What’s a view worth?

What is the value of a view and how much should you pay for it?

 

If you are a tramper or climber it is priceless and you pay little or nothing for it. If you are involved in tourism or film making it is worth a lot and what you pay for it depends on negotiation. If you want a scenic hideaway it is worth even more and the market generally ensures you pay what it’s worth to you when buying it. If, however, you are grazing sheep, cattle or deer on crown pastoral leasehold property it is not worth much.

 

That is not to say that farmers do not appreciate the often spectacular views on and from their properties, but the average pastoral lease allows a leaseholder to do nothing else but farm. While a grand vista might make advertising fodder it does not feed animals; and a sheep or cattle beast is going to be worth no more if it grazed in beautiful surroundings.

 

This was the reasoning which has governed rent reviews for pastoral leases. They are based on land exclusive of improvements and until now that has been taken to be the land as it was before it was settled.

 

We have a very good idea of exactly what that is because our pastoral leasehold property boundaries a large tract of reserve which is owned by the crown and administered by DOC. On our side of the fence is pasture, tussock and some bush. We spend a lot on weed and pest control and it shows. On the other side of the fence there is tussock and bush too but there is also scrub and lots of weeds.

 

We run about 10 stock units to the hectare on our farm; the DOC land would struggle to support one sheep or cattle beast in many hectares and that poor animal would be competing with the rabbits, possums, pigs and deer.

 

A crown pastoral lease precludes the lessee from realising any potential for subdivision for building purposes or any commercial or industrial use. The leases also have restrictive land use controls so lessees who wanted to do anything else on their property except graze it require permission from the commissioner of crown lands and the rent would increase to take account of any diversification.

 

This has been regarded as fair to both lessees and the crown since the Land Act of 1948. But the Labour Government believed that amenity values were part of the unimproved value and rents should reflect that.

 

There is no doubting the beauty of the high country but it is subjective. One set of eyes might delight in the uninterrupted view of tussock; another will see weeds between the golden clumps and recognise fire danger in uncontrolled growth.

 

Beauty also changes with the weather. We love our leasehold property but it is at the end of the aptly named Mount Misery Road and the beauty is difficult to appreciate in a howling blizzard or when you can’t see past your nose because of fog.

 

The idea that anyone should pay more to lease farm land because of the views from which they earn nothing at all is ludicrous.

 

But the previous Government changed the rules which forced some leaseholders to pay more than they can possibly generate from pastoral farming because their properties have views from which they get no financial return. Labour thought a view was worth more than a livelihood so a group of pastoral lessees has taken a test case on the issue to the Land Valuation Tribunal.

 

It’s the final day of the hearing today but the change of government may make the judgement academic anyway because National’s agriculture policy stated that it would ensure the sertting of high country rents was tied to earning capacity so runholders could maintain their properties at an acceptable level.

3 Responses to What’s a view worth?

  1. Truth Seeker says:

    So rents tied to incomes. Just like state housing, which many farmers (like Charlie Pederson r Frank Brenmuhl) would consider welfare from the evil nanny state. Of course, Brenmuhl is the same guy who argued in favour of market forces when it came to the money he gets for his milk and against market forces when it came to money he would have pay to by carbon credits.

    Thanks for the laugh. 🙂

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  2. sagenz says:

    When the income value is capitalised and used as the basis on which the leaseholder buys out the crown you should very much take into account the value of the views. Where the crown is constraining the uses to which the leasehold land can be put there is a case for tying it to income. The leaseholder is unable to develop the land with hotels/residences and thus the view is discounted. The problem arises when either govt or leaseholder wants a disproportionate value. I would be interested to know your views on the pastoral leaseholders buying out the leasehold on the basis of farm income values and then redeveloping. Why should the taxpayer miss out on that value?

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  3. homepaddock says:

    TS – earning capacity is different from income. Rents for pastoral leases have always been set on land exclusive of improvements the land itself not the earnings from the enterprise based on the land.

    The difference is important because rent based on income from the land would be a tax on effort.

    Income based rentals for hosues are a type of benefit and that’s very different from land rentals for pastoral farming.

    Sagenz – I don’t think leaseholders bought the land on the basis of income, it was done of the basis of the valuation of the land (which was public) and the improvements (which were the property of the leaseholder).

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