The major source of revenue for local government is the rating system. Rates are levied on almost all privately owned land and buildings in the State. In effect, all land and buildings are rateable, unless coming within the prescribed exceptions named in section 87 of the Local Government Act 1993 (LGA) such as public reserves and park lands, land used for churches, hospitals, libraries or recreation grounds.
The most important rate is the ‘general rate’. Normally the rate is levied in a uniform manner over the whole council area but councils have power to levy a separate rate for different classes of land. Councils have power also to fix ‘special rates’. Before a council is entitled to recover rates it must issue a rate notice which complies with the requirements of the LGA. Failure to issue a proper notice will jeopardise its ability to recover payment.
In each financial year the council must declare the rates for that year.
Valuation of Land
All rates and taxes in respect of land or buildings are based on an assessment of the value of the land and buildings. The Valuer-General usually values land in three ways:
- Land Value - broadly speaking, this is the value of the land itself disregarding a house or any other improvements upon it.
- Assessed Annual Value - this is an amount equal to the rent which the land and buildings might be expected to realise if rented.
- Capital Value – this is the value the land might be expected to realise if sold.
Values are determined on the basis of sales of comparable property which have been recently made. The value of one house in a street or in a suburb will be affected by the sales price of other houses in that street or suburb.
Values are also based on the ‘highest and best use’ of the land or buildings which is legally possible or which may become legally possible. This means that a piece of land with one house upon it in a zone which permits residential flats may be valued as if it had residential flats upon it. Or a large block of land may be valued at the price for which it could be sold, if subdivided into smaller blocks. These valuation techniques have led to increases in assessments in recent years.
Councils have power to base their rates upon any of the above modes of valuation or upon a differential value approved by the Minister. The LGA permits either method of assessment as the base on which to levy rates but if a council wishes to change from one form of assessment to another, it must pass a special resolution accordingly.
Challenging a Valuation
The Valuation of Land Act 2001 requires notice of the valuation made by the Valuer-General to be given to each landowner. It is possible to lodge an objection with the Valuer-General against an increased (or decreased) valuation. The objection must be lodged in writing within one month after service of the valuation notice and must contain a full and detailed statement of the grounds of the objection. The Valuer-General may then alter the valuation or disallow the objection. If the objection is disallowed, or is allowed only in part, there is a right to require reference of the objection to the Land Valuation Court. The appeal must be instituted within one month of the service of the notice from the Valuer-General disallowing objection.
Enforcing payment of Rates
Once levied, the rates form a charge on the land. Councils have various powers to enforce payment of rates, which include a power of sale in cases where rates have not been paid for three years or more. Late payment of rates automatically results in a fine equal to three percent of the amount of the rate, plus interest.
A certificate may be obtained from a local council stating that there are no rates or other money outstanding on a parcel of land and this certificate is deemed to be conclusive proof of that fact. It is desirable for a purchaser to obtain such a certificate.