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The Crown should appeal a tribunal's finding in favour of pastoral lessees in setting rents, according to former lands minister David Parker, the politician who initiated the rent-setting change.
He said last week's Otago District Land Valuation Tribunal ruling meant the rent-setting methodology created a large discount to what he considered was proper rent, and would increase land prices to the point where only wealthy overseas investors could afford to buy the land.
The tribunal found Land Information New Zealand (Linz) could not legally include a charge for amenity values, such as proximity to a lake or river and scenic views, when determining rental values for the Minaret Station Crown pastoral lease.
A Linz spokesman said yesterday no decision on an appeal had been made, but it has until next Friday to lodge one.
The National-led Government plans to release new high-country policy soon and has said it would ensure rents were affordable, keep farmers on the land and recognise their role in managing the land.
Mr Parker, who was lands minister in the previous Labour government, said the tribunal found the total value of the Minaret Station near Wanaka to be $8.82 million, of which the land exclusive of improvements (LEI), on which the rent was calculated at 2.25% or 2% if paid on time, was valued at $1 million.
"That means improvements that included many millions of dollars were attributed to the amenity of the land that doesn't attract rent," Mr Parker said in an interview.
If an amenity charge was included, Minaret lessees Jonathan and Annabel Wallis faced an annual rent increase from $4900 a year to more than $105,600, an increase they said would make the business unaffordable.
Under the tribunal's calculation, it would increase to $20,000.
Mr Parker said land prices would increase because the "low rents" would be capitalised in the price people were willing to pay for purchases.
"Land around a lakeside was worth much more than land not around a lakeside, and that should be included in the LEI. This decision says that is wrong, and I'm surprised at that, and I think it should be appealed."
It was an important issue, and just as a lessee would appeal a result that went against them, the Crown should appeal this result to a higher court, he said.
He also rejected claims from farming leaders that this was an issue about property rights, saying it was a test-case dispute between a landlord and a tennant.