First National questions 5 hectare clamp on land sales

First National questions 5 hectare clamp on land sales

First National Real Estate Chief Executive Bob Brereton has questioned the directive to apply ‘economic benefit’ rules to foreign land sales of sections as small as 5 hectares and says that the change will significantly affect kiwi landowners and adversely impact on rural and urban communities.

On Wednesday the new Labour Government announced that the sale of any parcel of land larger than 5 hectares, to a foreign buyer, will now undergo scrutiny by the Overseas Investment Office (OIO) before it can be approved. This represents a major change to the current policy which allows the OIO to ‘look favourably’ upon proposed purchases of farms up to ten times the size of an average farm and means that only very large farm sales are currently scrutinized.

However, Mr Brereton says that the change is too drastic.

“I don’t think anyone would disagree that the old rules needed tidying up – but this change is way too extreme”

“Land over 5 ha has always been classified as sensitive and has required OIO approval – but the variation announced this week simply places the large farm criteria onto smaller farms ranging from 5 ha and up. That’s too big a hurdle to jump”.

Mr Brereton says that the existing process was already arduous and certainly no rubber stamp arrangement – but the large farm provisions that will now apply to small land holdings mean that purchasers of small holdings will now need to prove that ‘significant economic benefits’ will flow from the sale.

“That’s going to be extremely difficult for the holders of sections that are little more than lifestyle blocks”.

“Given that 5ha plus always required consent of the OIO and given the criteria is already difficult to achieve - one might question how frequently transactions are flagged during the sale process as being sensitive and whom the responsibility to enforce these regulations falls on”.

Mr Brereton also says that the impact of the new policy isn’t just constrained to areas that we perceive as ‘rural’.

“This policy could just as easily impact on someone who has a lifestyle holding on Waiheke Island or on the fringes of many of our cities”
Bob Brereton

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