Valuations for rating & taxing
In accordance with the provisions of the Valuation of Land Act 1978 (the Act) the Valuer-General is required to maintain valuation rolls of rateable and taxable land throughout Western Australia. These rolls are periodically provided to rating and taxing authorities.
To help you better understand valuations made for rating and taxing and the importance of the date of valuation (DOV), here is a list of frequently asked questions.
What are rating and taxing valuations?
The Valuer-General is required to maintain valuations of all rateable land in Western Australia for rating and taxing purposes. Valuations are the basis of allocation of various rates and taxes including local government rates, land tax, metropolitan region improvement tax (MRIT), the fire and emergency services levy, residential sewerage rates, some drainage charges and the biosecurity levy of agricultural and grazing land.
Your local council rates are assessed on either gross rental values (GRVs) or unimproved values (UVs), whereas land tax and MRIT is assessed on UV only. These values are determined on a periodic basis in what is known as a General Valuation, commonly called a revaluation.
Every property within your local area that is subject to general valuation is required to be valued as at a date set by the Valuer-General and this is referred to as the Date of Valuation (DOV). Rating valuations are therefore assessed at a "snapshot in time" meaning that all properties in your local area are valued based on market levels at the same date. This ensures consistency and a degree of fairness in the allocation of rates.
How are my rates calculated?
Each year your council determines its revenue target, which includes the amount to be collected from rates. A rate in the dollar to be applied to the value (typically GRV for urban land and UV for rural land) is struck by dividing the rate collection by the total amount of the valuations on the valuation roll. Some councils use both GRV and UV meaning separate rate collection targets and different rates in the dollar are set for each. Your rate assessment is calculated by multiplying the value of your property by this rate in the dollar.
Other charges may also appear on your rate notice such as levies and waste management charges. These are determined by your local council and are not based on the valuation.
Example - GRV
Greg's property has a GRV of $26,000 which equates to $500 per week.
Greg's local council in which the property is located has set a rate in the dollar of five cents.
Greg's rates notice would be:
GRV of $26,000 x five cents = $1,300 in rates plus other council levies and charges.
Please note: GRVs remain fixed for periods of three to five years, however the rate in the dollar set by the council may change each year depending on its budget.
Gross Rental Values
What is a GRV?
For most properties the GRV is the gross annual rental value of rateable land.
The primary definition of GRV under the Act is as follows:
“GRV means the gross annual rental that the land might reasonably be expected to realise if let on a tenancy from year to year upon condition that the landlord was liable for all rates, taxes and other charges thereon and the insurance and other outgoings necessary to maintain the value of the land”.
A GRV is determined on the basis that the rental includes outgoings such as rates and other property expenses.
Unlike residential property, most commercial rentals are negotiated net of outgoings, so these need to be added to the net rental to equate to the statutory definition. Where property rental payments are subject to GST, they represent a tax payable by the property owner as part of the rent and are included in the GRV.
Where an annual rental cannot reasonably be determined, the GRV becomes the assessed value. Assessed value is defined in the VLA as a percentage applying to the capital value of land within a particular class.
Residential land for which a rental value cannot be determined is valued on the basis of three per cent of its total capital value. Assessed value of land designated for other uses is set at five per cent of its total capital value.
How is the GRV determined?
All GRVs within your local council are assessed at the same date of valuation. Rental evidence is collected at that date and used to determine the fair rental value for each property. The rental value for a house will be influenced by factors such as age, construction, size, car shelters, pools and location. By analysing property rents against their individual attributes and characteristics it is possible to assess a valuation for all properties, whether they are rented or not.
While land used for residential purposes is valued on its rental value, land used for other purposes having a relatively low rental value in comparison to its capital value may be valued on a percentage of its capital value as if it were vacant land.
What is the Date of Valuation (DOV) for my property?
