The 2020 district-wide revaluation is underway and valuation notices have been issued. New values will be used for rating purposes from 1 July 2021.
Information regarding licenced kiwifruit orchards
There's a view that the rating valuation methodology for licenced kiwifruit properties may not have been meeting the requirements because the licence to grow certain licenced kiwifruit variety (such as Gold3 and Zespri Red) wasn’t being assessed as part of the definition of the value of improvements.
The Valuer-General has regulatory oversight of the rating valuations system under the Rating Valuations Act 1998 (RVA). This includes promoting national consistency around the interpretation and application of the value definitions for capital value, value of improvements and land value within the Act.
There was a view that the rating valuation methodology for licenced kiwifruit properties may not have been meeting the requirements because the licence to grow certain licenced kiwifruit variety (such as Gold3 and Zespri Red) wasn’t being assessed as part of the definition of the Value of Improvements.
The Valuer-General accepted that certain licenced kiwifruit varieties be included, based on the RVA definition of Value of Improvements which requires the assessment of the value of all work done on or for the benefit of the land.
For rating valuation purposes, the added value of the overall canopy is determined from recent sales evidence, in line with the capital value and value of improvement definition under the Rating Valuations Act 1998. Together the licence, structures, infrastructure, and the planted vines generate added value, which is recognised in market transactions and therefore market value.
The Gisborne District rating valuations are set at 1 September 2020, based on the market valuation of kiwifruit orchards at that date. The rating valuations must align with how a kiwifruit orchard would transact in the marketplace. Transactions occur on an overall canopy value per hectare: The land value includes the land and water consent. The value of improvement includes the kiwifruit licence, vines and infrastructure such as trellising, overhead canopy and irrigation.
Read the Valuer-General's statement - Gold kiwifruit property valuation change(external link)
Notices with the new rating valuations were sent out to owners on 10 December 2020.
Objections to rating valuations
If you don’t agree with the value of the property you can object to the valuation. Rating valuation objections close with Council on Friday 29 January 2021. Council would accept late objections regarding the Kiwifruit valuations.
As part of the objection process the rating valuer (Lewis Wright) will contact the property owner to settle the objection. Any unresolved objections would proceed to the Land Valuation Tribunal to resolve.
Rating process for financial year commencing 1 July 2021
Any objections to the 1 September 2020 District Rating Revaluation would be settled prior to 1 July 2021. This might take longer for late objections or if the objection goes to the Land Valuation Tribunal for settlement.
The rates for the 2021/2022 rating year are set at 1 July 2021 based on:
- Council's budget for the 2021/22 year
- Rating revaluation values as at 1 September 2020
- Council’s revenue and finance policy in the 2021-2031 Long Term Plan
- Council’s rate remission policy in the 2021-2031 Long Term Plan
The legislation for carrying out rating valuations has not changed. Updated guidance as agreed between valuers and the Valuer-General has been used as above.
The way in which Council sets its rates has not changed. The revenue and finance policy and Council’s rate remission policies are reviewed as part of the 2021-2031 Long Term Plan and it's likely there will be changes from the existing rate remission policy.
The draft LTP 2021-2031 will be consulted with the community in the near future, along with modelling of the impact on rates. Council will consult directly with affected owners on any proposed changes to the permanent crops rate remission policy.
Currently the rate remission is automatically applied by Council and relates to the crop value and supporting infrastructure (including licences to grow certain crops such as Gold3 and Zespri Red). Lewis Wright calculates the capital value reduction for this rate remission, which applies to two of Council’s rates, the targeted road rate and the general rate which are based on capital value. The rate remission doesn’t apply to all rates. Changes may include which rates receive the remission, and similar to Council's other remission policies, the requirement for owners to apply for the remission.
How does it affect my rates?
If your valuation increases by 50% it does not mean rates increase by 50%.
An increase in values does not increase the overall rates collected by Council.
Rateable values are only one component of calculating rates and are used to provide the basis for allocating some of the rates required across all properties in the district. The property valuations underpin how a property is rated.
