Overseas investors will now be tested more stringently when looking to convert land into new production forestry.
The Overseas Investment (Forestry) Amendment Act 2022 (Act) came into force on 16 August 2022, after receiving Royal assent.
The Act amends the Overseas Investment Act 2005 to remove the ability for overseas investors to rely on the simplified ‘special forestry test’ when seeking to acquire land to convert into production forestry.
Previously, overseas investors seeking to acquire land for forestry conversions, could seek approval for the investment via a streamlined ‘special forestry test’, which was introduced in 2018 for investments in forestry land.
These applications will now be assessed under the more stringent ‘benefit to New Zealand’ test. Under this test, overseas investors must show that the investment is likely to result in a benefit to New Zealand, measured against seven benefit factors. In reality this should see only the more marginal hill country being granted consent for forestry, this would be land classes 5 to 8, with land classes 1 to 4 being reserved for pasture or arable farming (so not granted consent for forestry purposes).
This change applies only to forestry conversions, such as where overseas investors look to acquire existing farmland for planting into a new forest. There is no change to investments in pre-existing forests.
Transactions entered into before 16 August 2022 (even if they remain conditional on Overseas Investment Office (OIO) approval, or other conditions), and applications received by the OIO before that date will continue to be assessed under the previous regime (i.e. the ‘special forestry test’).
The special forestry test also continues to apply to standing consents granted or applied for before 16 August 2022. This means standing consents can continue to be utilised on the terms upon which they were, or are to be, granted.
For more information about how the Act affects you, please contact a member of our Overseas Investment team.
Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.