Should I object to a low ratings valuation?

[flanosau]

Hi, we own a 4 bedroom, 1 bathroom, renovated 2 hectare lifestyle block in Timaru and have received this year's rating valuation set at $380k. Its previous rating's valuation (2014) was $315k.

This is well below the market value of the property and has not taken into account the significant improvements made to the property as it has not been inspected in person by QV in the last 9 years at least.

Comparable properties in the same area have had ratings valuations of around $460k or more.

Whilst I realise that this may mean our Rates are lower I am also wondering if the low valuation would have an unconscious influence on how much an official surveyor would value the property at (necessary for re-financing) or how much a potential purchaser perceives the value of the property to be.

Should I lodge an objection?

[jimO]

i wouldnt, also i have lived in my current house for over 20 years never seen a qv valuer, they dont actually come look at houses

[Don't believe the Hype]

RV is irrelevant... having said that, many prospective purchasers take this number as a starting point for pricing offers, many others do not. The key to achieving a premium selling price for your property the way you present and market it.

You've already mentioned comparable sales, providing comparable sales info in your sales package is likely to influence an offer than an RV in my opinion


If you're worried about the impact of RV and were planning to sell at some time in the future you can apply for a reassessment of the RV to take into account the improvements you've made.

[RollingCloud]

Any increases in value from improvements come from the building consent values. Well they do from my council. I objected to a value on an old property I owned because I was selling. It was waterfront with uninterupted views and the property across the road that wasn't with less land had a higher value, go figure. It was increased at my request.

[flanosau]

RV is irrelevant... having said that, many prospective purchasers take this number as a starting point for pricing offers, many others do not. The key to achieving a premium selling price for your property the way you present and market it.

You've already mentioned comparable sales, providing comparable sales info in your sales package is likely to influence an offer than an RV in my opinion


If you're worried about the impact of RV and were planning to sell at some time in the future you can apply for a reassessment of the RV to take into account the improvements you've made.

Yes this is my concern, also it may have a big impact on drawing down on equity and will require us to pay a valuer for this purpose rather than using the RV.

[Don't believe the Hype]

Paying a valuer a one time payment of $600-$700 dollars vs. increased rates every year for the period of ownership. Which is better?

[hawkeye]

There is one other consideration that you might find relevant to your situation.

If the government compulsorily purchases your property from you they will use the GV/RV as the figure to pay. This is unlikely but has happened in Christchurch with the red zone purchases and land acquired for major roading works.

[klauster]

RV is irrelevant... having said that, many prospective purchasers take this number as a starting point for pricing offers, many others do not.

Well, the QV is irrelevant, the RV is based on valuer’s inspection - includes land, house and chattels and that is relevant for refinancing or selling, etc

I sold a house above RV of 440k (QV=295k) and would not be worried about a low QV/CV. At the end it is like a life insurance – for somebody important for others not.

[Beano]

A low QV will assist getting a higher sale price
A high QV will reduce getting a higher sale price
(Due to affecting the Opex)

[Bob Kane]

Any increases in value from improvements come from the building consent values. Well they do from my council.

Same with mine.
Apply for a building consent for renovating your bathroom. Price it at $100,000.
Then apply for renovating your kitchen - price it at $200,00.
Then apply for renovating your ensuite and laundry with a price of $100,000.
After this small amount of paperwork you will find your council/QV valuation will be $400k higher.
It's as easy as that.
The councils love this sort of stuff and won't bat an eyelid.

[Keithw]

Similar to Hawkeyes post above, another consideration might be CGT.
When / if Taxinta and her communist comrads manage to get CGT through, which they are working hard to do, the starting point for all existing property is likely to be CV.
If it takes 3 years then maybe you get an updated CV in between time, but any less than that and the current ones are likely to stand.
Hopefully there will be an outcry on how hopelessly outdated they are, but maybe not.

[Don't believe the Hype]

Similar to Hawkeyes post above, another consideration might be CGT.
When / if Taxinta and her communist comrads manage to get CGT through, which they are working hard to do, the starting point for all existing property is likely to be CV.
If it takes 3 years then maybe you get an updated CV in between time, but any less than that and the current ones are likely to stand.
Hopefully there will be an outcry on how hopelessly outdated they are, but maybe not.

unlikely any tax will be retrospective but in the event it was I would simply sell my entire portfolio to another entity I own at current market price therefore setting the base price for CGT calculation.

[Wayne]

There is one other consideration that you might find relevant to your situation.

If the government compulsorily purchases your property from you they will use the GV/RV as the figure to pay. This is unlikely but has happened in Christchurch with the red zone purchases and land acquired for major roading works.

They have to pay market value. The Red zone was a special case (after all the market value of most of the houses was 0 at the time).

Same with mine.
Apply for a building consent for renovating your bathroom. Price it at $100,000.
Then apply for renovating your kitchen - price it at $200,00.
Then apply for renovating your ensuite and laundry with a price of $100,000.
After this small amount of paperwork you will find your council/QV valuation will be $400k higher.
It's as easy as that.
The councils love this sort of stuff and won't bat an eyelid.

Does that really work?
Really does sound like bullshit to me.

If you are selling soon get it updated - people will feel better paying closer to the CV.
If you aren't selling soon then why bother setting yourself up to pay more rates?
When it does come time to sell there might be another CV out or values will have diverged significantly from CV or get a registered valuation to 'prove' your asking price.

[Bob Kane]

Does that really work?
Really does sound like bullshit to me.

I have observed this multiple times over the years.
Not sure if every council does this.
Why don't you phone up your council and ask if the consent figure is added to the valuation?