Valuations and Rates

This morning’s Press has the headline on the property page “Property Valuations May Decline.” It is referring to a Christchurch revaluation that is occurring this year.  Waimakariri’s next valuation is due in 2011.

Does this mean that rates wil also decline? 

Not necessarily.  If your property’s valuation goes down, the rates will only go down if your decline is greater than the average decline across the District. 

If your valuation decline is less than the average, your rates will actually increase, all other things being equal.

If your valuation goes down at the same rate as the District average, your rates will stay the same – again all other things being equal.

My proviso about all other things being equal relates to the fact that other things can change too, e.g. the mix of uniform charges vs rates in the dollar, what ECan does to their rates, the total amount the District Council decides to take or a change in the basis of rating from land value to capital value.

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2 Responses to “Valuations and Rates”

  1. Bill Scandrett Says:

    What is the advantage of rates based on capital value rather than land value other than subsidising farmers rates?t

    • David Ayers Says:

      First of all, rates are never totally fair in that property value does not necessarily correlate with capacity to pay. Capital value is, however, the real value of a property which land value is not. The Council has done research which shows that capital value is more closely related to income than is land value. The board mill at Sefton, for instance, is only rated for the piece of rural land it sits on. With regard to farmers, some dairy farms with high capital inputs may well pay higher rates with capital value rating. The question of “subsidy” depends on where you sit – I have heard farmers say they are subsidising their small-block neighbours who are using the same roads, etc, but paying only a tiny fraction of the rates they are.

      Waimakariri ratepayers are already rated on a capital value basis by ECan. All our three neighbours rate on capital value – in fact, the only other Canterbury council that rates on land value is Timaru District and I understand they use a differential in favour of rural ratepayers.

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