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GWM Lawyers and ConveyancersAustralian Law Articles - PropertyPoor Land Valuations from the NSW Valuer GeneralThe Valuer General's valuations of all land in NSW are used to calculate Land Tax liability and for fixing the value of local Council rates. This month the High Court unanimously found that the Valuer General had not complied with its statutory requirements in its method of valuing land and that its methods had led to it overvaluing land. This overvaluation had then led to increased Council rates and Land Tax liabilities being incurred. Land Tax is a State tax applied when:
Until the High Court decision the Valuer General valued land by reference to recent sales of vacant land in the area. The problem with this method was that vacant land in some areas was very scarce. Basic supply and demand economics meant that the few blocks of vacant land sold were at inflated prices. It was argued that the inflated value of vacant blocks was an unfair basis on which to value built upon land. The High Court said, in polite legal jargon, that the Valuer General's approach was ludicrous. When valuing land it is wrong to simply consider vacant land values while ignoring other relevant factors stating that a fair estimate of unimproved value could only be made "on the basis of a fair, that is to say, a reasonably representative group of comparable sales". The decision is a two edged sword as some values may increase and others may decrease. It appears certain that the Valuer General will be unable to apply a "blanket valuation" approach based on a small sample of vacant land, but will need to look at a greater range of comparable recent sales - including built upon land sales. Comprehensive land valuations are carried out every 3 years to update valuations for Land Tax purposes. The last comprehensive valuations in the Hastings local government area were carried out in 2000. Updated valuations should be carried out and notified to land owners during 2003. Local Council rates and Land Tax liabilities will depend upon those valuations. Increased valuations potentially flow into large increases in Council rates and Land Tax liabilities.
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