The imminent changes to foreign ownership of rural land are absolutely outrageous, ACT leader David Seymour says.

Photo: RNZ / Tracy Neal

From mid-December, foreigners who want to buy rural land larger than five hectares will have to prove more benefits than if a New Zealander owned the land.

The government says New Zealanders deserve the first bite at the land.

Mr Seymour has likened the government's moves to restrict farm sales to the infamous - often violent - land grabs of Zimbabwe.

He said unless the person buying the farm was a threat to security, it was none of the government's business who was buying it.

And he was appalled at how the change was being implemented.

"Absolutely outrageous that (Land Information Minister) Eugenie Sage, the upholder of virtue and due process in politics, is now saying that she is going to retrospectively change the law on people that already have an application in train.

"Well that is Zimbabwean stuff from Eugenie Sage, she should at the very least allow people to complete their applications under the law as it was when they made the application."

Zimbabwe was once one of the wealthiest countries in Africa, but the Mugabe era begun in the 1980s reduced it to a basket case. Land reforms attempted to redistribute farmland, economic mismanagement followed and many white farmers were forced off their lands.

Photo: RNZ / Richard Tindiller

Associate Finance Minister David Parker said the move won't necessarily affect farm prices, rather, it was a matter of principle.

He told Morning Report "we've got a view it's a privilege to own New Zealand land."

"For an outsider to outbid a New Zealander, they've got to be bringing something pretty special," he said.

Mr Parker said most Overseas Investment Office purchase approvals in recent years would be declined under the new policy.

"New Zealanders should not be outbid by "one percenters" from overseas... I call it a value."

Asked why forestry land had been exempt from the new restrictions, Mr Parker said the "horse had already bolted."

Mr Parker had previously presided over New Zealand's biggest international sale of land to foreign owners. He said it was during this time he formed the view that the government was too laissez-faire about overseas sales.

The government has said foreign investment in forestry will help New Zealand meet its climate change objectives and its goal of planting one billion trees in the next 10 years.

During the election campaign New Zealand First leader Winston Peters - now the deputy Prime Minister - travelled up and down the country decrying the high levels of foreign ownership in the forestry sector, saying the logs and the profits were heading straight offshore.

And Labour's policy was to keep forestry in New Zealand hands.

But the Forestry Minister Shane Jones said now it was a completely different regime.

"There is no place in the future for foreign ownership of forestry in New Zealand unless it passes a substantial quality test - and that test is onshore domestic tertiary and secondary processing in the regions.

"We're not closing the door but this is the new test that they must face."

National leader Bill English was unconvinced by the move.

"First place I think they've been exaggerating the problem, but we'll keep a watching brief on it because it is important that they don't slow investment into the regions," he said.

"It looks a bit like they're running a system where they're interfering with investment in the regions in different ways, and then they're going to use taxpayers' money to try and create the jobs that would otherwise flow from it."

Opposition finance spokesperson Steven Joyce told Morning Report that farm buyers will be in favour of the change, but sellers may not be.

"The changes could soften the farm sales market which is not necessarily a good thing," Mr Joyce said.

Mr Joyce played down the Parker's rhetoric saying that, as far as he knew, land doesn't actually leave the country.