OPINION: Checking the council capital valuation on your home in Auckland is a bizarre experience.
These valuations are updated every three years by the Auckland Council, which uses them to determine each homeowner’s share in the cost of running the city.
But the language of these valuations can do with a review. It’s confusing, and unnecessarily so.
Take the council’s valuation of a posh house in Auckland’s Epsom suburb, where prices are high as people search for homes in the “double grammar” school zone.
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It comes with three numbers.
The house in question has a capital valuation of $ 2.5 million.
This is the estimated price for which the place would have sold in June last year. Crazy price, but there we are.
Then there is the land value, which was $ 2.15 million. This is the price at which the land would have sold in June last year, provided there was no house on it.
The third number is the “value of improvements”, which was $ 375,000.
It’s that last one that’s the puzzle.
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Checking your board’s capital valuation is a strange experience, mostly because the jargon used is confusing.
A natural reading of those words, foolishly assumed to have a natural meaning, seems to suggest the house on the ground, and the other “improvements” such as retaining walls and driveway, are worth a combined $ 375,000.
Hold on. You could not build a two-story four-bedroom place for it. You will insist on building a lot for it at all.
What is the council talking about?
What the council means by “value of improvements” is the gap between the price of the land and house package, and the land alone.
What would you call it? Does it even need a name?
Why bother to talk about it at all? Why not just have a capital valuation and a land value?
The council gets a fair number of people who are dissatisfied with its valuations. Across the wider Auckland megatropole, just under 7,100 people challenged their valuations, or 12 homeowners out of every 1,000.
RICKY WILSON / Stuff
Gary Osborne complained to the council about his rating, and it has now reduced it by $ 225,000.
Among them was Gary Osborne, a resident of Te Atatu, who made something of a hobby to prove that the valuations on his homes are too high.
Of the objectors, 3178 objected that the valuation was too high, and 3913 claimed that the valuation was too low.
This would later include people who saw the capital valuation as supporting them when they went to sell their homes.
Some may have been spurred on by real estate agents. A few months ago, a brochure ended up in my mailbox from a real estate agent who would help me challenge the board valuation, if I just called him at 0800 ….
Capital values, or taxable values, are often seen in real estate advertisements.
Due to the confusion, however, the council should emphasize that the value of improvements is not the replacement cost of your place, and it is certainly not the sum to specify on your home insurance policy.
Fortunately, any insurer who sees someone trying to insure their place for $ 375,000 will ask a few questions.
The deadline for objecting to your capital valuation is now over, so Aucklanders are stuck with the valuation they now have, which for many people may reflect a higher value than what they can sell their place for.
From the council’s point of view, that would be fine. Rates have been rising at an alarming rate for years, making owning a home in Auckland increasingly expensive.
Homeowners miss out on rate increases much less when they feel their homes are making them richer.