Pastoral Lease rent rises reflect land market movements

4 May 2007

Land Information New Zealand (LINZ) has notified new and revised rents for 65 of 260 Crown pastoral leases in the South Island high country.

As well as reflecting land market movements during the previous 11 year rental period, rents now also reflect amenity values - which include inherent and locational values and natural characteristics - if present on a property.

Rents are set by the Land Act at 2.25% (2% if paid on time) of the value of the land excluding improvements. The rents are reviewed every 11 years on a rolling basis.

The rent increases notified this week vary from property to property, LINZ spokesman Brian Usherwood said today. The 65 leases range in area from 744 hectares to 31,800 hectares and are located between Marlborough and Southland.

The average annual rent for all 260 pastoral leases is currently $0.95 per hectare. The average rent for the 65 leases being notified will be $6.47 per hectare. The average rent will increase by $31,511 a year, from an average of $5125 per lease to $36,636 per lease.

Capital values (land value plus improvements) of the 65 leases range from $240,000 to $10.6 million and the average capital value is $3.4 million.

"Land values in New Zealand have appreciated considerably in the last 11 years. Quotable Value figures for this period show that values for farmland have increased by over 300%. Land values in the South Island high country have appreciated even more because of the premium the market places on amenity values such as location, landscapes and views, and the pressure on land for development," Mr Usherwood said.

Twenty-four of the notifications are 11-yearly rent review notices due to take effect from 1 July 2007, while 41 notifications are revaluations of earlier notified rents which lessees have asked to have set by the Land Valuation Tribunal.

The 24 rent review notices were due to be notified in September 2006, but were postponed to allow consultation on the implications of the government's preliminary response to the High Country Pastoral Leases Review.*

Given the delay to notification, the Commissioner of Crown Lands has decided the new rents will not take effect until 1 February 2008, or nine months from now.

The government's preliminary response outlined that the Land Act requires amenity values to be included when leasehold land is valued. In the past some rental valuations included amenity values and others didn't and a consistent approach was required.

Mr Usherwood said the government had stated it did not want to make rents unaffordable. The government has consulted with leaseholders on ways to achieve outcomes that are fair and reasonable for both parties and durable. LINZ is currently preparing a report on these issues.

Also LINZ and lessee representatives have agreed that judicial determination could be sought to resolve the issue of correct rental valuations through the LVT.

If a lessee disagrees with a rent notice, they can elect to ask the Land Valuation Tribunal to set the rent.

*The Preliminary Government Response to the Report of the High Country Pastoral Leases Review was released in October 2006.

Associated information:

For more information contact Dave Chowdhury, Senior Communications Advisor (04) 496 5402 or 027 222 9566.


`Last reviewed: 4 May 2007`

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