Outcome 1: Certainty of Property Rights

'Certainty of property rights' ensures New Zealand property rights and interests can be determined with a high degree of confidence.

Impact:

• land transactions may be undertaken efficiently and with confidence that the legal framework supports them.

Measured by:

• business confidence and satisfaction levels of those who use and rely on the land transfer system, and
• international comparison of the New Zealand system against other similar land transfer systems.

Completing the move to the 100% electronic lodgement of land transactions through Landonline

What we set out to achieve

The decision to automate New Zealand's land titles and cadastral survey system using Landonline was taken to deliver substantial efficiency gains for surveyors, conveyancing practitioners, property developers, and local and central government. In 2006, LINZ started a programme to enable all survey and title transactions to be lodged electronically to achieve the full benefits of Landonline.

What we have achieved

During 2008/09, the Landonline system was upgraded twice to improve its stability and reliability. Conveyancing practitioners received the full ability to lodge all title transactions, including complex land title transactions such as subdivisions. For 80% of titles transactions, the official land register is now updated instantaneously without any need for manual processing following lodgement. For surveyors, the second upgrade improved the presentation of complex survey plans.

A nationwide programme was conducted to support conveyancing practitioners move towards using electronic lodgement for all their transactions. With more than 2,300 people attending, this was the largest programme since Landonline customer training began in 2005. It resulted in a steady increase in those using electronic lodgement before it became mandatory on 23 February 2009.

LINZ also remodelled internal business processes to reflect the changes brought about by 100% electronic lodgement.

• Work was done during 2008/09 to reduce the standard processing times for title transactions by 33%, from 15 to 10 working days (effective from 1 July 2009).
• Workforce planning established the staff and skills models needed to support Landonline customers and to support the system itself. Prior to the 100% electronic lodgement programme, 350 processing staff were based in five centres. By 2012, numbers are expected to reduce to approximately 150 staff based in two centres.
• A change programme was implemented to manage the capability and capacity of the Hamilton and Christchurch processing centres during the phased closure by 2012 of the Dunedin, Auckland and Wellington centres.
• As manual lodgement was phased out and replaced by 100% electronic lodgement, public counters at processing centres were closed. Digitised land records are available through Landonline, and public access to records is provided through an online ordering service and a view-on-request service in Hamilton and Christchurch. The counter closures released 12 staff.

On 23 February 2009, new regulations came into effect making electronic lodgement of all land title transactions by lawyers and conveyancers mandatory through Landonline. LINZ's Hamilton and Christchurch processing centres are now New Zealand's designated land registry offices².

Initial feedback from customers shows the move to electronic lodgement has been well-received. In June 2009, surveyors and conveyancing practitioners recorded satisfaction levels of 80%, compared with 48% in 2005, before the 100% electronic programme began. Furthermore, 81% of conveyancing practitioners and 64% of surveyors agree Landonline has provided benefits to their organisation. LINZ has started an initiative that will monitor the full benefit realisation over the next two years.

A significant external endorsement of the success of our survey and titles system also comes from the World Bank. For the last three years, New Zealand has consistently ranked in the top three of more than 150 countries for property registration in the World Bank's annual 'Doing Business' publication. This uses several indicators, including property registration, to assess how a country's regulatory framework provides an efficient and effective environment for doing business.

Moving to industry self-compliance through outcome-focused interventions

What we set out to achieve

LINZ has been working on a rolling programme of rationalising regulatory documents and focusing our regulatory activities on outcomes rather than processes. This represents a move from a historically prescriptive approach to one where LINZ intervenes only where necessary, according to an assessment of risk. This work is important because a high-performing economy needs regulation that is optimal (fit for purpose and not over- or under-regulating) to promote ongoing business productivity and economic growth.

The review started in 2005/06 and was due for completion by 30 June 2009. Because of competing priorities for key staff resources and the need for a thorough consultation process, this was not possible. The review will now be completed by December 2009.

What we have achieved

During the year, we continued to optimise our regulatory interventions, and two major reviews were completed: the Rules for Cadastral Survey and the Rating Valuations Rules.

Review of the Rules for Cadastral Survey

The Rules for Cadastral Survey 2002/2 were reviewed to ensure they meet the needs of a changing surveying and regulatory environment. The new Rules represent a major shift from 'how' to comply to 'what' is required. The Rules define the minimum standards expected from surveyors to deliver accurate surveys, without prescribing how these standards are to be achieved.

An expert committee of survey industry experts and stakeholders, including surveyor representatives, facilitated industry input into how it is regulated and provided a valuable forum for LINZ to work more effectively with the survey industry. The committee reviewed 62 submissions from public consultation. Consultation and work of the expert committee led to significant changes and improvements to the draft rules LINZ proposed in 2007.

The new Rules will provide an increased certainty of land ownership and other rights in land. This ultimately benefits current and future land owners, including agents such as surveyors and solicitors, and central and local government agencies that rely on the cadastre. For surveyors, the Rules give greater clarity about what is expected of them when planning future surveys. The Rules also allow them to enjoy the maximum benefits provided by processes such as new technology, new initiatives and innovation, because the cost of compliance is more clearly directed toward outcomes.

The new Rules will be implemented in May 2010. In the lead-up, LINZ will run education seminars with surveyors and make the necessary changes in Landonline.

Rating Valuations Rules

The Rating Valuations Rules were finalised during 2008/09 and came into effect on 31 March 2009. This was the culmination of a review process that included a 17-strong expert committee reflecting all groups involved in the rating valuation process, including valuation service providers, four city councils and one district council, the New Zealand Institute of Valuers and members of LINZ's audit and regulatory staff.

