Rezoning can be problematic

When farmland is rezoned into residential status, skyrocketing rates can force farmers to subdivide land to meet rates bills.

Rezoning is problematic for farmers. Rates bills can sometimes lead to a vicious cycle where the farmer has to subdivide in order to realise capital.

Council rezoning could have a bigger impact on your farm than the council at first appreciates. With many district plans undergoing review and zoning changes, your farm could be unfairly rated for its subdivision potential.

In Horowhenua district, the council redrew the urban boundaries with an optimistic eye for growth. This meant that some farmland was now zoned as residential.

A year after the zone boundary was extended, this district also had a rating revaluation. The value of the farm skyrocketed because it was now valued for subdivision potential, even though the owner did not want to realise this. Rates subsequently skyrocketed too.

Federated Farmers has encountered a similar problem with coastal farms around the country, whose land value is sometimes enormous due to the beautiful views and potential for lifestyle subdivision. Rates bills can sometimes lead to a vicious cycle where the farmer has to subdivide in order to realise capital.

Councils sometimes wash their hands of this problem and say that QV is the culprit as they are the organisation that determines rateable value of properties.

However QV works on a mass appraisal system, and on their website warns that this may not give a true indication of the market value of an individual property. Property owners have only about six weeks to formally object to a new rating valuation, and often the implication on rates can be overlooked.

However, councils do have an ability to address this rating inequity by having a rates remission or postponement policy.

Kapiti Coast district has one such policy for farms that are within urban rating areas, which is aimed at encouraging farmers to refrain from subdividing.

Whangarei District Council has a policy for farms that have high land value due to their coastal location, and acknowledges that the rates levied would otherwise be a disincentive to the continued use of the land as a farm.

Federated Farmers encourages other councils to have similar policies. Rezoning may be great for the developers, but for farmers it can be a real rates headache. Make sure you let your regional policy advisor know if this is happening to you.