Keeping yourcouncil valuation as low as possible may shave a bit off your rates bill, butit could cost you in other ways.
Many councilsaround the country have recently completed their three-yearly revaluations ofevery property in their areas, leading to big jumps in some cases – such as 46per cent in Auckland and 33 per cent in the Waikato district.
These newrating values (RVs), sometimes known as capital values or CVs, are used to helpcouncils set rates. A homeowner can object to their RV if they’re not happy andask the council to review it.
While somebelieve a low RV is a good thing because it leads to lower rates, it can alsomean your home appears undervalued. This has implications for the bank who mayview you as a higher risk than you are in terms of your debt to equity ratio,and if you’re selling it could make it look as if you’re asking too much forthe place.
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Increasinglybanks and lending institutions use automated valuation reports and onlineestimates of your property’s value, so it’s worth keeping the RV used in thesereports up to date.
An RV is notdesigned to reflect market value at any time other than when it is set, and inmany cases it won’t capture renovations and upgrades to the property.
If a homeownerhas spent thousands of dollars of on improvements but this work did not requirea building consent and they did not advise the council or their rating valueservice provider, such as QVratingvalue, then it’s most likely that this addedvalue won’t be reflected in the property’s RV - unless that property has beensold in the meantime and a rating valuer has inspected this sale.
Where a councildoes issue a building consent the rating value services providers are notified.The project is then inspected, and the assessed added value of the new buildingwork or alterations is included in an updated RV once completed. But in thecase of work that doesn’t require a building consent - for example, a $30,000bathroom or kitchen renovation - the added value won’t be captured in the RVunless council or your rating value services provider are advised of the workyou have carried out.
This may meanyour RV is too low and your property could then be undervalued in onlineautomated valuation estimate which is usually calculated by an averagepercentage of sales prices to RV in your area. When it comes time to sell, apotential buyer may say ‘you are asking more than the estimate I am seeing onmy device or online of what your property is worth’.
So, if you wantto update your property details you can let QV know on its website via itsUpdate My Property service, or contact it on 0800 787 284 and send throughdetails of the improvements you have made and the next time a rating valuer isin their area they will visit your property.
If you needthis done urgently or in a more-timely manner, you can apply for a Section 16review of your rating valuation under the Rating Valuation Act 1998. You can alsomake an application on QV’s website, and this will be done promptly for a fee.Usually an inspection will be carried out within five working days of yourrequest.
