ABOUT half the town is leasehold land, and the Kāwhia Community Board is to put its support behind leaseholders who say they are being threatened by large increases. FILE PHOTO
KĀWHIA Community board is to enter the discussion between The Māori Trustee Dr Charlotte Severne, and leaseholders threatened by large rent increases in the small coastal settlement. The decision was made following a delegation by Rod Barnett and Peter Marquand from the Karewa Leaseholders Association at the August meeting. The leaseholders expressed concerns about the viability of continuing their leases in light of the increases in a falling market. There are about 90 Kāwhia residences that are leasehold, about half the town. The leases are reviewed every seven years. Board chair Dave Walsh said he sought assistance from the community board and was told it was between the leaseholders and the lessees.
HEFTY INCREASE “But that doesn’t mean we can’t send a letter of support, because it is a hefty increase they are facing,” Dave said. In 2008 to 2010 the leases skyrocketed because of land values, which fell when the economy tipped over in the global financial crisis. Board member Ken Brigs said two years ago the owners’ representative, The Māori Trustee and leaseholders agreed the best course of action would be to come to some arrangement that ensured there was no need to go to mediation and arbitration. “And now we have come to the first round of lease renewals since that meeting, and instantly hit with ‘we are going mediation’,” Ken said.
DIFFICULT TO UNDERSTAND “So it’s very difficult to understand why. The original context was they would have a valuation that was in the interests of both parties and the idea was for it to become a simpler process that would not involve an extensive amount of money on valuers, lawyers, and mediation. That seems to have been thrown out the window at the first opportunity.” Dave said he wanted the board to be able to support the leaseholders in some fashion. “Maybe with a letter, make the trustee aware we are facing a recession, the country the world, and values are dropping as the real estate indicators will tell you. because what they have said and projected for the land values are already dropping. “So you are paying less on something that is not even worth that anymore. “Maybe drafting a letter to The Māori Trustee saying that this could seriously impact our town, economically. NO-WIN SITUATION “If you can’t sell your place what do you do? If you walk off [you get] taken to court to keep paying, so in a bit of a no-win situation for 90 leaseshold properties,” Dave said. “Ken, it’s a matter between the Māori Trustee and the individual leaseholder, obviously you will have concerns about any impact it will have on the continued viability of the town.” Ken said a significant proportion of the cost to leaseholders had gone to lawyers, valuers, mediators arbitrators, and very little to the landowners. “Which seems pointless,” he said. “Surely then it would be better for the owners to accept slightly less than they feel entitled to and the leaseholders to pay perhaps slightly more than they feel they should. Then at least we don’t need to involve lawyers, mediators, arbitrators and so on.” He said previously the leaseholders were slightly better off if the dispute went to arbitration. “And in all cases, there were compromises. So surely it makes sense to look for a compromise right now,” he said. The board could send a letter where it could be pointed out the owners were going to be better off getting all the rent they were entitled to, rather than the little bit left after a mediation. Dave said an owner told him they got a $50,000 payout last time.
“ROBBING THE OWNERS” “If you look at the basis of it there’s 70 properties each paying three grand a year so that’s $210,000. The owners got $50,000, so the administration took $150,000. Which is what the big problem is – the Trustee is basically, I feel, robbing the owners.” In the 2008 GFC houses that had been selling for $150,000 plus, were selling from $40,000-$50,000 Dave said. His lease at the time had gone from a ‘ridiculously cheap’ $800 a year up to $3800. Once the leaseholders group became established the lease was brought back to $2800 which he said was still affordable. “The other thing I try and point out to people is so I’m paying $2800, on lease – but then if I’m paying another $2000 on rates, that’s $4800. That’s $100 a week. You can’t rent a house here for that, if you can find one to rent at all. “So my view when I came here was to buy a leasehold. I had no issue with buying a leasehold because I had somewhere to stay, it was cheaper than trying to find somewhere to rent and you could still make a capital gain if you could wait the time out. “So it’s a bit of an awkward situation for the leaseholders, but these last few valuations were really high.” The board’s letter will be sent to leaseholders and express the board’s concerns about the effects of a steep rent increase on the community.
