Over recent weeks property owners have been receiving the notice of valuation on their properties from the NSW Valuer General. These are the unimproved land valuations. For many, it has raised concerns that the valuations, taken during the covid property spike, are overinflated and will increase their rates.
The NSW Valuer General provides independent land values every three years. The NSW Valuer General said that the total land value for the region increased by 35.9 per cent in the 12 months to July last year. According to the Valuer General, the significant increase was driven by residential values, which climbed by 36.8 per cent over the period.
Impact on rates
Local councils do use these land valuations to help determine rates. However, it is only a part of the rates that this land value notice is used to set.
‘Only part of your rates is linked to your land value. This is known as the Ad Valorem component which includes a minimum rate,’ explained a spokesperson for Tweed Shire Council (TSC).
‘Council uses the minimum rate to ensure a fair contribution from all ratepayers.’
The other parts of your rates such as water access, sewerage access and garbage collection are not linked to your land value.
An increase in land value does not necessarily mean an increase in rates.
You can object
The land value is based on factors such as recent sales evidence, land use, zoning restrictions and nearby amenities. It does not include the value of a house or other property improvements.
Landholders who disagree with their land valuation can lodge an objection with the Valuer General at: valuergeneral.nsw.gov.au within 60 days.
No increase of money for councils
While the Valuer Generals notice may impact your rates it does not mean that your local Council will receive more rates overall.
Local councils receive rates as set by the Independent Pricing and Regulatory Tribunal (IPART). Council rates are pegged, set by the population and the new population growth factor, and all councils will receive a pegged rate increase between 3.7–6.8 per cent this coming year depending on population.
‘Council does not receive more money because land values increase, although some people may pay more or less on their rates depending on the change in value of their land relative to changes in land values across the Tweed,’ said the spokesperson for TSC.
Watch the video at land-valuations for an explanation on how land valuations affect rates.
SRV
When councils believe they need a greater increase of rates than the pegged rate they can seek a Special Rate Variation (SRV) as Tweed Shire Council are currently doing. The SRV is an application for a rate increase above the pegged rate set by IPRAT. This year TSC are seeking an increase of 2.35 per cent which, if approved would see an increase of 6.35 per cent for Tweed ratepayers.
Black is white, and white is black.
If the sale of an area is inflated due to less supply and more demand, but the land hasn’t been developed at all, the Valuer General will increase the land value. This will somewhat increase the council rates. Had the council released more land making sure the supply match with the demand then all this wouldn’t be happening. Therefore, who is driving all this and getting benefits from all this? The Councils! Period.