The date of valuation for your property will vary depending on on which local government the property is located in. Every property within your local area is valued at a date set by the Valuer-General and this is referred to as the Date of Valuation (DOV). Rating valuations are therefore assessed at a "snapshot in time" reflecting the property market for your local area at the same date. The Date of Valuation (DOV) table shows the GRV based date of valuation for every local authority in Western Australia.
What if the market changes between general valuations?
GRVs are currently assessed every three years in the Perth Metropolitan Region and every three to five years in country areas. It is unusual for property markets to remain constant and despite any changes to the property market which may occur in between general valuations, GRVs remain fixed until the next general valuation.
What if I think the GRV is too high?
You can object to the GRV subject to meeting the requirements outlined below.
- Your written objection is sent within 60 days of the rates notice being issued.
- You provide grounds and supporting reasons which might include:
- rental evidence at or around the date of valuation which show the GRV of your property to be too high.
- examples which show your GRV is significantly higher than similar properties within your local area.
Please note: Objecting to the GRV because you consider your rates notice or the increase in rates is too high are not valid reasons and the objection will not be accepted.
GRV valuation methodology
A database of rental evidence is assembled from information obtained from a variety of sources. From this, a schedule of properties within the local government which are rented within a set period around the date of valuation is prepared. The rented properties are inspected and the rents analysed (for example deductions for any furniture included in the letting).
Unsuitable lettings, such as those between related parties, are discarded so that the final list is acceptable as the basis for the determination of fair gross rentals as illustrated by actual market dealings.
From the analysis of actual rentals the fair gross rental of each property is established, after making allowances for any special features or detriments.
The GRV is expressed as an annual amount. A GRV of $26,000 represents a weekly rental of $500.
Who do I contact to obtain more information about my GRV?
You can contact the customer care team on +61 (0)8 9273 7373.
What is an Unimproved Value (UV)?
UV is defined in the Valuation of Land Act 1978 and in some cases is based on a statutory formula. UVs are determined each year for all land within the State and come into force on 30 June as at the date of valuation (DOV) of the 1 August in the preceding year.
As a broad guide the following applies:
Within a townsite
For land situated within a townsite the UV is the site value of the land. In general, this means the value of the land as if it were vacant with no improvements except merged improvements. Merged improvements relate to improvements such as removal of rocks, clearing, retaining, levelling, draining and filling.
Outside a townsite
The UV of land outside a townsite is valued as if it had no improvements. In this case the land is valued as though it remains in its original, natural state, although any land degradation is taken into account as are any services or amenities which add value.
For land used for cropping or grazing, if the UV of broad hectare land cannot reasonably be determined on similar undeveloped broad hectare comparable sales, it is calculated as a percentage of the value of the land as if it had been developed to a fair district standard but not including buildings. Where it applies, this percentage is prescribed by regulation by the Valuer-General from year to year and is currently set at 50 per cent.
There are certain exceptions to the above where the Valuation of Land Act 1978 provides that the UV is based on a statutory formula, for example a fixed rate per hectare or a multiple of the annual rent.
These exceptions include mining tenements, leases under the Land Administration Act 1997 for the purpose of grazing, leases under agreement acts, and land held under the Conservation and Land Management Act 1984.
Section 62(1) of the Strata Titles Act 1985 provides that for UV the Valuer-General must value the whole of the land subject to a strata plan as a single parcel in single ownership. The rating and taxing authority is required to apportion the value in proportion to the unit entitlement, which is shown on the registered strata plan.
Section 62A(2) of the Strata Titles Act 1985 provides that each lot in a survey-strata scheme shall be valued as a separate parcel of land.
UV valuation methodology
UVs determined on the basis of the capital value of an estate in fee simple are derived from reference to the land market at the date of valuation. All sales relevant to the predetermined date of valuation are investigated and where considered necessary, the parties interviewed.
Unsuitable sales, including sales between related parties or those with special circumstances are discarded. By this process, fair and reasonable criteria are established for the fixing of values.