Prepare for SHOCK in land revaluation

The NSW Valuer General has published land values for the South Coast Region. You can find the latest land valuation for your property HERE: https://www.valuergeneral.nsw.gov.au/land_values/where_can_you_learn_more_about_your_land_value/land_values_online Land value is the value of the land only. It does not include the value of a home or other structure. The NSW Valuer General Property advise that sales are the most important factor valuers consider when determining land values. Councils receive new land values for rating at least every three years. Land values are one factor used by councils to calculate rates. All councils have been issued with the 1 July 2022 land values. Landholders will receive a Notice of Valuation showing their land value before it is used by council for rating. Notices will be issued from January 2023. This gives landholders time to consider their land value. The latest land values for all properties in NSW are available on the Valuer General NSW website, along with information on trends, medians and typical land values for each local government area. Your Unimproved Land Value is used to calculate your Council rates. Note the calculations below relate to the land values of 2019 (Not the new 2022 ones). source

NOTE: The table above shows how the rates for a residential property calculated using the shire’s average residential land value for 2019 of $237,531. NOT 2022 We don't know what the average will be - there is little doubt that it will be more. How much more is unknown. So what can we expect in our next rate instalment? The Valuer General advise that: - the total land value for the South Coast region increased 38.2% between 1 July 2021 and 1 July 2022 from $155.1 billion to $214.4 billion. - Residential land values have increased very strongly by 38.3% overall. The increases were experienced in Bega Valley (62.1%) and Eurobodalla (61.3%). The main drivers in the region included high demand for lifestyle properties with constrained largest supply in many of the coastal villages. - Rural land values increased very strongly by 40.1% overall. The largest increases were seen in Bega Valley (69.9%) and Eurobodalla (57.1%). The land value increases were driven by high demand, with the area generally being tightly held leading to low supply. Demand was high for rural lifestyle properties in close proximity to larger population centres. By the above know to expect that our Unimproved Land value has increased. We also know that that value is used to calculate our rates. The calculation Council shows in the table above is using the Shires Average residential Land Value as valued in 2019. They offer that that value was $237,531. The Valuer General offers a property in Surf Beach as a record of land values and market trends for selected benchmark properties across local government areas and property types. If we apply the calculation Council used for determining the General Rate - Residential Residential 0.002313 x to the VG's example Unimproved Land Value on their typical Surf Beach property of 17m x 34 m below the rate payable last year for GENERAL FUND alone would have been $420.96.

source But now that example property has been revalued to $432,000 - that is a change of 60% in one year. The initial response might be to apply Council's rate in the dollar as per their calculations last year to the rate payable on the VG's example Unimproved Land Value on their typical Surf Beach property of 17m x 34 m above - that would calculate to $999.22 By that approach it would be an increase of $578. On an average unimproved land value for a property in Surf Beach. That is not the case though: A Council spokesperson explains: The NSW Valuer General’s report on land values (released 11 January 2023) reflects the land market value of more than 2.6 million properties across NSW as if sold on 1 July 2022. Report on NSW land values at 1 July 2022 Land values do not include the value of a home or other structures. Landowners will receive a Notice of Valuation from the Valuer General showing their revised land value. These new valuations will be used to determine Council rates starting from the 2023-24 financial year.

The last revaluation for Eurobodalla occurred in July 2019, in which time there has been an overall increase in the shire’s land value from $6,590,295,780 to $14,463,615,868 in 2022 - an increase of 119.47%. Individual property values since the last valuation have varied according to the property market. This means that Council rates will vary between different locations and different property types within the shire.

There is a common misunderstanding that increased property valuations will result in a windfall in rates for councils. This is not the case.

The increase in land values will not change Eurobodalla Council’s total permissible rates income but will result in changes in the rates levied on individual properties depending on their respective increase or decrease in land value.

The revaluation redistributes the same allowable rates income across the rating categories based on the new valuations for each property.

The total amount of general rate income collected by NSW councils is capped by the Minister for Local Government on an annual basis. The capped amount applicable to Eurobodalla for 2023/24 is 4.3% (3.7% base and 0.6% population growth) in line with the rate pegging set by IPART.

In Eurobodalla Council’s rating structure, fifty per cent of rates are levied using a base amount (this is the maximum allowable) and fifty per cent are levied via a rate in the dollar based on the land value. The increase in land values means the rate in the dollar and base charges will reduce to ensure Council’s general rate income remains within the permissible income limit as set by IPART. You can find the latest land valuation for your property HERE: https://www.valuergeneral.nsw.gov.au/land_values/where_can_you_learn_more_about_your_land_value/land_values_online It is critical to note that Council is NOT to responsible for any of the new valuations. The Valuer General is simply reflecting the spike in property values and in NSW that value is provided to Councils to use to determine, an derive their rate income. Basically they have little option but to use it.