It's a prime piece of coastal paradise up for sale but hapu say the land was once in the hands of Maori and they want that ownership again.

Elliot Bay, 30km east of Russell in the Bay of Islands, is owned by 75-year-old John Elliot. The 720ha farm backs on to the family's private beach, but the owners have allowed public access across their land to the beach.

Mr Elliot's family want to sell all but about 50ha and offered the Department of Conservation first dibs. The family said they would not take less than $15 million, which they said was a discount on the $20 million-plus they believed it was worth.

The property will now go on the open market, probably early next year, after DoC turned down the offer.

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Kaimahi for local hapu Ngati Kuta and Patukeha, Robert Willoughby, said they were asking for the Crown to buy the Elliot Bay land, known to hapu as Te Akau, to be land banked to be redress in a Treaty Settlement.

"It seems like the logical thing to do. That area is under a tribal claim of Ngati Kuta and Patukeha," Mr Willoughby said. "There was a village there. The name of that village was called Wairoa and it had a reasonable community. They had a lot of gardens there and grew vegetables to service the village. Through various ways the land was taken off the Maori."

Mr Willoughby said in 2009, koiwi (human remains) believed to have been Maori remains were exposed along Elliot Bay after a storm. He said it reinforced that the site was one of cultural historic heritage.

He said local hapu had a good relationship with John Elliot and were concerned about what might happen if the land was sold on the open market.

"He's lived amongst us for a long time and we've been coexisting quite nicely, we understand his position too. What we don't want to happen to the farm is it go out on the open market and eventually it gets broken up and it goes out of the hands of the local community."

A spokeswoman for the Minister for Treaty of Waitangi Negotiations said the Crown sometimes bought properties if there was a willing seller, the land was of particular importance to the claimant group and it fitted within their commercial and cultural aspirations for settlement.

She said the Minister for Treaty of Waitangi Negotiations, Chris Finlayson, had asked officials to consider options relating to the use of the Elliot Bay property in Treaty settlements.