The Feds say: Shifting values hit farms

Coastal blocks at Tangoio have pushed up farm prices. Photo / File

Farmers beware: properties in the Hastings District are due for a QV revaluation, starting in August this year.

This raises the spectre of property value rises, then rate increases.

Central Hawke's Bay faced a major impact from their September 2018 revaluations, which could give Hastings a window into the future.

CHB rural values increased from 13-71per cent. This hit ratepayers' pockets, as CHB is heavily reliant on its general rate based on capital value.

Revaluations can create a problem with 'outlier' values. Farms may end up with a value that is disproportionately high compared with similar properties because of subdivision potential, being next to a town or lifestyle zone boundary, or being close to a beach. The farm is then rated on this value as if it were money in the bank, not unrealised potential.

The previous round of Hastings revaluations in 2016 resulted in a Tangoio drystock farm experiencing a capital value increase of 34 per cent, attributable to the neighbouring coastal lifestyle blocks changing hands multiple times and a luxury accommodation business established next door ramping up sales prices.

The 127ha Tangoio farm with two dwellings was valued at $4.3million. In contrast, a comparable inland drystock farm also with two dwellings and larger at 189ha, was valued at $2.27m. This left the farmer with an unfair, unaffordable rates bill.

At the rates hearings last week, Federated Farmers suggested Hastings introduces a new remission policy for rates postponement to address the problem of these farms with outlier values.

A postponement is intended only for landowners who are farming. It is not a rates freebie if the property is developed or sold and the increased capital value realised.

Northland Regional Council, Kapiti Coast District and Horowhenua District have a similar issue: expanding town boundaries suddenly give farmland urban development potential; or increased subdivision pressure originating from demand coming out of Auckland and Wellington.

The purpose of these councils' postponements/remissions is to preserve uniformity and equitable relativity with comparable parcels of farmland. This is a worthy goal that I'm sure Hastings shares.

• Rhea Dasent is a senior policy adviser for Federated Farmers