menu
x

Like

Comment

Embed

Valuations upon which land taxes and council rates are calculated are set to be conducted annually throughout Victoria as the state moves to capture greater revenue associated with rising land prices and increase the fairness and consistency associated with the land valuation system.

Under new legislation introduced into Parliament, the current situation of land values being assessed by local councils every second year will be done away with.

Instead valuations will be assessed on an annual basis by the state Valuer-General.

The values which are assessed form the upon which calculations of land tax and council rates are charged.

In a statement, the Government said the new system would make land valuations more consistent and transparent.

The Valuer-General, it said, is best placed to undertake annual land valuations as they are able to let out larger contracts for valuation services across municipal boundaries.

The Valuer-General also possesses the expertise to manage valuation standards, it said.

In addition, the government says the change will resolve inherent inconsistencies in the current system.

As things stand, different councils use in-house valuation teams, private contractors or the Valuer-General to conduct their valuations – a system the government says results in inconsistencies across municipal boundaries.

Whilst being more consistent, however, the changes will also allow state and local councils to claim more tax from property owners in an environment of rising land values.

Under the current system of valuations being assessed every two years, property owners whose land increases in one year may not be hit with the higher taxes and charges associated with that increase until the following year when their land is revalued.

With valuations now being done every year, however, councils and the state government will reap the benefits associated with any rise in land prices and consequential higher value base on which taxes and charges are calculated each and every year.

The effect could be significant.

Over the 2016/17 financial year, for instance, HIA and CoreLogic reported that house prices in Melbourne rose by 16.7 per cent.

This means property owners whose land was not revalued are paying rates and taxes which are calculated on a base which is 16.7 per cent below the current market value of their land.

In a concession to local councils, the state has offered to pay the full cost associated with the revaluations, with councils paying the full cost of a supplementary valuation component.

This is a big win for councils compared with the initially proposed arrangement, which would have seen councils continue to pay for 50 per cent of the valuations but incur more cost as the valuations have to be conducted annually rather than every two years.

It is estimated that this measure will save councils between $8 million and $10 million annually.

Although the reforms will kick in in 2019, councils will have the option to ‘opt-out’ until 2022 to assist in the transition to the new arrangements.

Councillor Mayr Lalios, president of the Municipal Councils Association, said the latest version of the state’s annual, centralised property valuation model is vastly improved from the initial proposal that was sprung on councils without consultation.

“The Treasurer and Valuer-General, and their senior staff, have listened to the impacts facing councils and the reforms have come a long way towards addressing the concerns of our sector,” Lalios said.

Nevertheless, Lalios says the commitment of the state to pay the full cost of the valuations needed to be enshrined into law in order to prevent further cost-shifting back to councils.

Councils are also seeking a commitment from the Valuer-General to support local economies by using local contract Valuers in rural and regional communities wherever possible.

 
  • The assertions in this article are incorrect and fail to recognise the impact of rate capping on councils. Valuations are only the means against which rates are distributed.

advertisement
ADVERTISE RSS TERMS & CONDITIONS SUBSCRIBE CONTRIBUTE CONTACT US