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Pastoral lease rent review

Pastoral lease rent is the annual amount of ground rent that land in good condition might reasonably be expected to realise when managed as a long-term pastoral lease, plus any rents in relation to diversification permits.

Pastoral lease rent review

Pastoral rents in Western Australia are independently determined every ten years by the Valuer-General. Rents are based on land values, the economic state of the pastoral industry and the rate of return.

Pastoral lease rents form the basis for the unimproved value which are used in the calculation of local government rates and biosecurity levies payable by pastoralists.

The process for determination

The sales of pastoral leases are analysed, deducting the value of any improvements to determine the unimproved land value. A rate of return is then applied to the unimproved value, to derive a rental value.

Being based on analysis of sales of pastoral leases in the marketplace, the assessments reflect the impact of any drought, industry economics and other factors that were considered by the parties to the sale transaction.

Only pastoral lease sales that are considered to represent “fair market” transactions are used in determining what is termed ‘market unimproved value’. These sales are analysed by distributing the sale price between livestock, plant and equipment, houses and buildings, waters, fencing, any other improvements, and the unimproved land value.

This unimproved value evidence provides the basis for determining a separate unimproved value for each lease. The final market unimproved value considers a number of factors relevant to the pastoral enterprise. These include potential carrying capacity, land system productivity, location, access, and rainfall reliability.

The Valuer-General also consults with the Pastoral Lands Board in relation to the economic state of the pastoral industry.

2019 review

The most recent pastoral lease rent review occurred in 2019, with the determined values taking effect from 1 July 2019. At the time, the Minister of Lands determined that the rent increases were to be phased in over a three-year period, resulting in rent increases being capped at 20% in 2019-20 and 2020-21, with the balance to be applied in 2021-22.

Objection process

Under Section 32 of the Valuation of Land Act 1978, pastoralists have the right to object if they consider their rent to be excessive.

Factors considered as part of the pastoral objection process include:

  • sales analysis
  • station specifics
  • movement in bond rates
  • Consumer Price Index
  • movements in returns of other property classes.

As a result of 103 objections received following the delivery of new rents on 1 July 2019, and in conjunction with the pastoral industry, the rate of return utilised in the calculation of the rents was reduced from 2.8% to 1.8%. The revised rate of return can only apply where an objection has been received and allowed. The rate of return will not apply if a station is on minimum rent (currently $2,000 per annum).

The Valuer-General granted an extension for pastoralists to lodge an objection to their 1 July 2019 rent until 30 June 2021. This extension has now expired.

If you are looking to lodge an objection on a recent rent notice, please complete the objection form below. For assistance please contact our Customer Service team.

Pastoral lands reforms

Landgate is working with the Department of Planning, Lands and Heritage (DPLH) to review the pastoral rent setting methodology as part of the Pastoral Lands Reform, to enable both local government and pastoralists to plan with more certainty. Further information on Pastoral Lands Reform can be found on DPLH’s website.