Federated Farmers: Rates trap for multi-titled farm

In recent weeks Federated Farmers has been gathering information about rates on farms around the country. This will be part of our contribution to the Productivity Commission review of local body financing and cost pressures.

Besides the horrendous rates many farmers pay, a theme in the feedback has been concern that, in many districts, farming operations are paying numerous uniform annual charges because the farm is in more than one title.

Multiple titles are common in farming. This can be part of a farm succession plan, the use of leased blocks and run-offs.

A letter we received from a Far North farmer expressed dismay at multiple annual charges, and we thought it worth looking at how the Northland councils handle this issue.

The basic rule is that rates apply to each land title and its value. Uniform annual charges, as a per property amount, are intended to reflect a contribution all ratepayers should make regardless of property value.

To avoid one landowner paying multiple times, the law allows for charges on additional titles to be remitted — but the rules are strict. The titles must be contiguous, used for the same purpose (such as farming), and owned by the same person.

Individual councils can extend this using a remission policy, so that, for example, land titles making up a farm don't need to be in the same ownership to qualify for remission.

Around New Zealand the impact of these rules varies. Some councils hold tight to the legal minimum, getting maximum uniform charges from farmland, others are more relaxed.

In Northland council policies also vary.

Far North District Council has quite an extensive 'common use' policy, so titles that are physically separated but part of a farm such as a run-off can get the extra uniform charges taken off their rates.

The catch is that the titles still must be owned or leased by the same entity but, on application to the council, separate owners can confirm their titles are part of the same farm.

Whangārei's rules are a little different, with a charging policy refined to the separately used or inhabited part of a rating unit, presumably to capture multiple residences on the one title. For farms, it seems a bare land title ends up with uniform charges anyway.

Kaipara council's policy is perhaps best for the farming community. It allows remission of uniform charges where titles are part of the same farm, regardless of ownership.

A uniform general charge can be hundreds of dollars. It is a good idea to check your rate demands to see what charges are applied; if you have more than one title money might be saved by checking with your council.

Nigel Billings is a senior policy adviser for Federated Farmers