This week the story that just won't disappear from the media headlines has been the new Auckland CV's (Capital Valuations). Described by Auckland Council as the “most likely selling price had the property (including buildings and all other improvements on the land, excluding chattels) been sold on 1 July 2014”.
Now the fact is Auckland is not alone in being exposed to a whole new set of CV's - there are 11 councils that have or will have released rating revaluations in November alone, however the scale of property price inflation in the Auckland region over the past 3 years is what is drawing so much media attention.
Accessing this new valuation for Aucklanders has been a headache, and in many ways the archaic approach taken by their digital team to my mind reflects a somewhat archaic approach to the whole process, however that is another story and a separate article!
I have decided to object to the new Capital Value ascribed to our house and in doing so I though I would share my thinking and the process as a public service to you as readers. Our circumstances as ever, may well be very different to other people's circumstances, however I think there is value in sharing the principles of the objection. We will have to wait until mid December to see if our objection has been confirmed or rejected. Remember you have to object before the 19th December.
Out circumstances are that we purchased our property in the past 3 years since the last revaluation in 2011. This latest revaluation published this week has increased the value of our property by 14% since the 2011 revaluation. We live in Devonport. However the price we paid a year ago was actually lower than the 2011 valuation. This has resulted in our new Capital Valuation which of course is based on the Council's July 2014 notional valuation being 19% higher than the price we paid. I propose to object on the grounds that the value of our property has not increased by 19% in less than a year. It is in my mind irrelevant that the 3 year increase is 14%, what is relevant is recent sale of the property as clear benchmark to notional property value.
I therefore have objected on the basis that the new CV should be based on the last sale price adjusted for the general increase in property valuations of property in the local suburb over that time period.
The QV website has a suburb specific page within which is a chart which tracks the Median E-Valuer for the suburb going back over the past 5 years. Simply type in the name of your suburb on the home page of the website instead of your address. By hovering your mouse on a date on the chart line you can read off the median E-Valuer price for a specific month.
In our case I selected September 2013 at $1,121,700 (we purchased the property in August so the following month figure is the most accurate) and then the July 2014 figure at $1,215,100. I therefore submit to the Auckland Council that our property has appreciated by 8.3% since we purchased the property in August last year. So applying this 8.3% increase to the purchase price lead correctly in my opinion to the view that the “most likely selling price had the property (including buildings and all other improvements on the land, excluding chattels) been sold on 1 July 2014” would be (sale price * 1.083) = submitted revised CV.
The process of objection requires you to complete a form online or on paper and by snail mail which can be downloaded from the same page of the Council website. The process requires the completion of the details for the property and then the "Contended Value" (your challenged view of the new CV). This needs to be broken down into the Land Value and the Value of Improvements. I chose to use the Land Value in the new assessment and adjust the value of improvements.
As a guide I used this wording which may be of help:
The re-valuation of our property at XY Street, Devonport has defined a Capital Value of $A . This assessment is as defined by the Council is the “most likely selling price had the property (including buildings and all other improvements on the land, excluding chattels) been sold on 1 July 2014”.
I contend that this re-valuation is inaccurate based on the property having been sold on the <sale date> for a price of $B.
The most appropriate method of establishing the “most likely selling price had the property (including buildings and all other improvements on the land, excluding chattels) been sold on 1 July 2014” would be to evaluate the comparable valuation of all Devonport properties in September 2013 (based on sales in August) with that in July 2014, 10 months later.
Based on the published data from QV the median valuation in Devonport as reported at 1st September 2013 was $1,121,700 and as at 1st July 2014 it was $1,215,100. This represents an appreciation of value of 8.3% between the sale date of this property and the re-valuation date of 1st July, a period of 10 months.
On this basis the re-valuation of XY Street should be Capital Value of $C.
I should stress that this is my approach to addresses what I think is an inaccurate re-valuation of our property based on our circumstances. I recommend everyone makes an evaluation based on their own circumstances. I have no idea whether my appeal will be upheld and our Capital Value adjusted or if we fail. I do however believe that this matter is worthy of time and consideration. I do not naturally put myself out there as an advisory or expert. I simply want to highlight this subject and the approach I have chosen to take.
I believe this time around as compared to 2011 there are likely to be more objections lodged simply because the inflation in property prices and therefore CV's is far more significant and the knock-on effect on rates is likely to be just as significant.
To answer what might be a nagging question you might have as to why I don't just celebrate this somewhat elevated Capital Value? Simply put I have never held much sway by the CV of a property as I have expressed in prior articles. The CV will ultimately have no bearing on the true value of our property; that will be only judged by a future purchasers, whereas Auckland Council want to levy their rates based on a formula which I judge in our situation is inaccurate.