How will the Revaluation Initiative affect you?

Posted on 14/8/2019

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Overview:

For many South Australian property owners, news of the Revaluation Initiative may have raised alarm bells that a rate rise is on the horizon. Perks Insights speaks to the Valuer-General, Katherine Bartolo, who tells us that this is not necessarily the case.

The Valuer-General’s Office acts independently of SA Water, Local Councils and Revenue SA, who set the rates for their respective entities. The Revaluation is aimed to improve accuracy in property values to ensure contributions to the community are both fair and equitable.

There are many different factors that influence a change in value in metro areas, including recent sales in your area, the building itself and any alterations you have made to it, nearby area re-zonings and external market trends. For rural properties, values depend on recent sales in the area, as well as break-up of land types, use and yields.

With the first of three phases completed this year, only two metro areas and one regional area may be affected by some kind of movement in their property values in 2019-20. And if you don’t agree with your property’s revaluation, don’t sit by and accept it – there are measures you can take to object.

The Value of the Revaluation

Every year, all South Australian properties are reassessed for the General Valuation and used by rating and taxing authorities to distribute the collections of their levies. Property valuations aim to reflect market value, based on the property market at January 1 and then released July 1. There are approximately 935,000 records, with site and capital values for each resulting in over 1,850,000 assessments to be undertaken every year. Given this immense number, mass appraisal is the primary valuation methodology. This method identifies submarket groups, which are then analysed using sales evidence to derive an annual index.

In 2015, it was identified that the data forming the basis of the annual General Valuation required a comprehensive review, to improve accuracy and ensure that contributions by the community are as fair as possible. Funding was granted in the 2016/2017 budget, for an in-depth data collection and analysis program, now known as the Revaluation Initiative. While this is the most comprehensive review undertaken in South Australia in many years, these reviews are best and common practice both nationally and other parts of the world.

 

Location, Location, Location – Where does your property fit in to the rollout?

The first cycle of the Revaluation Initiative has been completed for the 2019/20 financial year and included two inner metropolitan council areas – Unley and Walkerville, and one regional area – the Adelaide Plains primary production. The first cycle has allowed for best practice and data review methodologies to be identified, before rolling the Revaluation out in successive areas.

Outlier properties were identified with consideration to several factors including zoning changes, improved structures, occupancy information or changes to a specific market segment. These outlier properties are reviewed and where appropriate, corrections are applied, with the majority incurring a 0-10% positive or negative shift.

The Valuer-General South Australia, Katherine Bartolo clarifies that this the Revaluation Initiative is not a standalone valuation exercise and is complementary to the existing annual assessment.

“The annual General Valuation continues, with the project work being a more detailed level of research, identifying outliers for correction,” explains Katherine.

“The Revaluation Initiative forms part of the annual General Valuation and does not equate to a blanket change in value for all properties.”

The project’s progression will be largely geographic, with the inner metropolitan areas forming part of Cycle 2 for the 2020/2021 financial year, and outer metropolitan and some regional areas in Cycle 3, the following financial year. As the Adelaide CBD market represents a unique and large-scale challenge, research is ongoing over the course of the program.

 

Implications for the Future

Although the Valuer-General, by definition of the Act, operates independently and does not raise or collect taxes or rates, she is mindful that there may be flow on effects from changes in valuations.

“In the instance of Council Rates, the Valuations may be utilised to distribute rates to meet a budget and as such may or may not result in an increase in rates,” Katherine explains.

“To provide as much notice as possible, some Land Owners have received direct communication from the Office of the Valuer-General, however most are typically notified of their new valuation on receipt of their first rates notice.”

“We encourage all Land Owners to review information available at www.dpti.sa.gov.au/land/ovg and other online sources, such as Land Tax calculators.”

The Valuer-General is mindful that some valuations are irregular to past years and is accepting objections, with no changes to the existing objection process. If you believe your property valuation does not reflect market value, you can submit a written objection to the Office of the Valuer-General, or alternatively call on 1300 653 346.

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