Some of NZ’s best farmland could be opened up for housing

Saturday, 14 June 2025

The Government is looking to ease housing pressures by removing protections from some of New Zealand’s best farmland, a move some warn could damage exports and regional food security.

Supporters of the change say it could help unlock more land for desperately needed homes, especially in areas where strict planning rules have pushed up prices and limited supply.

The proposal targets what’s known as LUC 3 land, part of a system that ranks land from 1 (most productive for farming) to 8 (least).

Since 2022, the top three categories — LUC 1, 2 and 3 — have been off-limits for most housing developments under the National Policy Statement for Highly Productive Land.

Now, the Government is proposing to lift restrictions on LUC 3 land, which covers about 10% of the country and makes up most of the land currently protected. The goal is to free up space for new homes, especially near growing towns where housing is expensive and in short supply.

The change also delivers on a National Party campaign promise to revisit a policy they — along with Treasury officials and some economists — argued was poorly justified.

But the move is expected to face opposition from those who argue that once high-quality farmland is built over, it cannot be restored.

Dr Pierre Roudier, a soil scientist at Landcare Research and President of the Society of Soil Scientists, said that LUC 3 land underpins key export sectors like dairy and horticulture — and that removing protections across the board could have consequences.

“Before taking such a drastic decision that impacts the way we produce food in this country in the long term, I think it would be worthwhile to go a little bit deeper and make sure we understand where would be impacted areas that have very high export values,” he said.

He also pointed to risks for regional food security. Events like Cyclone Gabrielle, which devastated agricultural land in Hawke’s Bay, highlight the need to preserve a wide network of food-producing regions.

“In the context of climate change, our cropping options need to stay open,” Roudier said.

“We need to not put all of our eggs in one basket, in terms of where our food bowls would be.”

Around 90% of LUC 3 land is currently used for primary production, including livestock, dairy, arable, and intensive horticulture.

The Government says its goal is to strike a better balance between protecting farmland and building homes.

RMA Reform Minister Chris Bishop told a developers’ conference in March that he had “lost count of the number of developers who have come up to me…frustrated that they are unable to secure land for greenfield housing to be developed.”

“There needs to be a balance between how we protect our most productive land with our need for more housing to tackle our housing crisis,” he said. “Right now, that balance is out of whack.”

Public consultation on the change is under way. One option is to retain protections in a handful of key areas like Pukekohe and Horowhenua by designating them “Special Agricultural Areas” (SAAs).

Sceptics of the policy include officials from the Ministry for Primary Industries and the Ministry for the Environment.

Analysts who reviewed it questioned the underlying assumption that the protections were distorting land prices, a key justification for the change.

They found that much of the prime farmland lost in recent years has gone not to dense housing but to lifestyle blocks, which do little to ease housing pressure and often displace commercial farming.

They also reviewed four policy options and found Cabinet’s favoured plan was the least effective. A slightly better option was the inclusion of SAAs.

The strongest approach, they concluded, would be a targeted removal of LUC 3 protections that allows land to be rezoned for dense urban housing but not for lifestyle developments.

That option is not open for public consultation.

The debate highlights a long-standing tension: how to make room for new homes without sacrificing the country’s most productive farmland.

Between 2002 and 2019, around 35,000 hectares of high-quality land were used for housing, a 54% increase in the total amount.

A major driver was the surge in lifestyle blocks, which more than doubled over that period. In regions like Canterbury, Wellington, and Auckland, over half of the LUC 3 land not used for farming has been turned into these large, semi-rural properties.

Removing protections for LUC 3 land would affect some places more than others. In Canterbury, home to the largest share of productive land, over 65% is LUC3.

Fast-growing towns like Rolleston, Darfield and Lincoln are almost entirely ringed by LUC3 land, meaning current rules could limit — but not prevent entirely — their expansion.

Conversely, some areas, like the West Coast, Queenstown and Waitaki would have virtually no protected land if LUC3 land was excluded.

Once productive soil is developed for housing, it’s gone for good. The total area of farmland can only stay the same or shrink — it is, essentially, a non-renewable resource.

To Roudier, this meant the Government’s decision was a high-stakes one. He’s particularly concerned about relying on the LUC system — a decades-old classification tool with known limitations — to determine the future of New Zealand’s food-producing land.

“You do wonder whether we should sort of go from scratch and come up with a new system,” he said.

“There is an opportunity to perfect it, so maybe that would be a better way forward… It would be a missed opportunity to not leverage all the science that has been done in land characterisation over the last 50 years to try and come up with a better result.”

A spokesperson for Bishop said he had no further comment beyond what was in the discussion document, but encouraged people to have their say.