In this review we will briefly cover how land values are set by the Valuer General, the mandatory requirements to include in an objection and some examples of more unusual objection success and why those results were achieved.
Land tax in NSW is covered by the Land Tax Management Act and is controlled by NSW Revenue.
The assessment of land value is completed by the Office of the Valuer General under the Valuation of Land Act.
Land valuations undertaken by the Valuer General are completed on a mass valuation basis. That is, a sample of properties are valued which then set a benchmark for that category. As such it is very generic and if your property is slightly out of the norm or has specific issues, it may not be representative of the generic assessment.
Specific characteristics can include environmental, planning, topographical, and attributes as simple as views.
The current 2023 land valuation year is also a council rating year, which impacts upon owner occupiers via council rates as well as land tax for investors.
Although it is the 2023 land tax year, the base date of the assessed land values is July 2022.
So what is the appropriate or best way to object to an issued land value?
Any objection against the issued land values must be based upon comparable sales evidence. Whilst some comparison to other issued land values may be given some regard, Valuer General guidelines state comparable evidence must be the primary approach.
The Valuer General makes available two types of public reports which are available on their website.
The VG Sales report is a more generic group of sales that have occurred, and the Benchmark Report, shows the main sales evidence used to set the increase factor for that year.
The land valuations under The Valuation of Land Act are completed under specific sections of the Act and any objection must refer to and understand the relevant parts of the Act when objecting.
If an objection does not have regard for the correct process or the relevant part of the Act, at worst it may be rejected, however at the minimum it will be given less regard by the reviewing valuer. It is important to have a relevant argument upon which to object.
A complaint that my land value is too high with no relevant argument based upon comparable evidence rarely works.
The majority of objections are rejected by the Valuer General, however if a relevant argument can be put forward, substantial savings can occur. MMJ act for a number of land owners from small privates to larger national corporates and have had some strong successes in this sector.
MMJ complete assignments both for the NSW Valuer General and land owners and as such this gives us a detailed knowledge of how the rules and the system operates. A couple of examples are outlined below. These are not typical results, but they are the kind of results that can be achieved based upon the appropriate parameters.
An example in relation to environmental characteristics was a large site purchased for future residential development, which was a former tip and had various watercourses throughout. After being advised it could be developed and purchasing the property on that basis, council refused development approval based upon various environmental matters, which materially impacted upon the value of the land. In association with planning and environmental reports we were able to have the land values for multiple years revised, saving the client approximately $800,000 in land tax.
A residential asset which was continuously revalued upwards above its neighbouring parcels as the VG stated it had benefits of being on a corner. This was counteracted by showing the land was located at a busy give way sign, with traffic noise decreasing residential amenity and the corner lot required greater setbacks to develop in comparison to non corner lots. This was supported by comparing the characteristics of the sales evidence used by the Valuer General to the subject property. This resulted in a saving of $3,000 per annum for the previous 2 years.
One of the more unique instances in which we worked, was a large development site which had a conservation order on it, as a result of a Powerful Owl nesting tree. The order virtually sterilised the development capacity of the site even though it was in an established quality residential precinct. In that assignment we worked with a town planner to provide further expert opinion. Showing the limitations in comparison to the sales evidence resulted in 3 years of revised values for the client.
As mentioned, the majority of objections are not approved. As such, the main factors are to have a relevant objection in accordance with the appropriate sections of the Act and relevant supporting evidence, as opposed to anecdotal statements as a basis for the objection.