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Seven Arrowtown sections owned by the Queenstown Lakes District Council are likely to be offered to the people who lease them at market value.
The council's finance and corporate accountability committee decided on Tuesday the council should turn down a suggestion from the section leaseholders they split the difference between a valuation from five years ago and the sections' current value.
Leaseholders' spokesman Doug Anderson said leaseholders had been trying to buy the land their houses sat on for years, but five years ago the process was put on hold by the council.
"In my case, the land was valued at $160,000 five years ago and is now valued at $260,000. We are all interested in buying the sections, but all our offers have been rejected," he said.
"We accept there has been an increase in value, but we do not believe we should be solely responsible for this increase, as the council had been stalling the process," Mr Anderson said.
However, Lakes Property Services managing director Joanne Conroy said they had been advised against selling the properties under such an agreement.
"Our legal advisers told us it would not be legal for us to sell the land with a rebate. One of our Arrowtown sections was recently sold at the official valuation," she said.
Committee members were also loath to consider selling below valuation.
"Once the sections are bought as freehold, the owners can sell up and take the capital gain. That is not the idea. We have a duty to return the value of the land to the Arrowtown community," Cr Gillian Macleod said.
Cr Mel Gazzard asked if the council could give the leaseholders eight years to pay off the land, since the process had already been stalled for eight years.
Cr Macleod asked whether the leaseholders could be included in the shared ownership scheme under the Affordable Housing Trust, which would help them buy their sections.
QLDC finance manager Stewart Burns said it was unclear if this scenario would fit the criteria for assistance through the shared ownership programme, but Mayor Clive Geddes supported the idea.
"I think the suggestion to involve the trust is a good one, but we have to work on this matter.
"Whatever goes on the table has to be able to survive an audit," Mr Geddes said.