How councils determine rates
The Act relating to rates is the “Local Government (Rating) Act 2002”, this Act is used to provide fair transparent property rates thus enabling councils to fulfil their duties through a steady income stream, local government (Councils) uses standard rating valuations governed by the Rating Valuation Act 1998 and audited by the Office of the Valuer-General.
Council collects a fixed number of rates each year, as specified in the current Annual Plan or Long-term Plan. Increases in the capital value of properties does not mean that Council collects more rates revenue. Property values are a mechanism to determine how to allocate everyone’s share of rates they need to pay each year.
Your valuation components.
Capital value
The capital value is the probable price that would be paid for the property at the valuation date. It’s the total of the land value and improvements value – the total value of your property. It doesn’t include chattels, stock, crops, machinery, or trees. Residential values include GST, other property types do not.
Land value
Land value is the probable price that would be paid for the bare land at the valuation date. It includes any development, such as drainage, excavation, filling, retaining walls, reclamation, grading, levelling, vegetation clearing, soil improvement, or protection from erosion or flooding.
Improvement value
Improvement value is the difference between the capital value and the land value. It reflects the value of the property’s buildings and other structures.
Under the Rating Valuations Act 1998 owners/ratepayers have a right to object to a valuation of their property. This can be done through providing evidence, or through getting an independent valuation. Councils then review the objections, and if the ratepayer is dissatisfied with the outcome, they can take the dispute to the Land Valuation Tribunal. These tribunals are made up of registered valuers and District Court Judges. Most objections get resolved at council level.
The objection period is stated on your general revaluation and objections must be in before this date, you can object to only one property valuation at a time.
It is not widely known that an owner or ratepayer can request a new valuation at any time under section 16 of the Rating Valuations Act 1998. In this case, the owner would have to pay the market price for the valuation. The assessment would be made for the point in time when the general valuation took place across the territorial authority area. This means that market movement since the last general valuation will not be considered. A request for a section 16 valuation must be made to the council in writing. Once the valuation is completed by council, the QV website should usually be updated within a week. The reviewed rating value would not be used for rating purposes until 1 July.
You must inform the owner of the property (if you are not the owner) that you are objecting to the valuation of their property.
Revaluation process
• A valuer will review all values for a property (capital value, land value, value of improvements) as part of an objection.
• As a result of your objection, the value of your property could go up or down or it may not change.
• Changing the value of a property may result in a change of rates for that property.
• Correct other information on the valuation notice.
If the property information on your valuation notice is wrong, you can correct it by using Council’s online rating information database (RID) objection form.
What to include with your objection
You need to include:
• the objection reference number from your valuation notice
• the address of the property
• your estimate of what the capital value, land value and improvement value should be.
• your reason for objecting
• your name, postal address, and contact telephone number.
• the capacity in which you are objecting (as owner, ratepayer, agent)
• if you are an agent, the name of the person you are representing.
After you lodge an online objection (see your council for the objection form), they will email you an acknowledgment. One of our valuers will review your objection and may discuss it with you or inspect the property, if necessary.
Rateable values are not intended to provide property values for sales and marketing purposes. A market value of a house would include other factors such as desirability of a neighbourhood, chattels, interest rates and the cycle of the economy. Traditionally though, the CV or RV tends to be listed on Trademe Property; and depending on the cycle of the property marked agents tend to have a feel of where the prices are relative to Rating Values/Capital Values.
Contracting to Councils
Councils use many companies or contractors to complete tasks that they do not have the staffing or expertise to complete the task, this is an added cost to rate payers.
These contractors are not part of council and answer to council if you have any issues these need to be given in writing to council.
In closing
As the long term and annual plan set the total amount of rates if you wish to change the amount councils are charging for rates then the people of the region must make this a focus in their elections, the people need to vote for representatives with experience running councils and small to medium size businesses who can help manage council spending and understand bureaucracy, committees, non-government organisations like Local government New Zealand (LGNZ) who influence Councillors, chief executive officers etc. through training and committees.