Rate reductions anticipated for Rodney farmers

Reduced values and a change from land-based to a capital rating system are likely to add up to good news for Rodney farmers when Auckland City rates are struck next year.

Federated Farmers policy advisor Richard Gardner (pictured) says the recent round of rating valuations has seen farm values drop by as much 15 to 20 percent.

However, he says the reduction is “illusionary” as it simply reflects the fact that Rodney property values were last assessed at the market’s peak in 2007 and, due to amalgamation, weren’t revised in 2010, while other Auckland areas have been assessed more recently.

“The real impact is in the rating system.”

A switch from land-based to a capital-based rating is generally positive for Rodney farmers.  However, some people erroneously look at the capital value and see it’s more than the land value, so assume that they’ll pay more rates, he says.

“They don’t appreciate that it’s the ratio between the land value and the overall capital value, compared to the ratio between the average of both those values across Auckland, that determines what rate they'll be charged.

“Land value makes up a greater proportion of the overall value of a farmer’s property than it does for most other land uses, so they generally benefit from a capital value rating system.”

Prior to amalgamation, Mr Gardner compared rates paid by average farms in Rodney, Franklin, Manukau, which indicated Rodney farmers were paying a bit more than Franklin and significantly more than Manukau, as a result of different rating systems and the fact that Rodney ratepayers were funding rapid growth.

“Auckland’s growth was manifesting itself in Rodney and the Rodney ratepayers were paying for it. That’s partly why we came to the conclusion that Rodney would be better off in the new Auckland arrangements.”

Mr Gardner expects his 1300ha family farm, Mataia, at Glorit, will be among the majority of farms that benefit from the rating changes. However, he says the revised valuations don’t really mean anything in terms of property values, as they are just a snapshot of the property market at a single point in time.

Those negatively affected by falling property values will be people who bought a farm in 2007, some of which have dropped 15 to 20 percent in value since.

He anticipates that overall the changes will add up to “a useful drop in rates” for rural Rodney, but cautions that the rating approach has yet to be adopted by council and as part of the council's Long Term Plan will face public scrutiny early next year.

“I wouldn’t want people’s hopes to get too high at this early stage.”

Published 16 November 2011