An alternative to the ‘ban’ on foreign homeownership

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By Ellipsister

We are obsessed with home ownership. In an effort to make home ownership a reality for more people living in Aotearoa, our political parties have all proposed what they see as solutions to our housing crisis. From land taxes on foreign investors, to outright bans of foreign home ownership. But is there another option?

Banning foreign home ownership in Aotearoa is a policy option that has been circulated by opposition parties over the past few years as the Auckland housing market has become an unrealistic dream, especially for first-home buyers. It’s been peddled in varying degrees from banning foreign ownership of any land in Aotearoa, to banning foreign homebuyers, to banning foreign ownership of houses by non-resident investors.

I’m not a fan of taking punitive measures to alleviate social issues. And yes, I am arguing that preceding anything with the word ‘ban’ is punitive and that housing – renting or owning is social. Aside from the xenophobic image banning foreign [insert anything here] feeds into, it also ignores the importance that foreign investment has made and continues to make in Aotearoa.

I accept that some people visualise a utopia in which we all live on a self-sufficient plot of land, working as a community, isolated from the trappings of capitalism, and independent of foreign investment. Conversely, some people will visualise a utopia in which people are free to hoard as many resources and as much capital as they desire in partnership with uber wealthy foreign investors. As far as I can tell, neither of those utopias are a reality nor an aspiration for the majority of people in Aotearoa. So rather than a ban of foreign investment in land or homes, I propose a more compassionate option that doesn’t demonise foreign investors or investment – a ‘Letter of Justification’.

I’m imagining a society where people who want to own houses, rather than competing on price – compete on best interests.

My understanding is that when putting in an offer for a house, you can already write a letter to the vendor to support your tender. My question is then why not make this a more prominent part of a sale? Why not introduce a requirement to justify why your bid should be accepted over others?

When buyers are required to justify why they should be entitled to the privilege of taking exclusive possession of a property, we move away from the profit motive, and toward a more equitable and socially just system for property ownership. This would mean that non-resident foreign investors and domestic property speculators would have to make a strong case for why they should be able to own a property over a  homebuyer who intends to live in the home they purchase. The effect being that we reduce the typical financial advantage enjoyed by investors through the increased appeal to equity for the intend-to-live-in-it homebuyer.

How might we design a robust system that supports ‘competing on best interests’? Well, that I haven’t fully explored yet. But we all have a society toward which our actions are directed and I think this is a good place to start.

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