Ko te mana raihana: Pēwhea nei te oranga? - Rent review update

With 90 percent of property inspections completed, Richard Buttimore, Te Rau Whakahono Pito / General Manager Property, says the Parininihi ki Waitōtara (PKW) corpus whenua rent review is ‘on track’.

The review covers 326 whenua parcels, with 272 of them occupied by external leaseholders.

Following a robust process, PKW appointed two independent valuers, Logan Stone and Colliers, to assess the land. The West Coast Settlement Reserves Lessee Association, representing the majority of the leaseholders, also appointed its own. The valuers appointed by PKW have had a good deal of experience in this kind of work, having acted for other Māori incorporations.

“Working together with the leaseholders collegially should result in a smoother process for both parties to arrive at agreed valuations of the individual whenua blocks and, from that, a fair annual rent,” says Richard.

“We are in a partnership with the lessees – we have a commercial relationship with them – and so the collegial approach is key in working out any differences and overcoming them.”

“This approach does not guarantee the parties will agree on a fair annual rent, but it will identify the areas where we cannot agree and allow us an avenue to attempt to resolve these differences constructively.”

The property inspections began in August last year and cover PKW’s corpus whenua portfolio of 20,000 hectares. Richard points out that the aim is to reach a fair annual rental as if the whenua had never been improved, as opposed to a traditional market rent.

“With a market rent approach, you can compare the subject property with comparable sales and leasing data and follow traditional valuation practices. Arriving at a fair rental for the corpus whenua presents a few challenges as we are valuing the unimproved whenua, the whenua in its original state at the commencement of the perpetual leases more than 130 years ago.”

That means the valuers will come together and agree on a methodology for deciding on the appropriate rent and, importantly, how any disagreements will be resolved.

Richard hopes to see all valuations completed by October, and valuation notices with the new rents out to leaseholders by the end of the year. The vast majority of rents under review will come into force on 1 January 2024.

The review process is governed by the Māori Reserved Land Amendment Act 1997, which changed the frequency of reviews from every 21 years to every seven years, as well as giving PKW first right to buy leasehold titles on the open market.

The rent assessment is based on the value of the land in its original state in 1892, when settlement reserves were set aside for the return of land confiscated from Taranaki Māori. Making such assessments on the original value and any growth in value is a complex and often contested issue.

The valuation process looks at the current market value of a property (both the leasehold title and the underlying Māori freehold title) and then deducts any improvements on the whenua (dwellings, cowsheds, fences) and then any improvements to the whenua (clearing, drainage, contouring) to establish the value of the unimproved, underlying whenua on which the rent is based.

“It is a big piece of work. We have to do it every seven years and each rent review is a two-year process,” says Richard, adding that the corpus whenua portfolio currently realises $9 million per annum for the Incorporation.

In the event a rental figure cannot be agreed, the matter would go to third-party arbitration by an independent body.