Bishop ChrisOVERSEAS INVESTMENT (BUILD-TO-RENT AND SIMILAR RENTAL DEVELOPMENTS) AMENDMENT BILLFirst ReadingHon CHRIS BISHOP (Minister of Housing): I present a legislative statement on the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill.ASSISTANT SPEAKER (Maureen Pugh): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon CHRIS BISHOP: I move That the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 1 November 2024.The bill amends the Overseas Investment Act to create a streamlined pathway for build-to-rent developers. It responds to concerns raised by stakeholders that the Overseas Investment Act presents undue barriers to selling established build-to-rent assets to overseas investors. This uncertainty over the ability to onsell assets is creating liquidity concerns for developers and disincentivising housing development and supply. So the changes in this bill seek to boost housing supply by providing clarity and certainty to investors that they will be allowed to build and when required sell build-to-rent and similar large-scale rental assets.I think it's well known amongst the House that New Zealand needs more houses. That is an understatement. We have a chronic housing shortage affecting almost every metric in society we care about and build-to-rent can make a contribution towards the solution. It's not a silver bullet—I'm not pretending for one second it will be the solution to our housing crisis—but it is a useful and important step forward.So build-to-rent provides the opportunities to increase supply and diversity in particular of secure quality rental developments at scale; exactly the sort of housing we need. People out there listening—if they are on Wednesday night at five past nine in the middle of winter—might wonder what build-to-rent is. Purpose-built medium- to large-scale rental properties often within walking distance of key transport links. The key difference is that they're often funded by institutional investors. They tend to be professionally managed good amenities and offer residents a variety of lifestyle options.In fact just the other day the Prime Minister and I opened Resido at Sylvia Park in Auckland which is a Kiwi Property development—it's a New Zealand company. Those are quite upscaled apartments: a lot of them all in the same place next to Sylvia Park right next to the train station; concierge down the bottom; they've got a gym; I think they've got a co-working space. It's quite an upscale development and that's an option for people and clearly Kiwi Property think they can make a quid out of it and it's an option for people to choose.That's what we need in New Zealand. We need housing choice. The small apartment in the Auckland CBD will be right for some people—a more upscale apartment at Sylvia Park will be good for some families. We need terraced houses we need duplexes we need apartments we need suburban homes we need houses on the city fringe we need houses on the CBD. We just need a lot more of everything and build-to-rent's part of that.So we know from overseas it's made a contribution to housing markets: 100000 homes in the UK; Australia has seen quite a lot of growth. We're at an earlier stage but we do have a sector with potential for growth. There's currently 23 developments I'm advised under way across Auckland Christchurch and Wellington. What they need—the developers of these products—is access to domestic and foreign capital to help get the sector off the ground. So you're talking significant upfront investment—upwards of $200 million—and given our limited domestic savings and limited experience with build-to-rent we are going to need overseas investment to support projects at this scale.Again if you look overseas institutional investors such as pension funds are making quite big contributions to build-to-rent but our overseas investment laws—as I think many people in the House know—are very complex and they're creating uncertainty around investing here. So again as the House knows since 2018 the Overseas Investment Act has generally—not always but generally—prohibited foreigners from purchasing residential land in New Zealand except in limited circumstances.So under the current rules overseas investors 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. As a result developers report they are not confident that overseas investors will be able to purchase build-to-rent assets after they are built. So this doesn't give enough certainty that they'll be able to sell their assets when it comes time to exit or if they face fiscal distress—ultimately disincentivising new housing from being built.So what the bill does is create a new pathway under the Act—a streamlined pathway—which enables investors to purchase established large-scale rental developments if they intend to continue to operate them. The new pathway is primarily designed for build-to-rent but it will also enable investment in similar large-scale rental developments which may face liquidity issues such as key worker accommodation affordable housing delivered by community housing providers.The pathway has been designed to maximise certainty for investors so it removes the need to demonstrate a benefit to New Zealand to obtain consent for these purchases. The pathway operates similarly to and in conjunction with other streamlined pathways within the Act—such as the "increased housing test" which people will be already familiar with.I want to be clear: the bill retains the foreign buyers ban. We recognise that owning residential land in New Zealand is a privilege. So this bill does not affect existing restrictions which prevent foreign investors from purchasing homes to live in becoming small-scale landlords in New Zealand or holding empty homes for speculation. The new pathway is limited to investors who seek to purchase existing large-scale developments which have 20 or more units that can be made available for rent. Investors will be required to lease units under a residential tenancy and meet any other conditions of their consent. As with other consents under the Act the conditions will be actively monitored and enforced by Land Information New Zealand.So it's a relatively simple bill within a very complicated legislative schema. I think we should be clear about that. The Act is complicated but this is a relatively small change. I'm not pretending for a moment it's the solution to our housing crisis but it is of course one useful thing we can do. Ultimately the solutions are around land infrastructure funding and financing and incentives for councils—and that is what the Government is working at pace on.But this was part of the 100-day programme the Government said we would take policy decisions on. We did that within our first 100 days—introduced to the House a few weeks ago. I'm looking forward to it being considered by the Finance and Expenditure Committee—I know that committee will do a good job. I hope that we will be able to legislate it before the end of the year.So as I say I'm not pretending for a moment that this is a silver bullet—there is none—but it is a useful contribution. I commend the bill to the House.ASSISTANT SPEAKER (Maureen Pugh): The question is that the motion be agreed to."