Committee Deliberates on Build-to-Rent Amendment Bill

In a detailed committee stage session at Parliament today, legislators engaged with Part 1 of the Overseas Investment (Build-to-Rent and Similar Rental Developments) Amendment Bill. The discussion centered around amendments to the principal Act concerning overseas investment in build-to-rent developments.

Minimum Unit Settings Concerns

Labour's Tangi Utikere questioned whether additional amendment papers might address concerns regarding minimum unit settings for these developments. He highlighted that although the changes are minor in quantum, their impact could be significant, particularly in regional areas where a 20-unit threshold may not be appropriate.

In response, Hon Chris Bishop, the Minister of Housing, explained the rationale behind maintaining the existing threshold. He emphasized balancing restricting access to capital and ensuring consistency with foreign-buyers bans. Bishop argued against adding complexity to the Overseas Investment Act by altering thresholds, citing advice that smaller regional projects are more likely to secure domestic finance.

Regional Considerations

The debate also explored how these amendments apply differently in urban versus rural areas. Utikere emphasized the need for flexibility in unit thresholds to accommodate varying market conditions across regions and urged the proactive release of advice received by the Minister.

Bishop reiterated that build-to-rent developments are generally less viable in smaller regions, where domestic capital is more accessible for smaller projects, thus supporting the current thresholds. He mentioned specific areas like Waipukurau as examples where local financing might be feasible without overseas investment.

Regulatory Impact Statement Clarifications

Dr. Lawrence Xu-Nan from the Green Party sought clarification on why certain limitations were set regarding the bill's scope and its impact on investment and residential land restrictions. He questioned the rationale behind not conducting a first-principles review of the Overseas Investment Act in this context.

Bishop explained that the bill is part of broader reforms led by David Seymour, with the RIS's scope deliberately limited to focus on specific build-to-rent investment extensions. This limitation was intended to facilitate manageable legislative changes without overhauling the entire Act.

Clarity on Legal Definitions

Dr. Xu-Nan also sought clarification regarding potential ambiguities in clause definitions, specifically concerning "20 or more dwellings" and "at least 20 dwellings." Bishop clarified that both conditions must be met simultaneously, resolving any perceived ambiguity by explaining that "20 or more" is equivalent to "at least 20." This clarification was crucial for compliance with the large rental developer test.

Potential for Missed Opportunities

Hon Kieran McAnulty from Labour discussed the potential missed opportunities if regional developments are constrained by current thresholds. He advocated for a two-tier threshold system and expressed concern that without such differentiation, build-to-rent opportunities in smaller regions might be overlooked.

Bishop acknowledged ongoing review possibilities but maintained the current policy decisions, emphasizing the aim of preserving existing foreign buyers bans while increasing liquidity for larger developments. He mentioned that the advice received suggested increased complexity with a two-tier system would outweigh potential benefits.

Conclusion and Vote Outcome

After thorough deliberation, Part 1 was agreed to with a vote tally of 102 ayes to 21 noes. The majority support came from New Zealand National (49), Labour (34), ACT New Zealand (11), and New Zealand First (8). Opposition was led by the Green Party (15) and Te Pāti Māori (6).

The committee stage has set the stage for further debate on this bill, reflecting Parliament's commitment to addressing the complexities of housing affordability and investment in New Zealand. As legislators continue to navigate these issues, the focus remains on balancing regulatory frameworks with market needs to foster sustainable development across urban and regional landscapes.