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No. 30 (March 1960)
– 53 –

PRUDENT LEASING
WOULD IMPROVE EAST COAST LANDS

The Improvement of farming on the East Coast was the subject of an address by Mr V. Holst, District Officer of the Department of Maori Affairs in Gisborne, during the recent Grasslands Conference in that town.

One of the important points made by Mr Holst concerned the leasing of Maori land on the Coast. ‘It has become a very widespread practice in modern farming,’ he said, ‘to offer an incoming lessee compensation for improvements, so as to encourage him to improve the property and to maintain the improvements, but on the East Coast there is a strong aversion on the part of owners to granting compensation. This attitude has arisen because of the unfortunate experience of the owners of several blocks of land in this District. This experience can best be illustrated by a case in point. A block of land was leased for 21 years with a right of renewal for a further 21 years and with the right to full compensation for improvements effected by the Lessee. At the end of the 42-year term, the improvements were valued and the value was so high that the owners were unable to obtain finance from any of the recognized lending institutions to pay the Lessee. They were therefore compelled to allow the Lessee to work out his compensation by way of rent and this took nearly 20 years. Towards the end of the latter period, the Lessee neglected to maintain the improvements and when he vacated the property, it was in a semi-derelict condition. The nett result was that after nearly 20 years without receiving any return from their property, the owners were faced with either having to borrow extensively in order to bring the land back into production or to let it remain idle and unproductive.

Because it is considered that the provision of compensation is important, it has been suggested that the right to compensation should be limited to say 75% of the value of the improvements at the expiry of the lease. If this suggestion was adopted, it would mean that in most cases because of the limited amount of compensation, the Lessors would be enabled to borrow a sum sufficient to pay the Lessee. However, this proposal has rarely been accepted by the people of this District.