Rates, Building & Property

Rates and rating values

Find out about changes to our rating system and how to understand your rating value.

Changes to our rating system 

In 2018, new property valuations were issued for Palmerston North. On average, residential land valuations increased by 68 per cent and there was a significant variation in the level of increase. For commercial properties there was an average 30 per cent increase.

The Council decided to propose changes to the rating system to moderate the effects of the revaluation on rates for 2019-20. Without these changes some ratepayers who have residential properties with lower land values would pay rates higher than what the Council believes is reasonable, and rates for some other ratepayers would be unreasonably low.

After consulting with the public, the Council decided to adopt these changes. The rating system is described in more detail in the Annual Budget 2019-20. For descriptions of commonly used rates terms, see our rates glossary.

Rates for 2019-20

Council adopted the rates at its meeting on 24 June 2019.

Rating values

The property values issued in 2018 have been used for the first time to assess the rates for the 2019-20 rating year.

Understanding your rating value

Rating values and their effect on the rates you pay is a common topic of interest. How rating values are calculated and their impact on rates is a complex process which differs between councils.

The rating valuation process used in New Zealand is an efficient method of determining many property values for allocating rates.

What is a rating value?

A “rating value” is assigned to every property in New Zealand, and is made up of:

  • Capital value: the likely price a property would sell for at the time of the revaluation. The capital value does not include chattels.
  • Land value: the likely price the land would sell for at the time of the revaluation.
  • The value of improvements: the difference between the capital value and land value, reflecting the value which buildings and improvements add to the bare land.

Who determines your rating value?

Palmerston North City Council contracts Quotable Value (QV) for the valuation services.

How are rating values calculated?

Rating values are calculated using a complex process called mass-appraisal. Valuers consider all relevant property sales which occurred in an area around the date of the latest valuation. A market trend is established and applied to similar properties in the area.

Several assessments of individual properties are completed every year because of issued building consents, subdivisions, sales inspections, objections and ratepayers’ requests to update their rating value. These individual assessments supplement the mass-appraisal process.

The process of calculating rating values is independently audited by the Office of the Valuer General. Strict quality standards must be met before a revaluation is confirmed.

When are rating values calculated?

An important aspect of a rating value is its “effective date”, which is the date of the citywide revaluation.

The rating value of a property depicts its value at the effective date, and it’s updated every three years.

The effective date of the latest Palmerston North revaluation is 1 September 2018.

If you don’t look inside my house, how do you know what it is worth?

QV uses the details it stores on every property. When rating values are calculated, a market trend is established from similar properties which have recently sold and applied to the properties in the group.

Similar properties have similar attributes, like land and floor area, building age, and the property condition and location.

Properties are inspected throughout the year to make sure their details are updated where changes have occurred (as notified on a building consent).

How can my house have a rating value if it wasn’t built at the time of valuation?

Houses that have been newly built or renovated since the last valuation receive an updated rating value that reflects what it would have been worth if it existed at the effective date.

As rating values are used to apportion rates for up to three years, this keeps all property values comparable, enabling Council to allocate rates accordingly.

Why is the change in my rating value different from the changes in property values I hear in the media?

The different numbers are explained by different time periods being reported on.

We revalue our properties every three years. Any change in rating value is compared with the last revaluation, three years ago, whereas most media coverage refers to changes in property values over the last 12 months.

What is the difference between a rating value and a current market valuation?

Rating values exist to apportion rates and are determined at the effective date for each Council.

Market valuations can be independently acquired at any time. They involve an extensive interior and exterior inspection as well as an assessment of comparable sales to accurately depict an individual property value in a comprehensive report.

The valuer will use their expertise and analyse recent sales data to arrive at a figure which is current at the date they issue the report.