The NSW Valuer General, Mr David Parker, spoke to the AFR yesterday and told everyone to start collating information to lodge their land value objection from now. Why would the Valuer General “poke the bear” and tempt everyone to object to their land values. Before we can answer that question, I’ll give you a very quick summary on how land valuations are undertaken in NSW.
Firstly, here is the link to the AFR article I’m referring to:
and here is a quick summary for you to get your head around the valuation land value system in NSW in thirty seconds:
- Valuations are generally issued in January but they are completed with a valuation date of 1 July of the previous year – 6 months before they are issued,
- Land Values are completed in accordance with the Valuation of Land Act 1916,
The valuations are multi-purpose, they get used to levy Council Rates as well as for Land Tax notices,
Valuations for Council Rates (Government Val or GVAL) are issued every three years where Land Tax Values (LTV) are completed every year, - Once you get your notice, you have 60 days to object to your valuation,
This year is a combined GVAL year and LTV year so about 2.5 million notices will be issued early next year, - Valuations are completed on a Mass Appraisal basis. That means they pool groups of properties together and apply an indexation rate based on the movement of a few selected properties that represent a statistical cross section of that group.
Now you know the basics, let’s get back to the question. Why poke the bear?
The Valuer General’s department has a huge amount of data indicating that objection volumes spike in GVAL years. It makes sense because a much larger cross section of people get notices. This gets compounded when we are commencing a downturn in a property cycle.
Very simply, if the valuations are undertaken at 1 July when the market is at its peak and then the values are issued in January when the market has turned, the instant reaction from most people that see their notice is that the value is too high. What most people don’t realise is that any movement the market does from July of the previous year gets captured in the next year valuation cycle. So what the VG is doing is subtly trying to educate the masses with a clickbait headline. Quite clever actually.
The VG is a smart guy. He was once a Commissioner of the Land and Environment Court, is a Professor and a published academic. You don’t get the top job knocking about the suburbs doing mortgage vals. I’m certain that he wouldn’t place a bet he knew he didn’t have a good chance at winning.
He is also well aware there is a correction currently happening across NSW. It may correct further by the time we get to January, but you can be certain that the market conditions at the moment would be a primary consideration when the VG department is issuing land values for this year.
In saying that, the goal of the article (from my outside perspective) is to probably achieve a few things:
- Get everyone to keep an eye on the market around the time the base date (1 July) will be issued so its fresh in our minds when we get to January we have a good idea about the value of our properties,
- Educate the public so they either don’t lodge timewaster objections or only lodge when they know they’re a good chance of success,
- Reduce overall objection volumes by eliminating the emotional objectors, and;
- Preparing objectors for the new process that has been implemented for objectors
After all that, I’m not telling you to file all your future notices in the too hard basket. I’m saying even though the AFR article was poking the bear, there is some good to take away from it. Get the information together from now so when your notice comes, you know whether you have a good chance for success.
A couple more tips for those that are lodging an objection
The properties that represent the typical house block are usually the ones they get correct most of the time. Most of the objections that get allowed – land value gets reduced, are not the “typical” property. They might be a commercial property, have heritage restrictions, are contaminated, are rural properties, have an odd shape or are just a little out of left field. The mass valuation process doesn’t suit these unique properties very well and as a result, these are the ones that more frequently slip through the cracks.
The Take Away
If you want to lodge an objection, make sure you do your research and include sales around July or it wont get far, or even better call Titan and we can do it for you.