Making sense of property valuations

Published on 18 June 2020

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At the end of this month the Council will adopt its Annual Plan for 2020/21. This affects all ratepayers, because this is when we confirm the Council's budget and how we will finance services provided over the next year.

Last week, I explained that councillors had decided to tie rates as close to the cost of inflation as possible and voted for a 2.23 per cent total rates increase, down from 3.94 per cent planned before the Northland drought and COVID-19 pandemic.

This year, the Annual Plan comes after property valuations were undertaken in 2019. The Rating Valuations Act 1988 requires every property in New Zealand be revalued for rating purposes at least every three years. Quotable Value, an independent company, provides this service for many councils including FNDC. In the Far North, we use land value to help calculate rates, not the capital or building value.

The latest valuation saw total property value across the Far North increase by 32 per cent. Some areas increased more, such as Aupouri Peninsula, Kaitaia, and the inner Bay of Islands, where land values increased on average by 40 per cent. Horticultural, industrial and residential land also increased by 54, 42, and 37 per cent respectively.

However, a 54 per cent increase in land value does not equate to a 54 per cent increase in rates. Nor does an increase in property value mean the total amount of rates collected by the Council increases. This is set when the Council adopts the Long Term Plan every 10 years and is reassessed during the Annual Plan process.

So how do revaluations impact rates? We use land values to help calculate your share of General Rates (about 41 per cent of Council revenue) and Roading Differential Rates. In Kaitaia only, commercial properties pay a rate based on land value to improve the business district. The Uniform Annual General Charge, and ward rates for water and sewerage are not related to land values.

How much General Rates you pay depends on the land value of your property relative to the district’s total land value. So, a property with a land value that is 0.003 per cent of the district’s total pays 0.003 per cent of the General Rates. Imagine General Rates as a pie and each rates bill is a slice. The pie doesn’t get bigger or smaller as land values go up or down. However, your slice of that pie may get bigger or smaller depending on the value of your land. If your land value has risen more than the average, you may get a rates increase beginning 1 July. Most will see little change or even a decrease in rates if land value has increased by less than the district average.

We are still calculating what impact property values and the 2.23 per cent total rates increase will have on individual ratepayers. We aim to update our database by 19 June when you can view rates details on our website or at a customer service centre. New rates bills will be sent on 13 July after the Council has adopted the Annual Plan.