The Status Of Land Can Impact On Its Value

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The Status Of Land Can Impact On Its Value
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The Status Of Land Can Impact On Its Value

The status of land as Maori freehold land or General land within the meaning of the Te Ture Whenua Maori Act 1993 (the Te Ture Whenua Act) can influence the value of the land.

Media coverage of the purchase of much of the land in the Mangakino township has reported a number of people questioning why the prices set for the sale of the sections to the leaseholders are so much higher than the “government valuations” (now valuations established by Quotable Value NZ Limited).

Fortune Manning act for MV Properties Limited, the purchaser of the land in the Mangakino township, its director Stuart Searle and his wife Vivien Searle.

The land in Mangakino purchased by MV Properties Limited was changed from Maori freehold land to General land immediately prior to the sale. As noted below, Maori freehold land has significant sale restrictions.

Quotable Value NZ Limited valuations set since the change in status appear to have been established still showing the land as Maori freehold land.

This issue was dealt with by the Court of Appeal in the Mangatu Inc case in 1997, where the owners of a block of Maori freehold lands disputed a revaluation by Valuation New Zealand as it did not take into consideration the impact of the constraints on disposal of Maori freehold land under the Te Ture Whenua Act, which arguably reduce the value of the land.

The Te Ture Whenua Act imposes very significant restraints on the sale of Maori freehold land to reflect the objective of the Act being the retention of Maori land by Maori and the use, development and control of Maori land by Maori.

A significant requirement of the Te Ture Whenua Act is that where Maori freehold land is to be disposed of the vendor must give first rights of refusal to purchase the land to certain people as set out in the Act, which essentially include a range of people who have or could have a relationship with the land, or people who the land could have special significance to.

The Court held that the determination of land value must recognise the constraints on disposal under the Te Ture Whenua Act. On the facts available the Court was not prepared to form a basis for any assessment as to the appropriate reduction in value. However, a valuer called by the owners of the land arrived at a discount for two of the properties of some 47% due to the properties being Maori freehold land.

The Mangatu decision clearly indicates that the value of land is affected by its status, which goes some way towards explaining the difference in value between the “government valuation” and the sale prices set by MV Properties Limited.

For further information, contact Tony Fortune on DDI 09 915 2405 or email him on amf@fmlaw.co.nz.

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