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The Finance and Performance Committee today received the report on the property revaluations across Auckland.

From the Finance and Performance Committee of Auckland Council:

General Revaluation report received by councillors

 

The Finance and Performance committee this morning received the 2014 General Revaluation report, which shows average residential capital value increases of 34.8 per cent since 2011. It also shows increases of 16.2 per cent for commercial property; 15.7 per cent for industrial; 17.7 per cent for lifestyle and 4.6 per cent for rural property.

The new values will be published online at aucklandcouncil.govt.nz/revaluation from 10 November 2014, or owners can wait for their revaluation notice in the mail in mid-November. The new values won’t be used to help set rates until 1 July 2015.

Increases in property valuations have no impact on the amount of rates money the council collects. If property values go up, no additional income flows to council. Property values simply help to determine how rates are shared across ratepayers.

Committee chair Penny Webster said: “We are seeing significant market movements from the last revaluation in 2011. However, while they are big numbers, it’s important for ratepayers to remember that council’s property valuations have no impact on the overall amount of rates that a council collects.”

“It’s not about the amount of rates council collects, but rather distributing rates fairly based on the capital value of each property,” she said.

The overall amount of rates collected is set through the long term planning process, which also sets rating policies and involves consultation with the community. Each council first works out how much money it will need to fund its programmes, subtracts any income it receives, and the amount left over is the level of rates it collects. Property values determine how this is then shared among ratepayers.

If ratepayers believe their values are incorrect they can object during the statutory 30-day objection period, from 10 November to 19 December 2014.

It is important to note that the Valuer-General also audits the objection process. Values can only be adjusted through the objection process if they are found to be incorrect; for example if the value is different to recent comparable sales or if base data calculations are incorrect. Values cannot be changed solely for the purpose of the impact on rates.

Values are based on recent sales, and for commercial properties, recent rental information, as at 1 July 2014. Buyers and sellers of properties in the Auckland region have set the new value levels and it is the rating valuers’ job to ensure the new value levels are applied consistently and fairly across the region for the balance of properties.  On completion of the revaluation process the Valuer-General must first certify that value levels are correct compared to market evidence before a council can use them for rating purposes. The new values must be assessed independent of any rating implications.

The Valuer-General audits all New Zealand councils and revaluations happen at least every three years.  Values for all councils, including Auckland Council, must first be certified by the Valuer-General before they can be used for rating purposes.

—-Ends—-

 

Rates is set through four different formulas as seen in your Rates Bill:

 

The two main components the Council via the 2015-2015 Long Term Plan will have to look at is the Uniform Annual General Charge, and the General Rating formula.

Currently the UAGC is set to the low-end and only makes up 13% of your current total Rates bill. There are calls to increase the UAGC towards 30% of a total Rates bill however UAGC’s can be like GST in the fact it is regressive. That is a higher UAGC will disproportionately hit lower Socio-group ratepayers while disproportionately favouring higher Socio-group ratepayers.

For the General Rate formula it will need to be altered insofar as lowered to what it is now. Currently I pay $839.51 in the General Rate based on the universal residential urban formula set at what it is against my property valued at $260,000 as of 2011. If Council kept the formula the same and my Council Valuation increased by the 29% average in Papakura it means I am going to be rated against $335,000. This means my General Rating component rises to $1,081.68. That is a very large jump. So to keep things even Council would need to lower that General Rating component for me by 29% or for the City the 34.8% residential average. However, being the average and with other components to be worked out including expenses, targeted rates, and the UAGC level some are going to be better off and some are going to get literally stiffed.

The Industrial valuations have me worried especially around the Penrose-Southdown-Onehunga Heavy Industrial Complex – the largest in New Zealand. If those valuations rise too high too fast the industry moves causing large consequences. Something I have noted before.

 

The Budget Committee meets twice in November so we should have a better idea of where our Rates, and the Council Budget is heading.