The government is seeking clarification from the High Court on the Land Valuation Tribunal’s decision on the Minaret Station rent case.
Minaret Station took a test case to the tribunal after the previous government decreed amenity values be included in the value when rent was set on pastoral lease properties.
The Tribunal ruled in Minaret’s favour.
A media release from Minister of Land Information, Maurice Williamson and Agriculture Minister David Carter is quite clear they are seeking clarification of the ruling on a technicality not amenity values.
The Government remains supportive of the decision and is committed to implementing pastoral lease rents based on the earnings capacity of a property,” say Agriculture Minister David Carter and Land Information Minister Maurice Williamson.
“However, the Solicitor General has advised the judgment leaves an unclear definition of “capital value” which presents some complexities around valuing pastoral leases in the future.
“For this reason, further clarification is needed,” say Mr Carter and Mr Williamson.
“This is not about amenity values. This Government has no intention of revisiting Labour’s policy of including amenity values in the rent setting process,” says Mr Carter.
“It is a case of defining a narrow technical aspect of the ruling.”
“We want to bring certainty to the application of our previously stated policy on pastoral lease rents. Clarifying the decision will benefit both the Crown and leaseholders,” the Ministers say.
Any suggestion that the government was planning to relitigate the issue of amenity values would have been very disappointing for pastoral lessees. The Ministers have made it quite clear they aren’t going to go there so I don’t think this announcement will cause any concern.
But the issue has been financially and emotionally expensive for lessees so I hope the technical issue is settled quickly.
I would suspect they are going to need a new type of value to set rents on that’s all. Capital value as the value the property would likely change hands at would include amenity value by definition. If the lease agreement says rent shall be 5% of capital value they will have some re-writing to do to allow a new rent to be struck on an income related value – production? stock unit numbers or something maybe?
The current legislation states rent is set on land exclusive of improvements. The case was over whether LEI included amenity values and the Tribunal said it didn’t.
Land value has the same definition of course – price the land if vacant would sell for (at an arms length transaction, willing buyer and seller etc) as at the date of the valuation. Assuming they have moved away from the Unimproved value these days (haven’t seen a pastoral lease for a while) I understand what the ruling was – but do think that is their issue still – by using the terminology they have in the leases they have issues with what is the actual value. Maori land in coastal areas has the same issues – terms of the lease don’t allow it to be subdivided, if it was put on the open market it would likely be chopped up to become a beach resort but the lessees can’t afford the ground rent when farming it and will need to walk off. Some common sense is needed and the Minaret Station decision is a good one.