By now, all Victorian local governments should have issued rate notices to land owners for each piece of rateable land in Victoria, denoting a newly assessed site value (value of the land absent improvements), capital improved value (value of the land as currently improved) and net annual value (the rent the land could expectedly derive).
These valuations are based on levels of value applying as at 1 January 2014, and will be used for the purpose of assessing:
- land tax in 2015 and 2016 – by reference to a property's site value;
- council rates for the 2014/2015 and 2015/2016 rating years – by reference to a property's capital improved value or net annual value, depending on the relevant Council;
- fire service levies for the 2014/2015 and 2015/2016 rating years – by reference to a property's capital improved value; and
- water rates for the 2014/2015 and 2015/2016 rating years – by reference to a property's net annual value.
The Valuation of Land Act 1960 (Vic) provides land owners with a two month window to lodge an objection to a valuation notice, leaving limited remaining time for land owners to initiate such action on recently received valuations. In light of this, land owners should review their council rate notices as soon as possible to consider whether the increase in levels from 1 January 2012 values appears reasonable and, if not, whether to object to the assessed values.
The Victorian Government recently forecast in the 2014/2015 State Budget an approximate 17% increase in land tax revenue in the 2014/2015 financial year, which is driven solely by the bi-annual valuation cycle (given land tax rates have remained frozen over recent years). With the Victorian Valuer-General noting in the recently published A Guide to Property Values 2013 that the median house price in Victoria's residential market increased by only 3.2 per cent over the two years preceding 1 January 2014, it is logically expected that commercial property owners will have experienced large increases in the site values of their properties (greater than 17%) if the Victorian Government's land tax estimates are accurate.