What unimproved value means – and why you should care

Wendy Johnson 4 February 2019 4

Ryan Broadhurst from Belle Property. Photo: Supplied.

You’ve received your annual rates from the ACT Government but are puzzled by the ‘unimproved value’ figure. What does it mean exactly? How does the government calculate it? How often is it revised? Should you even care?

“These are all good questions,” says real estate agent Ryan Broadhurst, from Belle Property. “One thing is for sure, you should take note of unimproved value because government uses it to calculate your rates and land tax.”

To demystify the topic, it’s important to understand what unimproved value is.

“Essentially it’s the dollar figure a block of land is deemed worth without any improvements on it,” says Ryan. “Improvements include buildings, paths, fences, landscaping or other features such as swimming pools. This is different from “full value” or “market value” which does include improvements.”

When you buy a property, you’re paying for the land and the house on that land. This means the higher the unimproved value, the higher the likely purchase price. In Canberra, the unimproved value per square metre varies between suburbs with higher priced properties paying higher square-metre amounts.

Unimproved values are determined by qualified, independent valuers who calculate the value on various factors, including the location of the land and comparable vacant land sales.

“The amount can more than double between, say Tuggeranong, and prime properties in the Inner South, which can pay more than $1,000 a square metre,” says Ryan. “Most purchasers factor the unimproved value in from the beginning, with the figure noted on marketing material. It can help as a bit of a guide on where a property should sit price wise.”

Homeowners should keep an eye on their land values because they can rarely remain the same over time according to the ACT Revenue Office, which reports on its website that “values within the same area and between areas may change, and the prices people are willing to pay when they buy property are good indicators of these changes.”

But what if you own a unit?

“For valuation purposes, the ACT Government treats unit title developments as single properties,” says Ryan. “The difference is that the individual owner doesn’t receive the valuation notice, the owner’s corporation does.”

If an owner believes their unimproved value is incorrect, they can lodge an objection. They must do so within 60 days, however, with the clock ticking from the date they receive their valuation notice. If the deadline is missed, the owner must wait until they receive their next annual valuation notice before taking action.

Objections must be submitted in writing through this contact form on the ACT Revenue Office website or owners can write to the Commissioner for ACT Revenue stating why they object. Owners of a unit in a complex can’t object as an individual. Instead, the owner’s corporation acts on behalf of all unit owners. The ACT Revenue Office assess all objections and responds on the outcome in writing.

Ryan says most home buyers note the unimproved value when making a decision on purchasing a home but ultimately buy based on the features and location of the home itself.

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4 Responses to What unimproved value means – and why you should care
bj_ACT bj_ACT 10:28 am 05 Feb 19

Use of UAV is core to the unfairness of the switch from Stamp Duty to Annual Rates.

Under the old model, much more tax would be paid on a flash mansion that sold for $3 Million than on the $750k sale for the house next door on a bigger block.

Under the new model (using the 10.5 year average house ownership method and checking on the actual sales price, UAV and Rates data in Allhomes) shows that a $500,000 sale on a large block in Kambah, will pay much more tax than a $1 million house and property sale in Nicholls or a $2 million dollar townhouse in Kingston.

The ACT Government should not have simply used the old UAV model for the Stamp Duty to Annual rates switch. Crazy decision not to understand the flow on effects!

Mr Barr needs to factor in the Services, Amenities, Infrastructure, Public Transport, Education institutions available to a property when calculating annual rates.

This is why we now see poorer residents from outer suburban large blocks paying more tax than flash inner city residents with great lifestyle options on small blocks.

Why should the square metre value of your land be the core element in calculating how much tax a household should pay?

    chewy14 chewy14 10:37 pm 05 Feb 19

    This is exactly why the change in ratings to a land taxing model works well, it encourages far more efficient use of land by making those people in Kambah and the closer inner areas use their blocks more efficiently and encouraging redevelopment.

    Kambah isn’t an “outer” suburb and the above is exactly what is occurring in Kambah and similar suburbs with many sales of newer redevloped houses nearing that $1million Nicholls house you’re talking about and paying similar tax rates.

    The land is where the value and capital growth is, what you’re asking for is that well off inner city land holders be subsidized at the expense of those actual poorer people. People who land bank inappropriate dwellings on bigger blocks shouldn’t make windfall benefits for inefficiently hoarding those large blocks.

    Inner city and apartment dwellers are paying more proportionally for the benefit of owning much smaller land parcels in those areas, which is exactly what the land tax model is already achieving as designed.

    bj_ACT bj_ACT 10:29 am 06 Feb 19

    Surely you are not serious. Almost all of Kambah is zoned for the lowest density level in Canberra and for single dwelling houses. I’ll quote from the Governments own Kambah zoning regulations “Protect the character of established single dwelling housing by limiting the extent of change”.

    If there begins to be rezoning and a large demand by developers for Kambah house blocks for higher density housing, then yes I agree with you and by all means increase the rates. But these residents shouldn’t be paying exhorbitant Rates until their land is actually being regularly used or is zoned for higher density.

    Considering the government took out public transport routes, closed 3 primary schools and 2 pre schools in the suburb, I’m not counting on a sudden rush of young families to knock down existing houses and exploit the theoretical UAV values.

    I still contend that the ACT should follow some other Australian states and other countries and use the Improved value method.

    I also like the South Australian model of “property is valued on its actual use not its best potential use”

    chewy14 chewy14 9:30 pm 06 Feb 19

    I didn’t mention rezoning anywhere, I said redevelopment. That doesn’t necessarily mean high density.

    Although it won’t actually be that long until significant areas are rezoned and there are actually already large areas zoned RZ2.

    If these other areas were actually zoned for higher density, the land values and rates would be significantly higher right now.

    So yes, these people should be paying higher rates as it encourages them to use their land more efficiently and makes it easier to move to more appropriate accommodation if they cant afford it. Why should younger poorer people be flung to the outer suburbs or stuck in unsuitable accommodation whilst older, wealthy land holders hold on to unsuitable dwellings?

    An improved value model would be the single worst thing we could do. It would encourage slums and disincentivise anyone to renovate or improve their home.

    I dont know about you, but I’d prefer that our inner city areas weren’t encouraged to be full of rundown, shabby houses. Well anymore than they already are, that is.

    I know this is very personal for you, but you need to look at the bigger picture and what’s best for us as a whole.

    BTW, have you actually driven around Kambah lately? Along with the Fluffy blocks, there is already significant redevelopment occurring, with families most definitely knocking down or improving these houses. It’s already working.

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