Written by John Williams
The Capital Value (CV) or Rateable Value (RV) of your property is one in the same. Every three years Auckland Council reassesses the value of every property within its jurisdiction, primarily to determine how much a property owner should contribute towards the city’s upkeep via their rates bill. So, what is a CV, and how do the council determine this magical figure?
“A CV is a snaphot of the value of a property at a particular point in time – in this case July 1st, 2017. The council will analyse sales of different categories of all types of properties in all parts of the city as at that date, then reflect those statistics back into a database of information they hold for each individual property. From here, they will determine its capital value.”
“For example, for a villa in Ponsonby, they will gather all the information they can around sales of similar homes at that time, then interpret that information, via computer model, to reach a figure for the current valuation of that property. It’s certainly not a broad-brush approach – they try to be as property specific as possible.”
How do these figures relate to the actual market value of a house?
“The intention is that the CV will be as close to the market value at that time, excluding chattels. Obviously it’s not as accurate as an actual assessment, whereby a Registered Valuer carries out a site visit and can make comment on specific improvements a homeowner has made to a property, such as renovations or significant improvements which have been made post valuation.”
How should buyers and vendors use or interpret these new figures?
“They are indexed figures and should be treated as such, and not something you’d want to hang your hat on as the true value of a property. They should not be relied on in isolation, but used in combination with many other factors, such as actual recent sales and a property inspection or an appraisal by a Real Estate Salesperson may assist.”
If you don’t agree with the new valuation, can you object or have it re-assessed?
“Yes, everyone is entitled to question their Valuation and the process is clearly defined on the Council's website. The objection period is open for up to a month after valuations are notified."
What are the main reasons people object?
“Don’t panic. With the proviso that the Council don’t require an additional increase in rates over the previous year, an average increase in CV would mean no increase in rates. However, for those properties impacted by the Unitary Plan there may be significant increases if the property value increases are significantly more than the average.”
So, does the CV directly affect the level of rates a homeowner will pay?
“My understanding is that your rates bill is largely made up of fixed costs, and that the CV component of a rates assessment only contributes to about a third of the overall cost. A lot of people are under the misconception that if their CV doubles, then their rates bill will double. That’s clearly not the case.”
The level of individual rates only increases or decreases if the value of the specific property increases at a greater or lesser percentage than those surrounding.
Will the new Unitary Plan affect these new figures?
“It will be interesting to see how the council have interpreted and reflected zoning changes brought about by of the new Unitary Plan – for instance, a house that was previously zoned as a single house site that now has zoning for a more intensive property use. Will the new CV now take into account the potential new land use and reflect its new value? It’s not quite apples and apples any more, it’s more like apples and mandarins.”
Aside from this slight curved ball, the fact remains that buying and selling a property is probably one of the biggest transactions any of us is likely to make, so relying on the CV is not recommended for vendors or buyers. Sure, it’s a useful metric to have, but more specific information, gathered by a professional valuation expert such as Clayton Munting from Edwards Valuation, will give a much more accurate assessment of the value of a property.
For more information, please visit this information page on Auckland Council’s website.