Foreign buyers under scrutiny

[MotherBear]

Foreign buyers under scrutiny
27.11.05
By Graeme Hunt

Growing public concern about foreigners snaring prime lifestyle properties has led to an unprecedented number of investigations into such deals. The Overseas Investment Office (OIO) has confirmed it is following up 30 complaints about potential breaches of the rules. The investigations follow years of complaints by the public that the Government seemed reluctant to scrutinise such purchases.

OIO manager Annelies McClure said many of the office's investigations were sparked by calls and letters from concerned Kiwis. But the office also carried out audits and did its own investigations, she said.

"We want to make sure we are not embarrassed by something that should have been brought to our notice," said McClure.

American businessman Lance Weller this month became the first person to be convicted of breaching the rules. He had promised to develop a chestnut orchard and a Douglas fir plantation on a 43ha property in Queenstown. But the only development he did was for his holiday home.

American singer Serj Tankian, from band System of a Down, admitted he was "pretty disappointed" when his proposal to buy 13.7ha of bush at Bethell's Beach in West Auckland was rejected in July. But new rules make it even tougher for foreigners to buy land here.

The changes follow an outcry over the sale of Gisborne landmark Young Nick's Head to an overseas investor and years of concerns about large South Island stations being sold to foreigners. While the thrust of the new law, which came into effect in September, is still to encourage foreign investment, it makes it harder for overseas buyers to purchase land of "special heritage or environmental value".

The Government has first right of refusal over any foreshore, seabed, riverbed or lakebed, and overseas buyers have to surrender strips of land next to rivers, lakes and the foreshore, without compensation. Instead of being under the wing of the Reserve Bank, the Overseas Investment Office is now the responsibility of Land Information New Zealand.

It is required to screen and audit applications more thoroughly than in the past and applicants have to provide plans detailing how they will manage historic, heritage, conservation or public access issues, as well as any economic development. Investors are also required to report for up to five years at their own cost on how they are meeting the terms of their consent. The applicant is generally required to live mainly in New Zealand but if a wealthy foreigner has other investments and wants to buy or build a holiday home on a prime property, consent will not necessarily be denied. Of the 139 applications finalised in the first half of this year, just 12 involved lifestyle properties.

Together, they made up just 85ha of more than 5000ha sold to foreigners in the six-month period. One property, in Otago, was just 0.3ha. Agricultural land was by far the greatest in demand (3578ha) followed by forestry (1305ha).

Overall, Americans received approval to buy by far the greatest area of freehold land (2379ha), followed by the Japanese (986ha), British (661ha), Germans (610ha), Dutch (161ha) and Swiss (106ha).

Otago was by far the most popular location, accounting for just under half of the land, by area. Many of the purchases have been for vineyards.

- HERALD ON SUNDAY

[selchie]

Otago was by far the most popular location, accounting for just under half of the land, by area. Many of the purchases have been for vineyards.

As much as I love wine, I hope that NZ doesn't allow the same sort of environmental degradation that Sonoma and Napa Counties in California have. So many oak forests have been decimated for new vinyards in the last few decades that they have recently had to strictly control such activity. There was an article in the latest Wine Spectator (winespectator.com) on New Zealand wines. It said that Kiwi viniculture is growing by leaps and bounds. Exciting and worrisome at the same time.

Personally, I think it's good that NZ is restricting foreign property ownership. Don't know a lot about the details, but I am cautious about "selling the farm" to folks who may not have the country's best interests in mind.

[MotherBear]

Personally, I think it's good that NZ is restricting foreign property ownership. Don't know a lot about the details, but I am cautious about "selling the farm" to folks who may not have the country's best interests in mind.

True. We?ve seen this in Spain where the countryside, in places, is now blanketed with new developments. They are a blot on the landscape. Smaller developments are attractive, but some are really huge and still growing. It?s all about money, rather than maintaining the beauty of the countryside. As it is, it?s the Spanish developers who are doing this, although it?s the expats who are buying the places and encouraging further development.

Aside from the vast developments, there are acres of ?plastic? where growers have their tomatoes etc. under sheets of white plastic, as far as the eye can see. Spain obviously isn?t that bothered about maintaining standards where the state of its countryside is concerned.

[Daisyspop]

Bummer, I was going to put an offer in for Mount Wellington.