The review process developed a stronger relationship between LINZ and the industry, with a feedback rating of 88.6% approval from participants. This consultation model provided an opportunity to bring the whole industry together to discuss issues and learn more about how regulation works in the rating valuations area. All local government organisations were given an opportunity to comment on the draft of the new Rules, along with the general public.

There was general satisfaction with the new Rules from local government and industry representatives during the public consultation. Outcome requirements that territorial authorities must meet are now more clearly defined and more logically presented. For ratepayers, the new Rules require valuation notice statements to contain more information about what values can be reviewed as part of an objection, and a new requirement that the valuer contacts the objector if the reviewed valuation varies 15% or more from the objector's submitted value.

Understanding our role in the land development market

What we set out to achieve

LINZ oversees the regulatory framework and systems used to define and transact land. Understanding the future needs of the land development market helps define the optimal role for LINZ. LINZ plans to lead discussions with key industry representatives, to establish a shared view of how the market should operate in the future, and how the various professions and players can work more efficiently together to meet the future needs of New Zealand and promote economic efficiencies. We will use this work to align frameworks and processes to improve our efficiencies in this area.

What we have achieved

In 2008/09, LINZ began working with the cadastral surveying industry to develop a shared view of how the industry should operate in the future. LINZ established a joint initiative with the survey industry, called the Survey Strategic Context, and formed a working group with representatives from the New Zealand Institute of Surveyors and LINZ. From February to June 2009, the group explored issues on the future shape of the industry and how the key players interact. The group considered information from industry participants, international papers, New Zealand law, regulations and markets, and submissions from a consultation process.

In April 2009, the group produced a draft framework, 'Proposal for Tomorrow's Cadastral Survey Industry'. It outlines a proposal for the future environment for cadastral information, what this is based on, and how it functions to support land development and administration, and the wider use of land information. The framework also considers the possible roles of participants within the proposed environment.

The group is using this paper and further feedback to identify key challenges and analyse gaps that exist between where we are now and the proposed future state. This will be issued in a second working paper in August 2009. A final report is scheduled for release in late October 2009.

The report aims to improve the functioning of the cadastral survey industry by:

• improving LINZ's understanding of the future needs of survey professionals and others who create, maintain or use the cadastre
• developing a shared view of the future of the cadastral survey industry and of how to work together to achieve the future goals identified, an
• working towards better access to and integration of geospatial data that defines the spatial extent of all statutory rights and privileges associated with land.

The project will also feed into ongoing broader discussions on establishing a shared view of the land development and land information markets of the future.

Strengthening the capability of the Overseas Investment Office

What we set out to achieve

The Overseas Investment Office (OIO) is part of LINZ. It administers the Overseas Investment Act 2005, which seeks to encourage ongoing economic growth through investment while protecting New Zealand's unique assets and resources.

The OIO assesses overseas applications against a stated set of criteria on the basis of benefit to New Zealand, and also compiles and records these applications. To ensure ongoing effectiveness, LINZ has worked on building capability and putting in place appropriate processes and systems.

The focus for 2008/09 was to review the OIO's decision-making processes. In particular, we sought to improve the quality of documentation submitted by applicants and the certainty of decisions against criteria. We also planned to complete the development of a database to enable easier recording and monitoring of overseas investment information.

During 2008/09, the Government announced a review of the overseas investment framework to ensure the screening regime does not deter or prevent overseas investment. A review of the fees structure was also part of this review.

What we achieved

One of the key successes has been improvements to the processing of applications from overseas investors. During 2008/09, significant time and resources were put into ensuring staffing levels for processing applications were increased to deal with backlogs and minimise processing delays. This was supported by enhancing the capability of the information management system's application and database to capture and record overseas investment trends and statistics.

Building capability has resulted in faster turnaround times for accepted applications and for processing of requests for additional supporting information.

During 2008/09, the OIO aimed to process 90% of all delegated applications within 10 working days of receipt of all information. From 1 October 2008 this timeframe was changed to 50 working days, but this measure includes all applications from acceptance to date of decision. The change came about as a result of a review of overseas investment processing times. The review established that backlogs of applications and delays in processing these were due to higher-than-expected numbers of applications and low staffing levels. It was recommended that the target of processing of delegated applications within 10 working days be changed to the 50 working day target, which is more transparent and reflects the actual time and resources required to process overseas investment applications. Under the new measure, the OIO has achieved an average processing time of 24 working days for applications delegated for decision by the OIO, and 41 working days for applications requiring ministerial decisions. Emphasis has also been placed on the quality of the analysis underpinning the decision to support or reject an application.

Since 1 October 2008, all applications have been checked on receipt and either accepted for registration, if the application was of acceptable quality, or rejected for unacceptable quality. The OIO has also worked on providing clearer and more accessible information to help applicants. This included redesigning the overseas investment section of the LINZ website, with input from law firms that are regular users.

Fee pressure

A key issue for the OIO since its inception in 2005 has been the growing complexity of assessing overseas investment applications and the associated higher operating costs. The fee structure set in 2005 significantly under-estimated costs and this function has been subsidised from other areas of LINZ. These factors led to delays in assessing applications and higher operating deficits.

In the last quarter of 2008, the number of applications fell by 25%, as a flow-on effect of the global economic recession. Fewer application numbers meant fee revenue was lower, and this further affected our ability to cover costs. During 2008/09, the total number of applications processed was 188 against an expected target of 250.

During 2008/09, the Overseas Investment Regulations 2005 were amended and fees and charges were increased, allowing the OIO to recover costs and also rationalise its charging structure. These fees take effect in September 2009.

Review of the Overseas Investment Act 2005

LINZ has been assisting the Treasury to review legislation relating to overseas investment. This review seeks to determine if the purpose of the Act could be restated to promote the flow of overseas investment into New Zealand.