With many councils across New Zealand preparing to release their new capital valuations (CVs), REDnews took a look at what a CV really is, and whether it can be challenged.
Auckland Council is due to release new CVs for Auckland properties in March 2022. The new CVs will represent any change in value since 2017 and will account for the impact of the housing boom over the past year, as well as recent sub-divisions, renovations and new dwellings.
REDnews spoke to Auckland Council’s Manager of Valuations, Chloe Woollard, and Manager of Financial Policy, Andrew Duncan, to find out more about what this means for Aucklanders.
What do the new capital valuations mean?
“The new valuations suggest what the property would have most likely sold for as at 1st June 2021,” Woollard said.
Given the values are taken for rating purposes, they are only a guide and should not be used as a market valuation.
“CVs are mainly used to find out how much you’ll pay in rates. If you want to buy a property, you should use a valuer or real estate agent to gauge the actual market value,” she said.
Property values change over time. The council re-values properties every three years to ensure everyone is rated fairly, however, the pandemic delayed the latest valuation.
What this means for your rates
"Property values are just one of the factors the council uses to determine rates. Therefore, if house prices have gone up 30% since the last CVs came out in 2017, that doesn’t mean your rates will go up by the same amount," Andrew Duncan said.
The Council’s 10-year Budget plans for Aucklanders' rates to go up by 3.5% from June 2022.
“The council determines rate requirements after considering the region’s long-term budget every three years,” Duncan said.
“The council looks at the cost of services the city needs and subtracts revenue from fees and charges and other sources, which leaves the rates required for the city.
“We then share that rate requirement across the city based on each property’s capital value, that’s the sharing mechanism. So, if the capital value increases, it doesn’t necessarily increase their rates. But if a new property is added to an existing section, that would increase the rates for that section,” Duncan said.
It’s a common misunderstanding that rates could rise 30% if CVs went up 30%. It’s more dependent on how much your house has risen compared to the average rise for the city.
If houses across the city have risen by 30% on average, for example, a house that has risen 30% could expect the average 3.5% rate rise. If your house had only risen by 20% though (less than the hypothetical average of 30%), you might expect to have a rate rise lower than 3.5%.
Can you challenge your CV?
Auckland City Council’s Manager of Valuations Chloe Woollard says you can object if you feel your CV is incorrect and around 2% of people do challenge their capital value.
“Of those who challenge it, it’s around 50/50 with those who think it should be higher and those who think it should be lower,” she said.
“One of the main reasons someone may challenge their CV is if they’ve completed a renovation that didn’t need a consent, so the council didn’t know the renovation was done. Or, if there’s something unique about the property that wasn’t captured in our valuation process.
“In these cases, we would go and look at the property to see if there is a need to revise the valuation.
“We do look at consented work in our valuation process, but we cannot see unconsented work. We do go out and look at properties that have had subdivisions and inspect a large proportion that have sold during our valuation process to see what the value is,” she said.
Objections to capital valuations can be made via the council website or through their service centres.
These objections must include the reasons why you are objecting and what you believe the new value should be.