Questions and Answers about pastoral leases
Questions and Answers about pastoral leases, including tenure review, lakesides, rents, and government objectives
What is a pastoral lease?
The Crown owns nearly 2 million hectares of South Island high country land, located from Marlborough to Southland, which is leased or (in a few cases) licensed for pastoral farming. Pastoral leases were established under the Land Act 1948, although land in the South Island high country has been licensed or leased since the 1850s.
The Land Act granted lessees secure rights to the land, namely perpetual right of renewal and exclusive occupation of the land, and the right to use the land for a limited purpose, namely pastoral farming. Lessees pay an annual rent which is set at 2.25% (2% if paid promptly) of the land value exclusive of improvements (LEI).
Tenure review and lakesides
What is tenure review?
Tenure
review of a pastoral lease is a voluntary negotiation
between the Crown (Land Information New Zealand taking the
lead) and the lessee, under the Crown Pastoral Land Act
1998. The process results in the transfer of some land with
significant values (biodiversity, landscape, recreation,
historic, public access etc) to the Department of
Conservation as public conservation land, and the
freeholding of some land capable of productive use to the
lessee.
Final decisions on each review are made by the Commissioner of Crown Lands after comment from the Land Information and Conservation Ministers. Before any tenure review proposal can proceed, it must receive funding approval from the Minister for Land Information.
What
has tenure review achieved?
Tenure review has
delivered important gains for conservation, public access,
recreational opportunities, the establishment of high
country parks, and the protection of distinctive and rare
ecosystems. It has also resulted in diversified economic use
of freeholded land. However, the government has been
concerned about the cumulative impacts tenure review could
have, particularly on lakeside areas, as the process
gradually advances across the high country.
What
criteria were used to select the 65 properties that are
affected by the policy to exclude lakeside properties from
tenure review?
If a property is within 5 kilometres
of and visible from a lakeside, and the lake is greater than
5 square kilometres in area, the default assumption is that
the property is excluded from tenure review.
At a distance of more than 5 km, buildings and many types of landscape changes are relatively insignificant to the human eye. So if someone stands on the shore of a lake, the default position would be that tenure review would not be funded for properties within a visible radius of 5 km from where they stand.
The relevant lakes (from largest to smallest) are Wakatipu, Wanaka, Pukaki, Hawea, Tekapo, Benmore, Ohau, Coleridge, Aviemore, Dunstan, Sumner, North Mavora, Heron, Alexandrina, Waitaki, and Roxburgh.
Which 38 lakeside properties affected by the policy
are in tenure review?
Rugged Ridges, Bendrose, Black
Forest, Omarama, Rostriever, Glenthorne, Kawarau, Leaning
Rock, Mt Difficulty, Lake Hawea, Mt Burke, Mt Grand, Clent
Hills, Glenfalloch, Mt Arrowsmith, Glen Lyon, Huxley Gorge
(Otago), Braemar, Ferintosh, Glentanner, Irishman Creek,
Maryburn, Mount Cook, Simons Pass, The Wolds, Glynn Wye,
Lake Taylor, The Lakes, The Poplars, Balmoral (Tekapo),
Glenmore, Godley Peaks, Mt Gerald, Sawdon, Bellamore,
Allandale/Greenvale, Loch Linnie, Mt Creighton.
Which
27 lakeside properties affected by the policy are not in
tenure review?
Aviemore, Otematata 1, Waitangi, Bog
Roy, Te Akatarawa, Mt Algidus, Mt Oakden, Cairnmuir, Hunter
Valley, Upper Lake Heron, Omahau Part (Hill Block), Coal
Creek, Gorge Creek, Matangi, Mt Benger, Riverside, The
Forks, The Herrons, Mt Hay, Ben Lomond, Cecil Peak, Halfway
Bay, Kingston, Mt Nicholas, Walter Peak, Minaret, Mt Albert.
What conditions must be met for tenure review to be
reinstated for lakeside properties?
The conditions
that must be met include –
• lakeside land being
retained in Crown ownership (preferably) or covenanted to
restrict subdivision;
• lakeside views being
protected;
• no large artificial structures, barriers
or subdivision within 5 km of a lake;
• no significant
alterations of the lakeshore;
• no pollution or
significant impact on the lake's aquatic
ecosystem;
• due care being taken of historically
important lakeside structures/foundations;
• significant biodiversity, wetland, waterway,
landscape and access features being sufficiently protected,
for example:
o sites or areas having priority for
protection in "Protecting Our Places" where the indigenous
biodiversity values have been verified by observation, and
it is practical and realistic to manage and sustain those
values;
o wetlands and waterways that make a significant
contribution to a lake's ecosystems, and it is practical and
realistic to manage and sustain those
values;
o indigenous vegetation associated with wetlands,
waterways and lake margins;
o public access routes that
are of "prime interest and enjoyment" in the
recreational/landscape setting (DoC being aware of commonly
used/desired access routes that fall under this
definition).
Also, any payment that the Crown is required to make to the lessee in the tenure review settlement would have to be affordable within the amount of funding for tenure review provided by Parliament.
What is the
status of non-Iakeside pastoral leases?
The tenure
review process can continue for non-Iakeside properties for
those lessees who wish to pursue it, subject to significant
values being sufficiently protected, and Crown funding
constraints.
Rents
What was the government's
response to the report LINZ commissioned from a panel of
valuers entitled High Country Pastoral Leases Review
2005-2007?
