Common questions and answers
Every property in New Zealand will have a rating valuation. Council's must update all rating valuations at a minimum of every three years, for the purposes of setting rates.
A rating value comprises three components:
- The capital value: The total value of your property including land and buildings. This is an estimate of what your property may have sold for on 1 September 2018 (excluding chattels).
- The land value: The value of just the land as if it had no buildings on it. This is based on its highest and best use. The land value includes any development work which may have been carried out such, as drainage or retaining.
- The value of improvements: The difference between the capital value and the land value. Although it reflects value added by any structures to the land, it does not represent a replacement cost of any buildings.
In Hamilton, Quotable Value Ltd (QV) is the independent valuation service provider contracted by Council to review and maintain property valuations.
The entire process is also independently audited by the Office of the Valuer-General. Strict quality standards must be met before your new rating value is confirmed.
The process to determine residential valuations is a follows
- Rating values are calculated using a complex process called mass appraisal.
- Valuers consider relevant property sales from your area around the time of the valuation. A market trend is established and applied to similar properties.
- A number of individual properties are also assessed every year because of issued building consents, and other inspections. These individual assessments enhance the mass appraisal process.
- The land value is firstly determined. Land is valued as if vacant, and on its highest and best use. Highest and best use means that if land has development potential, this will be factored into the value.
- The capital value is then determined. This reflects the likely value the property would sell for as at 1 September 2018. The capital value does not include chattels.
- The improvement value is the difference between the capital and land values.
Commercial and industrial properties are determined by the market and other factors such rental returns. They do not include chattels, nor do they include GST.
My land value has increased, but my capital value has stayed the same.
The value of improvements is simply the difference between your capital (total) value and your land value. The value of improvements does not represent a replacement cost of any buildings.
In a growth area such as Hamilton, the demand for land has meant that in general, land values have increased at a higher percentage than the capital values. As a result, for most properties, the value of improvements makes up a lesser proportion of the total capital value.
Where land has development potential, the highest and best use may mean the land is the most valuable component of the total property.