Valuation anomalies have landlords paying unnecessarily higher rates
Inaccurate rating valuations are hitting Hutt City commercial property owners in the bank account, according to a leading real estate valuer.
Chris Orchard from Bayleys Valuations says that following the recent release of new rating valuations for commercial real estate throughout Hutt City, it has quickly become evident that there were examples of commercial and industrial property owners and occupiers who were paying excessive rates.
Mr Orchard said that as values for many commercial and industrial properties had steadily fallen over the past three years, some rating valuations were now considerably higher than what the properties were actually worth according to sales.
He cited two examples where rateable values were far in excess of actual property values set by public auctions, and tenders.. Firstly a 2158 square metre service station property in Lower Hutt with a rating value of $1.3million which sold in October 2010 for $525,000. And secondly, a 700 square metre industrial unit in Raroa Road, Lower Hutt, which has a rating value of $1.1million but which sold for $770,000.
“Many commercial and industrial properties in the areas of Petone and Lower Hutt were purchased by their present owners some 10 – 20 years ago. Some of those owners now have little idea what their properties are currently worth outside of the Hutt City valuation,” Mr Orchard said.
“Sales data available through the various land registry databases is showing an increasing pattern of discrepancies between actual market value and the council’s perceived value for rating purposes.
“This means that for every $100,000 that a property is overvalued, the extra rates burden is in the order of $1000 per annum. With rating valuations only reviewed on a three yearly basis, any excess is fixed for the full three years. A $1000 excess therefore becomes $3000 over the three year term – and in the current tight business climate that is a substantial sum for many businesses.”
Mr Orchard said that to rectify the anomaly, commercial property owners had to lodge an official objection with Quotable Value NZ Ltd - the company charged with undertaking rating valuations for Hutt City Council. The last date for lodging objections was January 18, 2011.
“With Christmas and New Year taking a large slice out of the intervening period between now and January 18, the onus is on landlords to quickly manage this objection lodgement process by having their property assessed by a registered valuer,” Mr Orchard said.