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'There aren't dots you can join' in foreign taxpayers' home buying figures – Upston

The LINZ property transfers and tax residency data is "not a register of foreign buyers"

Pattrick Smellie
Tue, 10 May 2016

The Land Information New Zealand (LINZ) figures 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, Ms Upston has been at pains to stress the LINZ property transfers and tax residency data is "not a register of foreign buyers."

"This is not that kind of report. There aren't dots you can join," she says of the data, which LINZ chief executive Peter Mersi 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 had gone unconditional or been completed earlier than October 1 before tax information was required.

In the second three-month collection period, it became apparent 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% of transactions between Jan and March 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.

Ms Upston's played up the fact the survey of "transfers where buyers stated an overseas tax residency", showed just 3% were to foreign taxpayers. It found 1158 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.

Some 22,554, or 50% of all transactions involved a buyer who claimed New Zealand tax residency but for whom the purchase was not their main home.

This is 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 all those properties were bought as investments rather than main homes since the category includes situations such as a parent buying a home for their child, Mr Mersi says. 

"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," Ms Upston says.

(BusinessDesk)

 

Pattrick Smellie
Tue, 10 May 2016
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'There aren't dots you can join' in foreign taxpayers' home buying figures – Upston
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