Rating objection: land value, capital value and a neighbouring sale
A 2024 rating revaluation has increased the capital value of a Christchurch industrial property from $1.70m to $2.35m. The property has a 1,800 m² site and a 900 m² warehouse built in 2005; the new rating values show land value $1.10m and value of improvements $1.25m. The owner has a neighbouring sale from 2023 at $2.00m; that site is 2,200 m², zoned industrial but with a 1,200 m² older building and a different effective date. The council's valuer adopted $650/m² for land and $1,100/m² for improvements. The owner lodges an objection claiming the capital value should be $2.00m and asks you to support it. The objection deadline is 20 working days after the rating notice; the owner has 12 working days left. The property is leased at $180,000 net per annum, and market rent is $200,000 net.
1. Assess the merits of the objection and the evidence you would need before supporting it.
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A rating objection is not an appeal against the size of the increase. The question is whether the new capital value is outside the acceptable range of market value at the relevant effective date, applying the statutory definitions and the council's level of value. The owner's proposed $2.00m must be tested, not simply repeated.
The neighbouring 2023 sale is relevant but not directly comparable. It has a larger site (2,200 m² against 1,800 m²), a larger but older building (1,200 m² against 900 m²), and a different sale date. Adjust for land area, building area, age, condition, location, zoning and time. If land is analysed at about $650/m², the extra 400 m² is worth roughly $260,000 before other adjustments. The older building may be at a lower rate per m². After adjustments, the sale may support a value above or below $2.00m; it does not automatically prove the owner's figure.
Check the council's land rate and building rate against other industrial sales and rentals. Use the income approach as a cross-check: market rent of $200,000 capitalised at a market yield gives an indicative value. At $2.35m the implied yield is about 8.5%; at $2.00m it is about 10%. Consider whether 8.5% is consistent with the market for this quality and lease profile. The passing rent of $180,000 is not the rating basis, but it is relevant evidence of the lease's effect on marketability. Request the council valuer's report and comparable sales before forming a view.
2. How would you analyse the neighbouring sale and reconcile it with the council's figures?
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Analyse the sale in a grid. Confirm it was arm's length, unconditional and settled; check for GST, chattels, related-party terms or leaseback. Adjust the sale price for time to the effective date, then for site area, building area, building age/condition, yard, access, seismic status and zoning. Do not use a single unadjusted rate per square metre of land or building.
If the subject's land rate is $650/m² and building rate $1,100/m², test those against the adjusted sale. The subject's land value of $1.10m is 1,800 m² at about $611/m², close to the council's rate. The improvements value of $1.25m is about $1,389/m² of building, higher than the council's stated $1,100/m², which may reflect the building's age and condition or a different measurement basis. Check whether the council has applied the rates consistently and whether the building area is gross or net.
Reconcile the income cross-check with the sales. If the adjusted sale indicates $2.10m–$2.25m and the income approach indicates a similar range, the council's $2.35m may be at the top or outside the range. If the evidence supports $2.25m–$2.40m, the objection is weak. Support the objection only if you can show a material overstatement, not merely that the owner prefers $2.00m. Present a reasoned range and explain the weight given to each approach.
3. What process should the owner follow, and what are the risks of proceeding?
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Advise the owner to lodge the objection with the territorial authority before the statutory deadline. The notice should identify the property, the valuation objected to, the grounds and the evidence relied on. Do not wait for further information if the deadline is close; lodge on time and supplement later. The period is commonly 20 working days, but the notice should be checked for the exact date.
Ask the council valuer for the valuation report, the comparable sales and the rating basis. Many objections are resolved by discussion and correction. If not, the objection may proceed to the Land Valuation Tribunal. Explain the costs, time, uncertainty and the risk of an order for costs. The owner should understand that the tribunal may confirm, reduce or even increase the value; the objection is not a one-way bet.
As a registered valuer, provide evidence that is independent and transparent. Do not become an advocate for the owner's desired figure. If the evidence does not support $2.00m, say so and advise against proceeding on that basis. Consider whether the objection should be narrowed to the land value or improvements value rather than the total capital value. Keep a written record of advice and instructions.