The Land Valuation Act 2010 came into effect in September 2010 and repealed the Valuation of Land Act 1994. (The Act).
The Act set out a new valuation methodology for the assessment of the value of a parcel of land from an "unimproved value" to a "site value", for non-rural land only.
The unimproved value required land to be assessed in its natural state, although surrounding infrastructure was taken into account.
Site value on the other hand considers the value of the land but excludes all non-site improvements such as buildings. Site improvements include clearing of vegetation, reclamation by drainage or filling including retaining works and underground drainage. However, footings or foundations are not a site improvement.
Site improvements such as land reclamation by drainage or filling or underground drainage can have high inherent costs and a major effect on value by bringing unproductive land into a developable state.
Foreseeing that many industrial and commercial sites could have substantial increases in value in going from an unimproved value to a site value, the Act provides for amelioration of the impact by two methods which will phase in the increase. This is achieved by two formulations, namely, the site improvement deduction and the off-set allowance.
The off-set allowance applies where the difference between the site value and the unimproved value is greater than $1M. A formula set out in the Act provides for the difference to be phased in over 12 years.
The site improvement deduction method is available to the owner who made the site improvements during the previous 12 years. An owner must make application for this deduction and provide the evidence set out in the Act. The deduction equates to the value of the site improvements for the part of the 12 year period that has not expired. So if site improvements were made in the last three years, the deduction will be for the next nine years, or until sold.
The election of the site deduction method over the offset allowance rests with the land owner who must write to the department (with supporting evidence of costs) within the 60 day objection period. Valuation Notices will now be issued by 30 June 2011, instead of 31 March 2011, so that the department can fully assess the effects of recent extreme weather events.
The Act also changes the objection and appeals process and brings back the position of an independent Valuer-General.
This article does not constitute legal advice nor is it a full explanation of the new Act. If you would like further information or to discuss the issues above please contact:
Marcus Johnson
Director
(07) 3233 9999
MarcusJ@mccarthydurie.com.au
Or
Ian Neil
Director
(07) 3370 5100
IanN@mccarthydurie.com.au
