New Survey and Title Fees and Charges from 1 July 2011

LINZ has reviewed the fees and charges for its survey and title systems. New fees come into effect on 1 July 2011.

This may affect survey and title fees charged by conveyancers, surveyors and other land professionals.

Background

The costs of operating New Zealand's survey and title systems are designed to be fully recovered from those who use the systems.

Fees were last set on 1 July 2010. However an ongoing decline in survey and title transaction volumes over the past year, due to low activity in the property market, has resulted in a significant under-recovery of costs. This in turn has required LINZ to review its fees and charges to ensure costs are fully recovered in 2011/12.

LINZ will continue to monitor transaction volumes and trends, and focus on cost-efficiencies, and set its fees accordingly.

See the questions and answers below, and refer to the Landonline website for detailed information on survey and title fees and charges.

Questions and answers

Why is LINZ increasing the fees?

The costs of survey and title products provided by LINZ are met on a cost-recovery basis by users of the survey and title systems, such as surveyors, conveyancers and legal professionals. Cost recovery is in line with Treasury and Office of the Auditor-General guidelines.

A $26.9 million deficit for operating the survey and title system was recorded in 2009/10 after an unprecedented 33% decline in transaction volumes.

Since July 2010, and against forecast expectations of a flattening then slow rise in property transactions in 2010/11, volumes have continued to decline significantly and are 20% to 25% below forecast levels.

These low transaction volumes have resulted in the significant under-recovery of costs, which in turn has required LINZ to review its fees and charges to ensure costs are fully recovered in 2011/12.

When do the new fees apply from?

The new fees are due to come into effect on 1 July 2011.

When were the fees last set?

Fees were last set on 1 July 2010. However, an ongoing decline in survey and title transaction volumes over the past year has resulted in a significant under-recovery of costs. This in turn has required LINZ to review its fees and charges to ensure costs are fully recovered in 2011/12.

What are the new fees?

A schedule of the new fees is available on the Landonline website.

What do the survey and title fees and charges pay for?

The fees enable LINZ to operate New Zealand's cadastral survey and land transfer systems and related products and services. These are used by land professionals such as surveyors, conveyancers and legal professionals, who provide services to the public for transactions such as buying a house or land. Without these systems, transactions such as buying a house or subdividing a property wouldn’t be possible.

Why can't LINZ or the Government cover the costs of maintaining the survey and title systems?

The costs of survey and title products provided by LINZ are met on a cost-recovery basis from the users of the survey and title systems. Crown funding helped to address an operating deficit for the 2010/11 financial year, but fee increases are necessary to return the systems to full cost recovery in 2011/12.

What has LINZ done to reduce costs for survey and title transactions?

The development of Landonline, LINZ’s electronic survey and title system, has generated considerable savings. The $50 million paper-based survey and title operation LINZ ran in 1999 would cost approximately $70 million today, assuming the decision to develop Landonline was not taken. Operating costs for Landonline for the current year are approximately $46 million.

Since 2003, LINZ has reduced:

• its processing centres from 12 to 2 – a reduction of over 80%
• processing centre staff numbers from 500 to 116 - a reduction of 77%
• processing centre operating costs from $67 million to $46 million a reduction of over 30%.

Since the start of the property market downturn in 2008, LINZ accelerated its office closure programme, made 87 staff redundant and has frozen further recruitment in its survey and title operations.

A further $3 million of savings were identified in 2010/11 for the 2011/12 year from reducing costs for office accommodation, employees and information technology systems and support.

Can you provide an example of the effect of the fee increase?

For a standard house purchase, the fee for a title transfer and mortgage memorandum would rise $56 under this proposal, from $104.26 to $160 (all including GST). This represents 0.04% of a median-priced house ($350,000).

What is LINZ doing to mitigate further fee increases?

LINZ is working hard to develop a more sustainable business model that can withstand fluctuations in the property market, and will engage with the land sector/industry on this.

A number of cost-saving initiatives are also underway. For example, $3 million of savings were identified in 2010/11 for the 2011/12 year from reducing costs for office accommodation, employees and information technology systems and support.

Did you consult before putting the fees and charges up?

LINZ consulted with stakeholder groups such as the New Zealand Law Society, New Zealand Institute of Surveyors and the New Zealand Bankers Association.