07 September 2010

Queensland's new land valuation system - the Land Valuation Bill 2010

Queensland's system of land valuation is set for change with the introduction into State Parliament of the Land Valuation Bill 2010 on 1 September 2010, which repeals the Valuation of Land Act 1944.

New valuation methodology for non-rural land

The Bill requires the Valuer-General to ascertain the site value of all non-rural land in Queensland. The site value approach assumes that all the existing surrounding development, infrastructure and services around the subject land at the date of valuation are in place, but also includes as part of the assessed value the ground improvements which have been undertaken to the land (eg. clearing, levelling, drainage, filling, reclamation, retaining walls, stone picking and contamination).

In effect, the site value requires a valuer to determine the value of improved land assuming that the land consists of a flat building pad ready to develop.

The site value methodology is similar to that currently operating in New South Wales and Victoria.

The Bill does not change the valuation methodology for unimproved land and requires the unimproved value of rural land to be ascertained.

Shopping centre valuation formula removed

The shopping centre valuation formula included in the Valuation of Land Act has been removed. Shopping centres will now be valued adopting the site value methodology.

Annual valuation cycle

The Valuation of Land Act currently requires each local government area to be valued at least once every five years. The Bill requires valuations to be undertaken annually, except in exceptional circumstances.

Removal of intangible elements

The Bill specifically excludes the value of leases, agreements for lease, mortgages or other charges from the definition of both site value and unimproved value.

The new definition of site improvements makes it clear that all improvements that are not defined as site improvements are excluded from the calculation of site value.

Allowance for new site improvements carried out

The Bill requires the Valuer-General to determine a reasonable allowance for site works carried out to land after the commencement of the Bill. The Valuer-General is required to deduct the value of these improvements for up to 12 years or upon the sale of the subject land, whichever occurs first.

This allowance means that the cost of site works will effectively be excluded from the site value during the preparation of land for development.

Allowance for existing site improvements

The Bill includes provisions which limit the impact of the change from unimproved value to site value on properties that have significant site works. Where there is an increase in value of more than $1million between the existing unimproved value and the new site value in the first year when site value was introduced, the difference will be offset in equal instalments over a 12 year period.

New objections and appeals process

The time for lodging an objection has been extended from 45 days to 60 days and the time for lodging an appeal has been extended from 42 days to 60 days.

The requirements of a properly made objection in the Valuation of Land Act 1944 have been retained, but some of the more onerous provisions (for example, the requirement to provide valuation reports and depreciation schedules when lodging an objection) have been removed.

The grounds of appeal are no longer restricted to those grounds of objections included in the initial notice of objection. The Bill includes a requirement that the Department must offer the owner of land with a site value of greater than $5million an objection conference if they lodge an objection. There is also a requirement that documents be provided by the Department and by the owner in relation to their respective valuations for the objection conference.

The changes should simplify the objection process and allow for the speedy resolution of the objections at the objection stage.

Appointment of Valuer-General

The Department has appointed a Valuer-General who is now responsible for the administration of the valuations in Queensland, and is responsible for issuing valuations and handling objections.

The Bill provides that the Valuer-General is to be truly independent, and can only be removed from office by the Governor in Council in certain circumstances.

Conclusion

It is proposed that the valuations to be issued as at 1 October 2010 will be issued under the Land Valuation Bill 2010 and that those valuations will be carried out in accordance with the new system contained in the Bill. We expect that the Bill will be passed in the next parliamentary sitting starting on Tuesday, 14 September 2010.

The valuations as at 1 October 2010 will take effect for the financial year commencing 1 July 2011 and will be issued before 31March 2011.

Disclaimer
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.
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