Call 07 834 6000

Healthy Rivers - buying and selling rural properties

01 December 2016

The Waikato Regional Council’s Healthy Rivers plan change has added another level of complexity to buying and selling rural properties in the region. One of the requirements of the plan change is for all rural properties greater than 2 hectares to register with the Council by March 2019 and provide information including land use activities being undertaken as at 22 October 2016. Anyone buying a rural property will need to consider what work might need to be done on the property to satisfy the new rules (for example, fencing) and whether they will be able to intensify or change the existing farming use.  Any intensification or change of use will depend in part on how the land was used at the date of the plan notification (i.e. 22 October 2016) and the level of nitrogen loss from the property in past years.

What Rules are relevant to the property?

The first step in deciding whether your proposed use of the property will be possible is to consider what Rules under the new plan are relevant to the property. The size of the land and the farming activity carried on will determine which Rules apply. The applicable Rules will in turn determine whether a resource consent for the farming activity and a farm environment plan might be required and what records of nitrogen losses will need to be kept.

Is a resource consent required?

The planned farming activity may come within four categories - Permitted activity (you will not need to obtain a resource consent so long as you comply with the rules); Controlled activity (you must obtain a resource consent, the Council must grant it but may impose conditions); Restricted discretionary activity (you must obtain a resource consent. Council may grant the consent and may impose conditions); and Non-complying activity (you must obtain resource consent. Council has full discretion whether or not to grant the consent and may impose consent conditions).

Nitrogen reference points

The nitrogen reference point for a property will have a bearing on the amount of nitrogen leaching allowed for a particular property in future and therefore the intensity of farming that can be undertaken on that land. By March 2019 properties growing vegetables commercially and other properties greater than 20 hectares will need to provide nitrogen reference points based on average nitrogen leaching loss for the period 2006 to 2016 (for vegetable growing properties) and highest annual nitrogen leaching loss in the 2014/15 or 2015/2016 (for properties greater than 20 hectares).  The correctness of the information provided by the seller will be critical.

Land use change

If you wish to change the use of the land from its use as at 22 October 2016 you will need to study the criteria under the new plan to ensure that you will be able to satisfy the conditions. You will also need to be able to rely on information provided to you by the seller as to the use of the land as at 22 October 2016. Changes of use from forestry to farming; from livestock grazing to dairy; from arable cropping to dairy; or to vegetable cropping will require a resource consent and a nitrogen reference point for the land will be established.

Agreements may need to include warranties by seller

In order to comply with the registration requirements and to determine whether their proposed use of the property is permitted, buyers may need sellers to provide them with accurate information regarding the use of the land as at 22 October 2016 and nitrogen losses for previous years.  Often buyers are provided with information but the agreement actually contains clauses excluding the buyer’s ability to rely on that information. If buyers have based their decision to purchase on the information provided, wish to rely on that information and have the ability to seek redress from the seller if incorrect information is provided to them, the agreement should include specific warranties by the seller.  The added complexity that the plan change has added to the business of farming means that it is more important than ever for sellers and buyers of rural properties to seek professional advice before signing an agreement.

 

Please email me at barbara.mcdermott@nwm.co.nz with your ideas for future articles. Keep an eye out for next month's column, where I will discuss another relevant rural legal issue.


Barbara McDermott is a partner of Norris Ward McKinnon, specialising in commercial and rural law. With offices in Hamilton and Huntly, we have friendly, expert legal advisors ready to help you with your business and personal legal matters.

 

Barbara McDermott