Property Valuation Tools: Understanding Government Valuations (GV), Rateable Value (RV), Capital Value (CV)

4 October, 2023 | Kandice Reilly

When it comes to trying to assess the value of a property in New Zealand, there are various tools that you can use to help form your assessment, and the property valuations provided by Local Councils are often touted as important factors.

“Priced below CV” or “sold $200K above CV” are common refrains in both real estate advertising and media reporting on the property market. But how are these valuations calculated? And how much weight should you give to them when weighing up how much a property is worth?

In this article we explain this terminology, what they’re designed for, how the valuations are calculated and the key things you need to understand as a potential property seller or purchaser.

Capital Value (CV), Rateable Value (RV) and Government Valuation (GV)
Capital value (CV), Rateable value (RV) and government valuation (GV) are all the same thing.

They all refer to the value of the property set by the local authority/council for the purpose of determining and allocating payable property rates.  In essence it is an estimate of the property’s market value as determined by the local council.

The term Rateable Value comes from the fact that the value is used to determine the rates.

The term Government Value (GV) originates from the fact that the valuations are determined by local Government.

Capital Value is the terminology the Auckland Council currently uses to describe the property valuations they use to assess how local government rates are apportioned.

(Special note – sometimes a person will refer to a registered valuation as an RV. A registered valuation is entirely different, it is conducted by a qualified and licensed valuer and includes an in-person inspection).

 

How is the property value calculated to work out RV/CV/GV?

As the Council does not come out and inspect properties in person, these values are calculated using the data and information that the Council has access to. This information includes analysing:

• Property type
• Location
• Land size & topography
• Zoning regulations
• Floor area
• Consented work (renovations, new build, subdivisions etc.
• Data from comparable sales in the area

The Council uses this information, together with computer models and algorithms are used to come up with an estimated market value. Each Council has their own method for calculating rateable value, however some Councils’ do outsource this work to a valuation service provider (for example Quotable Value New Zealand also known as QV)

The final property value is made up of:

Capital Value (CV)
The council estimates the capital value (CV) (also known as RV or GV) as being the most likely selling price at the date of valuation.

Land Value
It also estimates the Land Value (RV). Which is the most likely selling price of the land if it was vacant (had no buildings etc. on it).

Improvement Value
On the property valuation provided by the council, an amount accounting for the improvements to the land (i.e. buildings, driveways, services such as plumbing and drainage) is listed as the improvement value.

This value is calculated by taking the capital value that the Council has estimated and taking away their estimated land value.

Capital Value – Land Value = Improvement Value

The council also recommends that the improvement value SHOULD NOT be used for assessing how much you should insure a property for.

 

It is important to note that as there is no in-person inspection included in the assessment of the property’s value. The factors used to assess the value are restricted to the limited information that the Council has access to, such as the size of any dwellings on the property, the size of any other structures such as garages or sheds that have been consented, and any other consented improvements such as swimming pools and driveways. This means that the state of the property, the quality of the fixtures and fittings, chattels, recent refurbishments etc. are not included in the valuation assessment.

 

How accurate are the estimates?

Due to the limited amount of information used to make the estimate – i.e., as there is no in-person inspection, two houses side by side that are the same size, but one very run down and one newly renovated, could receive the same rateable value.

As the valuations are only re-assessed every three years, the information used to form the assessment can be out of date. It is useful to check out when the Council completed their reassessment so you can ascertain how old the CV is.

The Councils also make clear that their assessment of an RV or CV is not completed to provide a value for the property to be used for the purposes of buying or selling a property.

In different markets, properties can sell significantly above or below CV depending on the demand. Even within the same market, various factors can cause one property to sell for significantly below CV and one to sell significantly below CV.

It is a tool that can be used in conjunction with other factors to help influence your personal view on how much a property is worth.

 

Challenging the Rateable Value

Property owners have the right to challenge the Rateable Value if they believe it is inaccurate or unfair. The council will only accept objections for a limited amount of time after the re-assessments are issued to property-owners. It can then take up to 18 months or longer for the Council to evaluate your objection.

Only ratepayers can object, and you must provide evidence that supports that the valuation of the property is wrong. This evidence could include recent property sales data, independent valuations, or information about changes in the property that might affect its value. It’s advisable to seek professional advice from a qualified valuer or legal expert when considering a challenge to the Rateable Value.

 

How can you access the rateable valuation of a property?

You can find out the rateable valuation of any property by contacting the Council (even if you are not the property owner). Most Councils have this information available on their websites.

To access this information for a property found in the Auckland Council region, simply visit https://www.aucklandcouncil.govt.nz/property-rates-valuations/Pages/find-property-rates-valuation.aspx

 

As property markets continue to evolve, staying informed about the nuances of property valuation and other property-related concepts is key to making financially sound decisions. If you require expert guidance on property valuation, taxation, or any legal matters related to property, it’s advisable to seek advice from experienced professionals who specialize in New Zealand property law.

At Smith and Partners, we’re committed to guiding you through every step of your property ownership journey. Whether you’re a first-time buyer, a seasoned investor or looking to sell, our experienced team is here to provide expert legal assistance tailored to your needs.

Purchasing property involves various legal intricacies, and we understand that it can be both exciting and overwhelming. Our dedicated professionals specialise in New Zealand property law and have a deep understanding of the nuances in the local market.

Don’t embark on this journey alone. Let us be your trusted partners in ensuring a smooth and successful property transaction. Contact us today to schedule a consultation and discover how we can assist you in making informed decisions, addressing legal requirements, and securing your investment. 

Your dream property is just a call away. Reach out to property law expert Kandice Reilly at 09 837 6884 orkandice.reilly@smithpartners.co.nz.