursday, for giving me that latitude which is always expected on a third reading from at least one member of the Government! And that falls to me! I won’t mention that rents increased $170 per week under the last Government; nor will I mention that the social housing waiting list increased by over 20,000.

I want to finish off specifically talking about the bill because I want to leave a gem with our listeners on “Truth Radio” and viewers on TV today—that this is perfect for the likes of Auckland. For a city that has gone through the unitary plan of 2016, it caters very well for these medium- to large-scale build-to-rents. Whether they can be done and whether they will be done, there’s a lot of excitement for filling in the terrace housing, apartment zone, and mixed housing urban zone. These build-to-rents, medium-sized residential complexes are perfect in our town centres, in our metro centres, in our transport hubs, and on our arterial roads. If you want to know the excitement that’s brewing—

Hon Members: Ay!

Hon Members: Aw!

CAMERON BREWER: —go to this—you like that? You like that? If you want to know this, just to finish up, Madam Speaker—because David MacLeod gave me 10 minutes, but apparently it’s shorter—buildtorentnz.co.nz.

I’ll give it to you again: www.buildtorentnz.co.nz. The Property Council has led this, and you will see on that buildtorentnz.co.nz website all of what’s under construction, with 1,800 completed units, 736 under construction, and nearly 3,000 in the pipeline as of the end of December. Build-to-rent is ready to go. It’s already started. This will be huge news to a lot of people around New Zealand today. I commend the bill.

Thank you, Madam Speaker. As my colleague the Hon Kieran McAnulty indicated, Labour is continuing to support this bill. I agree with the last sentence of the last speaker, Cameron Brewer, that build-to-rent is under way. It is under way because, when we were in Government, we put in place the regime that allowed it to happen. We created the asset class. We made it clear that build-to-rent was part of solving our housing crisis. I agree with speakers in this House that have been careful to say that this is not some kind of magical solution to the housing crisis in New Zealand, but when we were in Government, none the less, we saw it as an important piece of the puzzle of solving a housing crisis and why we put in place the legislation to create the asset class of build-to-rent.

I think it is worth remembering that one of the things when creating that asset class is we were creating a new way of renting in New Zealand. This wasn’t just about building large apartment blocks and saying that there needed to be X number of owners. It actually was looking at it from the perspective of renters and saying, “If we’re going to create a new class for landlords, what does that mean for the people who are renting those?” Under this asset class, those people renting those apartments have the right for leases up to 10 years. This is hugely important. One of the things that we heard very loudly when we were doing the policy work around this is that renting is changing in New Zealand. Some people choose to rent their whole lives and they want to make sure that they can create a home in the place that they are leasing or renting, not live on year-to-year tenancies which do not allow their children to continue at the same school or to put down roots in a community.

One of the things that we, when in Government, also put work into was putting in place funding to ensure that this actually could be extended out to community organisations that could provide another part of our housing puzzle and solving our housing crisis. That we could get affordable rentals—not public housing but something that sat between the market and public housing in the form of community rentals, owned and rented at cheaper rates. Unfortunately, this Government has removed that piece of the puzzle by scrapping the fund that would have allowed our community providers to do that. That is a great shame, and I do ask the Government to reconsider that, because we will not solve a housing crisis until we resurrect that piece of housing that sits between the market and public housing, which we had in New Zealand for decades—decades and decades, since the 1930s—until the previous National Government created community housing providers’ access to the income-related rent subsidy, and we saw the dissolving of what had been a mainstay of housing in New Zealand.

In supporting this bill, I do put that plea out to the Government to rethink what I think has been a huge error, and one of the reasons we are seeing upticks in homelessness and why we are seeing more people that are not even getting on to the public housing waiting list but cannot find housing. We have to make sure that we are looking to solve the housing crisis for the most vulnerable in our communities as well, and if we just leave it to market mechanisms like this, it will not do it on its own.

This bill is very specific and very narrow in that what it does is it responds to concerns from the sector to do a belts and braces approach around laying bare in terms of the Overseas Investment Act what the test is. There was a long stream of advice that came through from Treasury and from the Ministry of Housing and Urban Development that, actually, what needed to be done could be done under the settings of the Official Information Act. In Government and in Opposition, we’d indicated that we were willing to look at whether we did need to put in further backstops to make it clear that this was an asset class that was open for investment in New Zealand and that we were encouraging.

There are always tweaks that can be made to a regime. This is a new regime that was only put in place, I think, in 2022 when we passed the legislation to allow the creation of this asset class. We will need to monitor it over the coming years to ensure that it is fit for purpose. We have international examples to look to that many other countries do have build-to-rent schemes, but New Zealand has to make sure that we’re continually watching it to make sure that it is fit for purpose here in Aotearoa. Labour is pleased to support this legislation but we do urge the Government to not cut off what are some incredibly important parts of making this work for all of our community. That means reversing the cuts that they have made to housing and, in particular, in the area of affordable rental housing to community providers.

Thank you, Madam Speaker. It is great to continue the conversation in this regard. As has been said by, I think, both sides of House, we appreciate the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill isn’t a silver bullet, but it’s certainly part of that puzzle. As our Minister said, it’s creating a streamlined pathway. One of the members opposite was a bit grumpy that we’re not extending it to the regions, but I think the realistic nature of this bill is that it’s probably not going to appeal to those regions, so I think it’s probably a fairly moot point.

This is largely about supply. I’d like to quote from The Post from just this Saturday: “For example, I have a rental property on the same street as one owned by a friend, and they are similar properties. My property was rented in two days, although I did reduce the rent by $70, but my friend reduced his rent by $150 and he still hasn’t rented it.” I think that’s an indicative example of the work that we’re doing, as a Government, across the ecosystem of housing, and it is and has been putting evidence and downward pressure on rents. It is all about supply, and this bill is another good example of supply.

The chair of the Finance and Expenditure Committee, Mr Brewer, has already alluded to many of the layers, the things that we have done over the last few months in Government. Of course, it was great news, only yesterday, to have the official cash rate drop by 50 basis points. The flow-on effect is just another example of the compound effect that we’re doing towards housing. The Minister beside me, the Hon Chris Penk, is doing some excellent work around consenting. Again, I’ll use that term “a streamlined pathway”—removing the friction in consenting to get houses built faster and quicker, so instead of taking three months or six months to get consent, hopefully six weeks, and we can build and be more productive.

The comment was made that we removed some funding from the housing portfolio, but we’re also enabling community housing providers (CHPs) to build housing and create—

Hon Dr Megan Woods: It was money for the CHPs—it was actually money for them!

RYAN HAMILTON: Remember, Kāinga Ora, how gold—

Hon Dr Megan Woods: It wasn’t Kāinga Ora; it was CHPs.

RYAN HAMILTON: No, no. If you’d let me finish, you might learn something, the Hon Megan Woods. Through the Kāinga Ora wasteful-spending situation, we’ve pulled some of that money back, and we’re creating competition with community housing providers to build more housing. We’re actually going to get a more diverse typology of housing, including affordable rentals, for you, Megan. That’s fantastic news.

It gives me great pleasure to introduce yet another thing that this Government is doing to enable housing supply and get Kiwis housed—private rental, market rental, affordable, the whole lot. We’re into it.

Goodness! That was quite something, seeing a newish member of the House explain—explain—what’s going on in the housing market to the former Minister of Housing. That was just interesting.

I’m going to explain something else back to that member Ryan Hamilton, and that’s to do with rent and what drives rents. It was something that he might have missed in the Monetary Policy Statement around what was happening with rents. Existing rents are staying high; new rents are going down. We know that a large part of what drives rents is demand. Now, if it was the case that rents dropped in response to interest drops, those existing rents should have dropped too, but they have not. It’s a simple little fact that rents are typically driven by demand in the rental market. So, you know, there’s something going on there—linked to the number of New Zealanders that have had to leave this country in order to find work. We know that net migration has slowed—that’s probably what’s been driving the rental market more than anything else.

Having said all that—I do want to address this particular bill, the detail of it rather than the points that have been made in argument—Labour does support this bill, perhaps with one or two reservations. This is work that we started, and we do want to see more build-to-rent investment in New Zealand. I think it’s important to note, for some people who are a bit dubious about it, that all it does is create a streamlined process through the Overseas Investment Act, right. All the other requirements of that office still apply, so there are still protections in there for New Zealand in terms of the sale of land. What it does is it creates a capacity where an investor is going to invest in build-to-rent housing, then that can go through the Overseas Investment Office in a slightly more streamlined fashion.

The point of build-to-rent, as my colleague the former Minister of Housing Megan Woods pointed out, was it that creates that security for renters—that renters know that they can have a tenure of a property for 10 years, perhaps longer, depending. What it means is that a renter in that build-to-rent space can put down roots in a community. Of course, we know in many countries overseas, people do rent for their entire lives, in the same building, in security. It’s a perfectly viable method of providing housing and of providing long-term, secure housing.

There is something I think we want to be a little bit cautious about here, though, in that in New Zealand, we have typically accumulated security through homeownership. That is what has built security for a family, for a couple, for an individual, and for the next generations of a family. Now, I support build-to-rent because it does give tenants security of tenure, and perhaps tenants who might not be able to afford to buy a house. But I don’t want to see people being priced out of a housing market altogether.

I think it’s quite important that we do a couple of things. One is that we do work hard to ensure that we have that security of housing tenure available in an ownership model as well as a build-to-rent model, but there’s also an alternative. We know that New Zealanders are very fond of their investments in homes and housing—people enjoy investing in it—but there are other routes for building up security, for building up the financial resources of a family. I think one of the things we need to consider is how we enhance KiwiSaver; how we ensure that every person in this country has access to KiwiSaver savings; how that gives them a different form of security—that’s not the security of an owned home, but it is the security of resources built up in your own name, through another savings mechanism.

