New Law Opens Doors for Overseas Investment in Build-to-Rent (BTR) Developments
The New Zealand Government has passed the Overseas Investment (Facilitating Build-to-Rent Developments) Amendment Bill (Bill) to support overseas investment in the Build-to-Rent (BTR) housing sector. This new piece of legislation aims to increase housing supply and provide more secure, affordable and quality rental options for New Zealanders.
What is Build-to-Rent (BTR)?
Although relatively new in New Zealand, BTR developments are a well-established accommodation offering in overseas markets and typically consist of medium-to-large scale rental properties. These developments appeal to tenants by providing stable, long-term, good quality rental options, which in turn helps to maintain a steady demand for BTR properties. With the new legislation in place, the BTR sector in New Zealand is set for significant growth, benefiting both investors and tenants.
How the new law supports overseas investment
A key feature of the new legislation is the introduction of a streamlined consent pathway for foreign investors under the Overseas Investments Act 2005 (OIA). Until now, the OIA has restricted growth in the BTR sector, making foreign investment a challenge. The new pathway allows foreign investors to apply for consent to purchase existing BTR developments with at least 20 dwellings, provided they continue leasing these properties as rental properties. By creating a more accessible and attractive investment environment for foreign investors, the consent pathway is expected to play an important role in addressing New Zealand's housing shortage.
Supporting Developers
The changes also address a significant concern for BTR developers regarding the ability to on-sell their developments. Previously, developers faced challenges due to being confined to the domestic market, which offered a limited number of investors with the capital and expertise to manage the complexity and scale of their developments. With greater certainty around on-selling their properties in a larger market, the Government hopes that developers will have the confidence to invest further in the sector.
Increased Housing Supply
The enactment of the Bill aligns with the Government's policy of improving housing availability and affordability for New Zealanders and marks a significant milestone in New Zealand's efforts to address its housing supply issues.
By encouraging overseas investment in the BTR sector, the Government is taking a proactive approach to increasing the availability of good quality rental properties. This legislation aims to not only benefit developers and investors but also aims to offer tenants more stable and long-term rental options.
If you have any questions about the Bill and what it may mean for you, please get in touch with the Commercial Property team at Wynn Williams.
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