On 5 November 2007, Cabinet agreed
that the government response to the valuers' report be as
follows:
1. the government recognises the value of the
high country to the economy of New Zealand and the
contribution farmers make to sustainable management of the
high country;
2. a proper interpretation of s 131 of the
Land Act 1948 requires amenity values to be retained in the
land exclusive of improvements (LEI) value;
3. there are
significant economic and financial implications for the
Crown and high country pastoral lessees, in that this
approach may lead to increased rents that may in some cases
exceed the income generated solely from pastoral
use;
4. for the Crown to reduce rents without lessees
giving up some of their rights would in effect be a capital
transfer of value from the Crown (on behalf of taxpayers) to
lessees for no value;
5. the government wants to achieve
outcomes that are lawful, fair and reasonable for the Crown
and lessees, and durable;
6. the best option for
achieving such outcomes is rent adjustment in exchange for
additional land husbandry or heritage protection
activities/improvements, or provision of public access;
7. all pastoral lessees, whether existing or new, will
be eligible to seek rent adjustment; and leases, with their
varying circumstances, will be addressed on a case by case
basis;
8. it is not the government's intention to make
rents unaffordable;
9. if a lessee has nothing of value
to the Crown to exchange for a rent adjustment, and in the
Crown's opinion an increased rent is unaffordable, the Crown
would still consider reducing the rent for part or all of
the 11 year rental period;
10. the government will abide
by the decision of the courts on the interpretation of s 131
of the Land Act and not legislate to overturn the outcome of
a judicial determination.
The government response confirms and builds upon the key points of the October 2006 preliminary government response to the valuers Interim Report: High Country Pastoral Leases Review 2005.
What does a lessee have to do to be eligible
for a rent adjustment?
A lessee could seek a rent
adjustment where they offer to provide enduring public
access through the land, e.g. from a public road to a lake
or river, or to public conservation land.
A lessee could
also undertake land husbandry or heritage protection
activities/improvements in addition to what they are
required to provide under the terms of the pastoral lease or
the general law (e.g. the Resource Management Act 1991).
Activities or improvements could include the provision
of:
• cultural heritage protection;
• biodiversity
or ecosystem protection;
• pest and weed
management;
• erosion control or soil improvement;
or
• other activities as agreed between the lessee and
the Commissioner (the lessor).
All pastoral lessees will be eligible to seek rent adjustment, and leases, with their varying circumstances, will be addressed on a case by case basis. In some cases, activities that lessees have carried out in the past, beyond what they were obliged to do, may be considered, and made permanent through a rent adjustment.
What happens in subsequent rent review
periods?
Lessees would agree to provide the
government with the rent adjustment activity for an agreed
period. This can be reviewed at the end of the agreed period
or at subsequent rental notifications.
Enduring public
access may be by way of an unformed legal road, an easement
or a covenant. Such permanent changes to the pastoral lease
would mean that there would be a change in the rent.
How often are pastoral lease rents reviewed and who
reviews them?
Rents are reviewed every 11 years on a
rolling cycle. Rents change to reflect changing land values
over the 11 year period.
The Commissioner is required by law to ascertain the value of a lease for rental purposes. The Commissioner engages registered valuers to undertake the valuation work. The lessee can appeal the rental value to the Land Valuation Tribunal.
Does seeking a rent
adjustment prevent a lessee from going to the
LVT?
No. A lessee whose rent has increased would be
able to approach LINZ at any time for a rent adjustment,
without prejudice to the lessee's right to contest the
lessor's current assessment of rent via the LVT.
Alternatively, the lessee could elect to go to the LVT, and
rent adjustment discussions could occur between the lessee
and LINZ after a LVT decision is made.
It is not envisaged that rent adjustment would cause rents to be reduced below pre-review levels. A reduction would only apply to part (or all) of the increase sought by the Crown on rent review.
Government objectives and use of tenure review
What are the government's high country
objectives?
In 2003 the government adopted 10 South
Island high country objectives, which set out the wide range
of things that the government wants to achieve in the high
country – environmental, economic, social, and financial.
The objectives are:
• promote the management of the
Crown's high country land in a way that is ecologically
sustainable;
• enable (tenure) reviewable land that is
capable of economic use to be freed of current management
constraints;
• protect significant inherent values of
reviewable land by the creation of protective measures; or
preferably by the restoration of the land concerned to full
Crown ownership and control;
• secure public access to,
and enjoyment of, high country land;
• take into
account the principles of the Treaty of
Waitangi;
• take into account any particular purpose
for which the Crown uses, or intends to use, the
land;
• ensure that conservation outcomes for the high
country are consistent with the New Zealand Biodiversity
Strategy;
• progressively establish a network of high
country parks and reserves;
• foster sustainability of
communities, infrastructure and economic growth and the
contribution of the high country to the economy of New
Zealand; and
• obtain a fair financial return to the
Crown on its high country land assets.
Where is tenure
review at?
Of the 303 pastoral leases eligible for
the tenure review process under the Crown Pastoral Land Act,
58 leases (about 15% of the eligible land) have completed
(or nearly completed) tenure review. This has resulted in a
42/58 split between land being transferred to public
conservation land and land being freeholded.
In addition, 3 leases have been purchased in whole, and some in part, by the Crown outside of tenure review, for public conservation land.
Can the Crown withdraw from tenure reviews
currently underway?
Tenure review has always been a
voluntary process for both the Crown and lessees, and the
Crown is now exercising its discretion not to participate in
tenure review in some cases.
If tenure review is no
longer an option for some properties, how will values be
protected?
Land excluded from tenure review will
either continue to be managed as pastoral lease or, if
available for sale, may in some circumstances be purchased
by the Crown and vested as public conservation land.
Pastoral leases prevent subdivision of the land and restrict what can be done with it. If properly managed, pastoral leases can provide good protection of natural values. Officials are reviewing land management practices on pastoral leases, and the issuing of consents by the Commissioner for non-pastoral activities or land disturbance.
ENDS