Aussies wary of residential-land moves

Submissions are building on one of the Government’s first moves towards a foreign buyer ban, with BusinessNZ highlighting the possible effects on Australian-owned businesses.

In December last year, the Government introduced a bill to amend the Overseas Investment Act to include residential land within the category of ‘‘sensitive land’’.

Housing Minister Phil Twyford said the legislative changes demonstrated the Government’s determination to make it easier for New Zealanders to buy their first home.

But submissions from banks, businesses and individuals highlight some of the possible drawbacks, especially for developers and commercial property players.

BusinessNZ chief executive Kirk Hope said the business advocacy group’s submission pointed out the bill’s ‘‘serious impediments’’ to Australian companies.

The bill would mean foreign buyers would only be able to buy houses or residential land if they proved to the Overseas Investment Office they had plans to develop the land in order to add supply to New Zealand’s housing market, or that the land would be used to benefit the country.

Kirk said making overseas companies go through the Overseas Investment Office could tack up to a year onto companies’ development plans, especially on complex transactions.

‘‘It’s another cost and another piece of compliance you need to do which makes life harder.

‘‘There’s quite substantial interplay between the Australian and New Zealand economies and this bill jeopardises that.’’

Bell Gully partner Andrew Petersen said foreign companies that built in the suburbs would now have to go through the OIO consent process.

This would affect projects including supermarkets, shopping malls, and petrol stations.

Australian residents were excluded from these restrictions, but not Australian companies.

‘‘There’s a whole range of businesses that buy residential land because they need to develop, grow, businesses, especially in newer residential areas where there are less amenities.’’

Petersen helped Progressive Enterprises, the Australian parent company of Countdown, with their submission.

A report by the Treasury to the Cabinet’s Business committee noted several stakeholders, including Progressive Enterprises, had corresponded with the Government regarding the policy changes before submissions opened.

Progressive had suggested exempting Australian companies or redevelopment of residential land for commercial use.

Treasury said in response that overseas businesses would need to go through the ‘‘benefit to New Zealand’’ test under the legislation.

Petersen said the benefit to New Zealand test was ‘‘not necessarily the right answer’’ and would be complicated, timeintensive, and expensive to businesses. He expected application fees to be somewhere between $30,000 and $50,000.

Fletchers Building also raised concerns that the policy would make it harder to fund developments by reducing the pool of ‘‘off-plan buyers’’.

Foodstuffs, the company behind New World and Pak’n Save supermarkets, was not making a submission, spokeswoman Antoinette Laird said.

‘‘Unlike our key competitor, Foodstuffs is made up of two 100 per cent New Zealand owned and operated cooperatives.’’

Countdown did not respond requests for comment. to