In New Zealand, Australia, and Canada
People haggle over how big land dues should be
Some places actually already do benefit from the public recovery of socially-generated land rent, mostly jurisdictions in the former British Empire. Not sharing the bounty causes problems. We trim, blend, and append four 2010 articles from: (1) New Zealands The Dominion Post, July 7 by Bernard Carpinter; (2) The New Zealand Herald, July 14 by Anne Gibson; (3) Down Unders ABC, July 12; and (4) Banff Crag and Canyon, July 7 by Larissa Barlow.
by B. Carpinter, by A. Gibson, by ABC, and by L. Barlow
Hefty rent rises swamp New Zealand leaseholders
After their land was reassessed, New Zealand leaseholders rents increased. One week Niki Willis was paying $27 a week ground rent for her leasehold home in Napier, the next she was paying $172.
Mrs Willis has not been able to afford that since the rent went up last November. She now owes the landowner, Hawke’s Bay Regional Council, nearly $4500. The council is threatening to send debt collectors.
The council, which owns about 1000 residential leasehold properties in Napier with a total book value of $85 million, realizes many leaseholders are finding themselves in impossible situations when their ground rent is reviewed at the end of the 21-year term.
Land these values have rocketed with the property boom of the mid-2000s. Some householders must sell — yet they are struggling to find buyers for leasehold homes at the price they want.
Mrs. Willis four-bedroom art deco house in the suburb of Marewa has a total valuation of $385,000, with $180,000 as site value. The council is happy to sell the sections to the house owners, and offers a discount of up to 30% on the rating value.
JJS: Even if owners did not have to pay rent to their community, some would still decide to move on, so the makeup of a community at any one point in time is not permanent.
When people get used to getting something for nothing, they dont look ahead. When the free ride stops, it can hurt. Further, when some pay less than market value, others pay more.
Each individual owner has a right to the value of his or her land — but no more right than do his or her neighbors, since we have an equal right to land and we dont individually make our land valuable; society does that together.
So itd be fair for people to pay what they owe all along and stay accustomed to doing so. Then others can get some of the bounty.
Yet change can be a win/win for everyone if society were to share the rents it recovers. Then with share in pocket, would owners be under so much pressure to move?
Ngati Whatua ready to raise city rents
Thousands of apartment owners on Auckland’s waterfront will be hit by steep leasehold land payments from later next year.
The landowner Ngati Whatua O Orakei Maori Trust Board will begin charging what is estimated to be around $15 million in annual rent from next August.
The iwi’s windfall will be a new expense for apartment owners and commercial landlords, many having enjoyed a 15-year ground-rent holiday on the 20ha block worth about $460 million.
The new leasehold land payments will fall due for many of the buildings put up in the past few years, including the Vector Arena, Countdown supermarket, three Scene apartment blocks, the Hudson Brown block of residential units, The Docks apartments, Quay Park Health, Grand Central Railway campus, a string of hotels, other apartments, shops and restaurants.
Building owners will pay 5 or 6 percent of the total value of their land, net of the value of buildings.
Not all building owners have been let off the ground rent: Vector Arena’s management have been paying a percentage of turnover but that will change.
Ngati Whatua chief executive Tiwana Tibble said some building owners had approached him and struck successful deals. “We’ve done a couple of early settlements already, instead of waiting till next August. If nothing happens, three months out from next August we will issue our assessment. If [lessees] don’t accept it, they go to arbitration.
“If we can reach agreements, we’re better off. The last resort is to go to the lawyers,” Tibble said.
Ngati Whatua bought the Quay Park land from the Crown in 1996, initially attempting to get approval to build Auckland’s casino there, which they failed to do.
The iwi said the original strategists who planned the land acquisition for Ngati Whatua “can only be described as visionary. Capital growth on the lessor’s interest has been astounding and the first year’s rental is predicted to exceed $15 million per annum”.
Trust board chairman Grant Hawke warned of dangers from the huge influx of cash. “We are going to find ourselves with more cash to work with soon. The great danger is that this is viewed as a gold rush and we lose sight of the need to use what we have wisely,” he said.
Graeme Horsley, a valuation expert and corporate board chairman for Ngati Whatua, said the money would transform the iwi and was at least the start of compensation for loss of 55,000ha of tribal lands through crown and settler purchasers from 1840 to 1855.
“It’s going to be like a lifeline for them. It will be the first time they have been able to say they have got something for the land they used to own in Auckland. It’s an amazing turnaround and many of the older people have waited 15 years for this,” said Horsley.
JJS: The original inhabitants of the nearby continent might also soon receive bigger shares of natural rent.
Land rent class action rumblings in Australia
A human rights lawyer says the Federal Government may find itself facing a class action challenging the amount of rent it plans to pay Aboriginal communities.
The Commonwealth said it will pay rent to Aboriginal communities for compulsory five-year leases of land.
The High Court ruled the Government must pay fair compensation.
Human rights lawyer George Newhouse says he is examining claims that the rent does not reflect fair value. “It’s very early days, the Government’s only just announced that they’re actually going to pay a rent,” he said.
“We need to sit down with the communities, community by community, look at how much land’s been taken by the Commonwealth, get a valuer in and have a look and assess what the truth worth of the community land is worth.”
JJS: Just as ethnic groups debate rent shares, so do breadths (levels) of government.
Talks on eliminating Banffs land rent are over
The resort town Banff is looking to make its annual land rent to Parks Canada “revenue neutral,” though what that could entail remains unclear.
Every September, both Banff and Jasper must pay the federal government rent for the land within the town. Banff has paid its 2009 land rent fee, which amounts to $550,000 per year, and Parks Canada has said the town’s bill is in good standing.
Eliminating the land rent has been a priority for council for years, as the large amount takes tax dollars away from the town.
JJS: To settle which breadth (or level) of government should recover which rent, one idea is to follow the Intimacy Principle. That is, the most intimate breadth of government — the local level — would recover rent from the most intimate use of land — homesteading. The least intimate breadth — the federal level — would recover rent from the least intimate use of land — pollution.
Its an argument Banff could make while happily agreeing to let the feds charge local businesses and drivers for any pollution.
If local residents got the rents, then governments would need to shrink, charge for its services, do both, or find more rents. Usually there are massive rent flows that government unjustly ignores, such as the annual value of commercial land. The region tends to overlook natural resources and roadways. The nation often turns a blind eye to pollution and EM spectrum. Sharing all those rents and more would help the lowest income residents the most. They might be happy to move to a place where their land dues would be low, so their rent dividend would stretch the furthest.
Editor Jeffery J. Smith runs the Forum on Geonomics.
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