Rural v Non-Rural land and the new Land Valuation Act 2010

New approach to valuation -are you ready?

• A new method of valuing non-rural land for land tax, rental and rating purposes based on “site value” will commence with the issue of statutory land valuation notices in March 2011 having an effective valuation date for rates and land tax purposes of 30 June 2011.
• The new valuation approach will not apply to rural land, which will continue to be valued using the “unimproved value” method which assumes land is in its natural state entirely without improvements, including site works such as filling and clearing.
• A “site value” valuation will take into consideration site improvements made to the land including filling, clearing, rehabilitating, retaining, draining or preparing the land for development but exclude “non-site improvements” made on the land such as buildings.
• Valuations issued using the site value methodology may result in an increase in land values as the value of the site improvements is included for the first time.
• The first valuation notices will identify whether the Valuer-General characterises the land as rural or non-rural for valuation purposes.

Characterisation of land as rural

• The characterisation of land as rural will require a determination of zoning, planning approvals and the use of land.  
• A rural zoning under a planning scheme does not necessarily mean the land will be characterised as rural for the purposes of the Act.
• Land zoned rural-residential or its “nearest equivalent” is characterised as non-rural land for valuation purposes.
• Land will cease to be rural land and become non-rural land if it is subject to a material change of use for an “urban purpose”, a term not defined in the Act.
• Land zoned rural but used for an approved “urban purpose” is characterised as non-rural.
• Where less than half of the land to be valued is zoned rural, it will be characterised as non-rural for valuation purposes.  
• Where land is subject to more than one use, the Valuer-General may declare that part of the land is to be valued separately.
• The Valuer-General may at any time declare land to be rural land if certain criteria (the Rural Land Criteria) are met.

Objection to characterisation of land

• Landholders may object to the categorisation of the land as non-rural by making a Rural Land Application within 60 days of the issue of the valuation notice, as long as the land meets the Rural Land Criteria. 
• Limited appeal rights apply to the Valuer-General’s decision on a Rural Land Application.
• If the Valuer-General rejects a Rural Land Application, there is no other opportunity to make a further application unless there is a material change of use or a development approval is granted for the land.

Objection to site valuation if Rural Land Application fails

• The Act allows those affected by significant increases in land value due to the inclusion of site improvements to lessen the impact of the new site value methodology by either claiming “site improvement deductions” or taking advantage of “offset allowances” in certain circumstances.
• Objection rights are preserved during the Rural Land Application process but strict time periods apply

What should you be doing now do to prepare?

• It will be important to be prepared for the introduction of the new valuation notices, particularly if you need to make a Rural Land Application.
• You should be preparing now for the issue of the valuations in March 2011 to understand the issues that may affect you and make sure you are ready to meet the challenges of the new Act.

What DibbsBarker can do to help you?