Rental system unworkable

Press, 27 March 1981, Page 13

Rental system unworkable

A change in the system of assessing rentals of pastoral leases'contained in 1979 legislation has proved unworkable as a result of the effects of inflation, according to the chairman of the South Island High Country Committee of Federated Farmers, Mr M. R. Murchison. The legislation provided for rentals to be assessed on land excluding improvements or so-called 1.e.i., he said. Previously rentals had been assessed on the productive value of the land with

limitations on stock numbers being imposed to protect the country. Mr Murchison said that they had opposed the 1979 legislation before a select committee but the fact that it was unworkable had come to light as a result of pastoral leases having recently been reclassified to renewable leases, under which the lessees had rights of. freeholding. Some of these people had originally applied for their leases to be reclassified in 1974 or 1975.'

As a result of inflation the value of the l.e.i. had increased more than improvements. More than 50 properties had now been reclassified in the Otago area and in one. case where under a renewable lease the rental in 1974 at 4Va per cent of the l.e.i. would have been $2BBO, in 1979 after compulsory reclassification the corresponding figure was $14,805 and ifinflation continued at the same rate as it was doing

now the rental in 1984 would be $29,410. Mr Murchison said that the l.e.i. value for a property in Southland had* increased from $30,000 in 1977 to $196,000 in 1981, and where a property was valued for reclassification in 1974 at $240,000 with the l.e.i. then being $64,000, these figures had increased to $580,000 and $329,000 respectively in 1980. Mr Murchison said that there were 3143 renewable leases in New Zealand, not only in the high country, but there .were 500 pastoral leases with these problems.

■■ At. a meeting in Timaru this week Mr Murchison said that runholders had felt that they should look at a type of pre-paid lease system that had been offered in 1979 which gives freeholding rights, or else they should return to the productive value basis that had formerly applied. Mr Murchison said . that they hoped to be able to get a unified approach and to come up with a proposition that would be acceptable'to everyone. They did not want land for nothing, but on the other hand they did not want to be put off their land as a result of the impact of a rental system. As far as pastoral leases were concerned, Otago and Canterbury were the most affected areas, he said.