Monday, March 4, 2024

Stiffer test for foreign buyers slows sales

Neal Wallace
 New land information minister briefed on effectiveness of ‘benefit to NZ’ threshold.
Reading Time: 2 minutes

More applications are being declined for foreign forestry companies buying farmland for conversion than are being approved since the introduction of new standards for foreign investors to meet.

In a briefing by Land Information New Zealand (LINZ) officials to Minister for Land Information Chris Penk, officials said that up to mid-October last year, seven applications had been declined and just four approved.

An August 2022 amendment to the Overseas Investment Act requires foreign investors buying farmland for conversion to forestry to meet the higher threshold of a “benefit to NZ” test.

Officials said this has reduced the number of successful forestry investment applications due to decision makers considering the benefits to be insufficient.

“The benefit to NZ test gives decision-makers broader discretion to take into account the sensitivity of the land being acquired compared with the benefits being brought by conversion to forestry when deciding whether to grant consent,” the officials said.

Applications from foreign investors to acquire existing forests can still be considered under the special forestry test.

LINZ also manages the Crown pastoral estate under the Crown Pastoral Land Act 1998.

Leaseholders are responsible for managing the land, including weed and pest control and need permission from the Commissioner of Crown lands to carry out some activities on their lease. 

LINZ is responsible for managing and approving consents for activities such as fencing or creating farm tracks, easement and recreational permit applications on pastoral leases.

Last year the previous government introduced the Crown Pastoral Land Reform Act, which it said balances the ecological, landscape, cultural, heritage and scientific values inherent to the land.

The legislation requires iwi to be consulted on any new land development or improvement requiring commissioner approval and sets infringement fees and notices for non-compliance.

Pastoral lessees have countered that the new regulations are illogical and too restrictive. 

The remaining elements of the reforms come into effect this year and include a strategic intentions document and reporting mechanisms on the performance of the chief executive and the commissioner.

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