Rates And Daylight Robbery: Ben’s Barometer August 2018
Wellington City Council Rates
For those living within the Wellington City Council boundary, you should receive your new rating value sometime soon. Two things are likely to happen:
- You are likely to feel very rich as your paper wealth increases by an estimated 30-50%
- You can expect to pay more rates
Higher rates are easier to swallow when you feel that personal wealth has increased. But in reality, it is a false economy. Let’s take a look at rates.
Rating Valuation Act 1998
It’s been twenty years since the Rating Valuation Act came into effect. These set out the rules for how rating valuations (RV’s) are produced and how councils can use these RV’s. The Act was implemented after the disestablishment of the Government Valuation (GV) department whose function, amongst other things, had been to provide all GV’s to councils. In the days of the GV, regular house inspections were carried out on all residential homes and the GV was roughly linked to the market value. Post the Act being implemented, the relevance of these values has diminished as they are now determined by a computer using aggression analysis.
Do higher rating values mean more rates?
Councils require a certain amount of money to be generated from residential property. You (your property) is required to contribute a proportion of that total and that amount as determined by your RV. An increase in your RV has little impact on what your proportion of the rates pool will be. This is because all properties are likely to have moved similarly. But an increase
in perceived wealth does make a higher rate bill easier to swallow! Watch out, this year it is likely to be a biggy.
Do we pay too much in rates?
Loaded question. In Wellington we are lucky that commercial property helps keep our residential rates downs. To highlight this fact, a house in Masterton with an RV of $430K pays $3,574 pa in rates and a house in Wellington with an RV of $590K pays $3,499.88 pa in rates. You could argue that many of the services originally provided by councils has diminished and that we have moved to a user pays model. From my perspective, I feel lucky that we have drinking water piped into my house and my waste removed, which is more than can be said for many parts of the world.
Are there alternative ways to raise property tax?
One of the best alternative property taxes I know of was the ‘window tax’ which was used in the UK. The more windows you had, the more tax you paid. Interestingly this is where the term ‘daylight robbery’ stemmed from! In a more modern-day example, last month the Hamilton City Council was discussing the use of a toilet tax to help fund a new sewage pipe and processing plant.
The Wellington Market
Demand continues to outstrip supply with stock levels incredibly low. Buyer patterns have changed recently with classically popular properties gaining the majority of the attention and properties outside of that sitting for much longer periods.
The longer I am in the property market, the less inclined I am to make bold predictions. We operate in a small market within New Zealand and an even smaller market internationally. But with values in major Australian cities way off those of even a year ago, and the gloss long gone off Auckland, it will be interesting to see what the spring market brings.
WELLINGTON MARKET QUICK FACTS
Average sale price by Ward:
Whats on this August in Wellington:
- New Zealand International Film Festival (NZIFF) – Embassy Theatre, 10 Kent Terrace, Mt Victoria, Wellington
The New Zealand International Film Festival (NZIFF) is a celebration of film on the finest screens in New Zealand. The event is the cultural highlight of winter in 13 towns and cities around the country, making a great occasion out of movie-going by presenting the latest and best films from around the world. Read more or to buy tickets visit www.nziff.co.nz
- Chocolate Factory Tours 2018 – Wellington Chocolate Factory, 5 Eva St, Te Aro, Wellington
Saturday 4 August 2018 11:00am – 12:00pm. Come join us to learn about the world of chocolate making, as this tour introduces you to the entire process of making chocolate at the Wellington Chocolate Factory, Aotearoa’s first open to the public ‘bean-to-bar’ chocolate factory.
- Music of the Night – The Hunter Lounge, Victoria University, 1 Kelburn Parade, Kelburn, Wellington
Friday 17 August 2018 8:30pm – 11:30pm. The annual Te Kōkī Music Society Ball returns in 2018 as ‘Music of the Night’. This year The Hunter Lounge will be hosting our event on Friday 17th August, and tunes will be provided by the groovy Jimmy and the Jets.
For a list of events and more information click here
If you, or anyone you know, could benefit from a considered market assessment by Wellington’s only licensed agent and registered property valuer, please do not hesitate to call. We are always very happy to help.