The new values aren’t used to allocate rates until 1 July 2019. They don’t generate additional revenue for the Council – they just mean rates are allocated among ratepayers in different proportions than before.
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.
If my property’s value increases will my rates go up?
Not necessarily. Your rating value is expressed as a share of the total value of all properties in the city so we can apportion the rates.
If all rating values increase by the same percentage, your share remains the same, and so do your rates. Of course, this is assuming that the city’s expenditure remains the same.
For the 2018 revaluation, the increase in land values has varied throughout the city. Also, residential land values have increased by a larger percentage than commercial or rural land values.
Early indications are that if the new land values had been used to calculate the current year’s rates, residential rates would have been between $140 and $250 higher than at present for many, and up to $500 more for some. However, any actual increases or decreases will not take effect until 1 July 2019 when the new annual rates are set for 2019-20.
If Council expenditure rises, your rates could rise irrespective of changes in your rating value, as the cost is apportioned across the city.
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.
What should I do if I disagree with the rating value on my property?
Please call QV on 0800 787 284 discuss your concerns.
You have the right to object to your rating value. Objections allow valuers to assess individual components which may not have been considered in the mass-appraisal process.
Any objections to the 2018 revaluation need to be lodged with QV by 13 December 2018. You can do this online through the QV website: