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Rating Values Update & Deposit Constraints



RATING VALUES UPDATE

All Dunedin properties were re-valued for rating purposes in July. Home-owners will be receiving their revised capital valuations in November.

Rating valuations are carried out every three years in Dunedin. The city council engages Quotable Value New Zealand to do this work. QV values each property for market value (excluding chattels). It is very likely this year that many property owners will discover their properties have increased in value substantially since 2013, reflecting the upward swing in the market, especially over the past 12 months. But a rise in your property’s capital value does not necessarily mean your rates will increase. See the following on the Dunedin City Council web site for a fuller explanation: http://www.dunedin.govt.nz/services/rates-information/general-valuations-2016

Although it is becoming more widely accepted that rating values are not market values (especially when they are three years old), some property owners selling between now and when their new rating valuations arrive might consider obtaining a registered valuation, particularly if they think their 2013 rating value is very low. There would be little point now in seeking a revised rating value from Quotable Value because it would be a revision as if the property were valued in July 2013.  (See my blog Clarifying Capital Valuations Parts 1 & 2)

Remember, though, that if your new 2016 rating value is not what you believe it should be, either too low or too high, you have around four weeks to appeal at no cost. You will need to have good reasons if the appeal is to be successful. For example, you might believe your property’s value should be higher because of substantial improvements carried out that did not require council permission, have not been recorded by the council and thus not taken into account by QV.

DEPOSIT CONSTRAINTS

The Reserve Bank’s edict that buyers purchasing investment properties must have a 40% deposit from October 1st is already noticeably affecting inquiry on existing investment property. I have heard of several deals which failed to confirm because of the restriction, already being observed by the banks.

This broad brush policy, which is really aimed at cooling the hotter markets such as Auckland while hoping to stimulate building activity, will limit younger, less well-heeled investors from entering the investment market. Consider now that a $500,000 investment property will require a deposit or equity of $200,000, a sum well beyond the reach of most budding entrepreneurs. One possible way round this is to build, which requires a lower level of deposit, 20%, but check your own situation with your bank. http://www.rbnz.govt.nz/education/at-a-glance-series/lvr-restrictions-at-a-glance

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