Changes to the Overseas Investment Act 2005 will come into force on 22 October 2018. The amendments have implications for overseas persons looking to purchase residential land, and also forestry and horticulture land. This article will focus on interesting changes for the overseas purchase of forestry land.
Making the process more streamlined
Overseas investment is acknowledged as being critical to maintaining the size of our national forest estate, and our current wood processing industry. The law changes reflect this, with a streamlined approach for overseas persons wanting to invest in forestry.
Forestry rights (rights to take trees) will now be subject to the Overseas Investment Act.
Previously only the purchase of forestry land was subject to Overseas Investment Office (OIO) scrutiny. But the purchase of forestry rights will not require Overseas Investment Office consent when less than 1000ha is acquired in any calendar year.
‘Benefit to New Zealand’ test
Overseas forestry investors can receive approval for the purchase of forestry land or forestry rights where the OIO favourably assesses the benefits of the investment. Firstly the OIO can compare the proposed land use against the current use.
Secondly, a new “benefit to New Zealand test” which doesn’t require any additional benefit from the investment, but will require existing arrangements for environmental protection and log supply to local processors are maintained.
Thirdly, investors relying on the “benefit to New Zealand test” can apply for a standing consent, which will allow regular investors to make acquisitions without requiring further OIO approval.
Generally, contracts which were entered into before 22 October will not be affected by the law changes. This is a complex area of law, and we recommend you at Preston Russell Law for specific advice on your circumstances.