Land Information Minister Eugenie Sage says it is a privilege not a right for overseas owners to purchase New Zealand farmland. (Photo: ANDY JACKSON/STUFF)
Overseas investors pull out of farm purchases after government clampdown
The number of foreign buyers pulling out of New Zealand farm purchases has more than doubled since the Government tightened rules for overseas investment, data shows.
New rules making it tougher for foreign buyers to invest in sensitive land, including farmland over five hectares or adjoining land such as a recreation reserve on the edge of a lake, were introduced in December last year.
Figures from the Overseas Investment Office show 11 applications to buy sensitive land were withdrawn in the six months leading up to the rule change and a further 13 were withdrawn in the six months after.
The average number of applications withdrawn in each six-month period from July 2015 to June 2017 was six, the data shows.
Eric Crampton, chief economist at public policy think tank New Zealand Initiative, said it was worrying that there were as many withdrawals in the first half of this year as there were in total last year.
"We would need data on the total number of applications in the system in both periods to be able to really tell whether the rate of withdrawals had increased," he said.
"But it would hardly be surprising if the Government's ban on foreign home buyers and more hostile approach to foreign investment more generally has resulted in investors looking to places seeking investment rather than places that wish to drive them away."
New Zealand was among the developed world's most restrictive regimes for foreign investment, Crampton said.
"So things here are becoming tighter from an already very restrictive position, as compared to other OECD countries.
"This prevents New Zealand from being able to profit from foreign expertise and, for some owners, blocks the only real option they have for developing their properties."
Land Information Minister Eugenie Sage said it was a privilege not a right for overseas owners to purchase New Zealand farmland.
"One of the first things the Government did was to change the directive so the OIO Act applied to rural land over five hectares, not just the large farms it applied to under National," she said.
New Zealand's farmers were world-leading, so the benefits overseas owners provided would have to be significantly above what those farmers could provide, Sage said.
"There has to be substantial and identifiable benefits to New Zealand - increased export receipts, increased primary processing and jobs - benefits we wouldn't get with New Zealanders farming that land."
Among the applications withdrawn so far this year were an $8.7 million Chinese bid for the 1359-hectare Pāmu (formerly Landcorp) farm, Jericho Station, near Manapouri.
The station was subsequently sold to Southland farmer Ed Pinckney, who took over the property in June.
Pinckney said he was not against foreign ownership and investment, but also liked to see New Zealanders being able to buy land at an economic price and that notion had been challenged in the past.