The budget total Council needs each year is set in the Annual Plan process. This total is then divided across all ratepayers using a combination of factors including the rating value of your property. Other income sources for Council are also considered before setting the annual rates requirement
Information about trends and values
Across the district values for residential / lifestyle properties have risen on average 64%, and 50% for all sectors since 2017. The land value alone for residential / lifestyle properties has climbed 90 - 100% due to the shortage of available residential land to build on. This has impacted and driven the average house price to almost $500,000 at revaluation date of 1 September 2020.
Gisborne has experienced an enormous demand in housing, with house prices still lower than in other regions, but steadily climbing. The market shows strong competition between first home buyers, investors, existing locals and new residents to Gisborne. This is impacted by lower interest rates and increasing equity.
While lower value properties have moved strongly above the average, rural properties moved on average 48% in the East Coast, Waikohu, Tolaga Bay and Poverty Bay Flats areas.
Market valuations change depending on the state of the market.
Rating valuations are set on the date of the general revaluation, this was 1 September 2020. They will not change (except for subdivision and building consents) until the next revaluation in 2023.
The rating valuations are prepared using rating methodology and are for rating purposes. Household chattels are not included in the rating valuation, so any expected sale price will include an additional amount to cover chattels.
Several factors are taken into account, including what other properties in the neighbourhood are selling for, the type of property and changes that have been made since the last valuation in 2017.
Rating valuations are independently audited by the Office of the Valuer General and need to meet rigorous quality standards before the new rating valuations are certified.
If you’re selling or purchasing a property, you might consider obtaining a market valuation from an independent valuer as rating valuations are not prepared on the same basis as a private registered valuers report.
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There's limited demand for older and earthquake buildings that require strengthening. The shortage of well-located industrial land has driven the significant land value spike.
This strong performing sector is expected to grow even more over the coming years as new apples and kiwifruit plantings come into full production.
Current development cost including land purchase of around $800,000 per canopy hectare is spent for gold kiwifruit orchards with capital values of around $1 million per canopy hectare on mature orchards. This means a value movement of 200 - 300% for developing and establishing orchards. Water availability is the most significant restriction for future development.
For the first time gold kiwifruit licences have been valued as part of the improvement value. While the licence to grow G3 vines is already assessed together with the planted vines which generate added value and is recognised in market transactions, the same principle applies now to gold kiwifruit growers. Valuers and councils national wide will follow the same consistent approach, regulated under the Rating Valuation Act 1998 and audited by the Valuer-General. In short term, improvement values require the assessment of the value of work done, on or for the benefit of the land.
The increase is driven by low interest rates and existing farmers and adjoining owners expanding.
A median sale price reached for 2020 is close to $10,000 per effective hectare and $1,100 per stock unit.
At present there's a tight supply and limited sales volume, returning stable values. Suitable greenfield-land to plant for carbon and harvest is underpinning the overall pastoral values.
Carbon units and timber components are not valued.
This sector shows a strong demand from overseas investors particularly due to the rising carbon price and attractive government policy
The valuation process
We provide Lewis Wright detailed records of each property. Those records are kept up-to-date by property inspections for building consents, subdivisions and sales analysis.
Lewis Wright make a detailed review of all relevant sales to ensure that the new value fairly represents the market as it was on 1 September 2020.
The rating valuation will factor any impact Covid may have had on rural, commercial and residential properties in the Gisborne district as at 1 September 2020.
The timeline for revaluation process:
1 September 2020 - revaluation date
4 December 2020 - Office of Valuer General approval
11 December 2020 - valuation notices issued.
29 January 2021 - objection period closed at 5pm
A rating value is assigned to every property in New Zealand as required by law.
A mass-appraisal approach is used to calculate rating values. All relevant property sales that occurred in an area around the date of the last revaluation are considered.
By using a local valuation service provider this ensures a more robust review of values and trends.
Non-market sales are identified and rejected. Then, a market trend is established and applied to similar properties in the area.
Supplement information of individual properties is also used, including issued building consents and subdivisions etc.
Other aspects are also considered to value your property, but are not limited to:
- Quality of the construction
- Views / outlook
- Access (drive on)
- Garaging / off street parking
- Other buildings or notable features
- Sun (aspect)
- Modernisation (kitchen and bathrooms)
- Number of bedrooms / bathrooms
- Access to local transport and amenities
- Street appeal
Maori freehold land value is discounted before it gets used for rating purposes. See more information about Maori freehold land
For more information, see the Q&A section