Eltham farmer Bill Gribble is upset about Kiwirail's demand for a 400 per cent increase on the lease he pays for a strip of land beside the railway line.

Rent increases of up to 400 per cent are an attempt to end "peppercorn rentals" and match market prices, KiwiRail says.

KiwiRail have conducted a nationwide review of their lease arrangements, increasing the rates to reflect the market and establishing legal agreements with some people who had been using the land without documentation, a spokesperson said.

There were people who been using the land for free or at very cheap rates, the spokesperson said.

While the move aimed to treat everyone fairly, KiwiRail was labelled a bully this week by Taranaki farmer Bill Gribble whose rent rose 400 per cent from $400 to $1800 a year.

READ MORE:

* Proposed 400 per cent rent hike for railway land leases angers farmers

* KiwiRail defends almost three-fold rent hike

Gribble, who has leased a 2 hectare strip of land for 15 years, said the increases would hit farmers already struggling with low payouts.

"There will be a lot of people not pig-headed like me that will simply pay it and put themselves under more financial stress, and there's already a lot of financial stress out there."

He received a letter outlining changes to his lease that included his increase and an added $350 administration fee for land he maintained.

"My wife was really upset by the tone of the letter, it used strong language to frighten us into it. We think going through Federated Farmers and coming up with a sensible solution for both parties would be fair."

KiwiRail said it had so far sent 1500 letters to people leasing KiwiRail land and around 60 per cent had replied to date, the spokesperson said.

Of that, 80 per cent had taken up or concluded a new licence. Others had sought a review.

The organisation understood tenants' disappointment but rents were based on valuation advice and market evidence. The methodology had been discussed with Federated Farmers and applied to everyone, the spokesperson said.

"KiwiRail manages 18,000 hectares of land. When setting rental prices, it has balanced fairness to its tenants with fairness to taxpayers who are putting money in to KiwiRail every year. They are entitled to expect KiwiRail to adopt market rents for its tenancies.

"KiwiRail does invite tenants that do not agree with the increases to reply detailing and providing as much evidence, including photos, so it can review its decision. This has been carried out with a number of sites so far and is standard when negotiating rental rates."

The spokesperson said people could choose not to continue using KiwiRail land. The management of the land would revert to KiwiRail.

Federated Farmers have previously advised members who didn't agree with proposed lease conditions not to feel pressured into signing, Taranaki regional policy adviser Lisa Harper said.

Many farmers were concerned by the size of proposed rent increases and a lack of an objective standard for the value of the lease, and the federation had met with KiwiRail to discuss management of these leases.

"We have had a steady trickle of inquiries for at least six months and that's replicated all around the country," she said.

While recognising that individual farmers will make their own agreements with KiwiRail, the federation wanted to establish some general principles, to achieve fair and reasonable settlements.