More than one million new annual land valuations have been issued to landowners in Queensland which will be used to assess land tax, rates and State land rental charges. For owners, reducing the statutory valuation of land can significantly reduce their taxes and rates whilst enhancing the commercial value of their property. However owners have a strictly limited time to object to the new valuations.
Annual land valuations in Queensland are made by the Valuer-General (VG) under the Land Valuation 2010 (LVA). These statutory valuations are used as the basis for levying a range of taxes and charges on landowners, including:
The LVA requires land to be valued on the basis of its ‘site value’ for non-rural land and ‘unimproved value’ for rural land. While there are some differences between the way in which site value and unimproved value are calculated, both basically involve determining the value of land on the assumption that it is undeveloped and that any buildings and a range of other improvements to the land have not been made.
The Land Court has described the valuation process under the LVA as an ‘artificial exercise’ for rating and taxation purposes with land required to be valued according to a series of legal concepts and assumptions. There is also a large body of case law that has been developed by the Courts to support the statutory valuation of land, including legal principles and rules concerning the valuation exercise.
Annual valuations under the LVA are therefore determined by the application of legal rules and principles, although valuation and other expert evidence are usually crucial to the determination of valuations.
This year more than one million landowners in 28 of Queensland’s 62 rateable local government areas have been issued new valuations. The local government areas with new valuations include Brisbane, Gold Coast, Logan, Ipswich, Moreton Bay, Bundaberg, Gladstone, Rockhampton and Townsville.
The VG must notify owners of the new annual valuations and owners have the right to object against the new valuations to the VG. Owners who lodge an objection and are not satisfied with the decision of the VG have the right to appeal the valuation to the Land Court.
Landowners have 60 days from the date of the new valuation to lodge an objection. There are only very limited grounds for a landowner to make a late objection so it is critical for owners who wish to object to the new valuations to ensure that their objections are lodged within time.
An objection must be ‘properly made’ in order to be considered by the VG. Any objection that is not properly made cannot be considered by the VG and will not give rise to any appeal rights to the Land Court.
Landowners must therefore ensure that their objections comply with the relevant requirements of the LVA in order to be properly made.
An objection must include a range of mandatory information, including the grounds of objection. According to the VG, an objection must be based on at least one of a number of relevant grounds, including:
It has long been established that the best evidence of value is to be found in sales of comparable properties, preferably unimproved, on the open market around about the relevant valuation date. That said, it can often be difficult to identify comparable sales. Disputes may also arise as to the analysis of comparable sales evidence and its application to the subject land.
Valuation objections or appeals will normally need to be supported by sales evidence to establish that the VG’s valuation is wrong and to support the valuation contended by the landowner. Valuation evidence will usually be provided by a professional valuer on behalf of the landowner. Case law shows that it is very difficult for owners who do not engage a valuer to successfully appeal valuations in the Land Court.
The identification and analysis of sales evidence is a core responsibility of a valuer and an objector or appellant without a valuer is typically at a great disadvantage to the VG. Also, because statutory valuations are an artificial exercise for rating and taxation purposes, valuers themselves need to be fully aware of the relevant legislative requirements to ensure that their assessments confirm to the correct legal principles and tests.
Legal review and analysis is often critical and owners will usually benefit from the combined input of experienced legal and valuation advisers to properly identify and apply sales evidence to the subject land.
Site constraints are physical features or characteristics of the land or market or legal constraints which affect its valuation. Site constraints may include physical features which affect its use (such as flooding) or legal restrictions on the use of land (eg. town planning controls or heritage listings). Environmental constraints such as vegetation or ecological values are also a common example of site constraints. Legal restrictions, such as those imposed by easements or covenants, can also affect the value of land under the LVA.
Landowners need to ensure that relevant site constraints have been identified and taken into account in the assessment of the new annual valuations. In particular, given the ‘mass appraisal’ system applied by the Valuer-General, it is not uncommon for individual site constraints to be missed or not fully taken into account by the VG. Owners may also need to seek legal or other expert advice in relation to site constraints, such as the impact of planning risk or the highest and best use of land.
Each valuation of land needs to be determined having regard to its own characteristics and the circumstances applying to the land and above is only a brief overview of some of the relevant issues affecting the new annual valuations.
Given the central role of valuations under the LVA in the assessment of land tax, rates and State land rental, landowners should carefully review the new valuations and consider seeking professional advice to identify whether there are valid grounds to object to the new valuations so that owners can reduce their taxes, rates and charges and maximise the commercial value of their property.