The Labour Party says the new Korean Free Trade Agreement may prevent future governments from taxing or restricting residential property sales to foreigners.
Labour's trade and export growth spokesperson David Parker said an arbitration expert informed MPs that the Korean agreement would limit the Government's ability to reform the Overseas Investment Act in the future.
Mr Parker said the Government had botched that part of the agreement and it could limit New Zealand's sovereignty.
"I think it's absolutely outrageous. Most New Zealanders think it's a birth right of New Zealanders to own a house in their own country not the unfettered right of people from overseas.
"And it's just terrible that the National government is now limiting the freedom of the next government to ban house sales to foreigners."
Mr Parker is calling on the Government to clarify with the Koreans that bans or taxes on residential land sales will be allowed in the future.