Of course, if we value KiwiSaver, we’ve also valued the security of the owned home, and that’s why the build-to-rent is quite good—I see these things as going together. I’m just going to point out that we owe a lot to that gifted Minister of Finance Dr Michael Cullen, who set up KiwiSaver and got it going. It has proved to be a real boon to New Zealand. I think this move to encourage build-to-rent investments—started under the Labour Government; enhanced by this current Government—is a good thing to do. For that reason, I commend this bill to the House.

New Zealand needs more high-quality, long-term, stable homes, so build-to-rent is one of the ways that we will deliver them, and this is why I’m standing here to support the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill. Now, our Government is making it easier for investors to find these projects in New Zealand so we can build more homes, create more jobs, and provide long-term, stable homes.

Why does providing more jobs matter for New Zealand? Because they’re more than just numbers on spreadsheets. It means more apprentices will get into the projects with construction, more work for tradies, more engineers, more architects, more suppliers, more plumbers, more drainers, more excavator operators, more forklift drivers, more diggers, more landscapers, and the list goes on. It means, also, for the local businesses, as the developments take shape, more cafes, more coffee, more sandwiches, more hardware stores, more service providers. They will be seeing the real benefits when they see the projects in their community. It also means that Kiwi families in New Zealand will now have more income, have more money for more choices at the supermarket checkouts, more after-school activities for their children.

This is why build-to-rent is part of our wider plan as the National Government to go for growth, because we’re saying yes to solutions, yes to actions, yes to more income, yes to a stronger economy for all Kiwis in the country. Therefore, I commend this bill to the House.

Thank you, Madam Speaker. I do just want to indulge the House really shortly for a moment, to pay tribute to Jennifer Anne Ng. This morning, the Assistant Speaker, myself, and the Serjeant-at-Arms went to her funeral to pay our respects on behalf of Parliament. We heard about Jenny the friend; “Grandma”, as the Chamber officers would delightfully call her; and Jenny the Ceroc dancer, the art appreciator, the jewellery appreciator—Jenny, just an amazing friend. I do want to acknowledge that Jenny was a wonderful constituent of the electorate of Mana. I loved being able to see her at community meetings at the rest home village where she and Bobby lived, so we give our love and thoughts to Bobby, the Young family, and to our Chamber office staff as well.

I do rise to take a call on behalf of the Labour Party on the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill. Many aspects of this bill have been traversed both within the various readings and the committee of the whole House stage. As part of the Finance and Expenditure Committee process, we received 27 submissions on this, including from a local iwi, which I acknowledged in the second reading of the House, who provided us with a bit more scope for the committee to think about, but on parts which are not within the scope of this bill.

I do want to support a number of the comments made by both Dr Megan Woods and Dr Deborah Russell in relation to this, and to acknowledge Dr Megan Woods for her work that she did around the build-to-rent regime, basically bringing it up, because we knew that it was an area within the housing policy that was missing at the time when Labour was in Government. One of the interesting things is that, when you’re going around meeting a number of businesses and investors, you actually hear about what the good things are that the previous Government has done. Actually, one of the large Kiwi investors said that the build-to-rent work that they had done at the time of Minister Woods was actually a standout for them. I just want to acknowledge Dr Megan Woods for her work that she’s done, and also just acknowledge the Minister for carrying that work through.

As members of the Labour Party have set out, this is a very narrow set of circumstances in the Overseas Investment Act. It does streamline the test in order to make things slightly quicker for those who have the volume of build-to-rent units. It has not removed some of those protections from the Overseas Investment Act, which is why this side of the House is supporting it—it makes it slightly easier because of the type of test it is with the volume and the 20 units that it’s put in, but also because some of the other protections which are still within the Act apply.

I also do want to acknowledge the point made by the Hon Kieran McAnulty in relation to the regional tests. We did hope that as a party, we would be able to convince other members of the House to consider proportionality, particularly in the regions where 20 units actually could be quite difficult to build. It’s unfortunate that we were unable to convince members on the Government side to change that through the committee of the whole House. Nevertheless, even despite that, we will still support this bill, and I commend this bill to the House.

The coalition Government is going for growth—going for growth in incomes, jobs, and housing. A big part of this is by unlocking the potential of foreign direct investment. The way we do this is by removing barriers. That is what this bill seeks to do by incentivising foreign investment in build-to-rent. I think all that has been said in this House is relevant. I don’t have much more to contribute other than to say I agree with the statements made from many sides of this part of the House. It is part of the solution. It is good news for Auckland. It is good news for renters. It’s good news for wider New Zealand. I commend this bill to the House.

I declare the House in committee for consideration of the District Court (District Court Judges) Amendment Bill and the Arms (Shooting Clubs, Shooting Ranges, and Other Matters) Amendment Bill.