Cost of Owning a House

The Cost of owning a house in New Zealand - Rates

The information below is based on Christchurch City Council information.
Rates are set annually in order to fund the net cost of running the city. The rate requirement is determined by the Long Term Council Community Plan, (or the Annual Plan) as part of the budgeting process and is then assessed on each property.

Glossary of rates terms

Capital Value
A reflection of a property's market value, being the amount that a willing seller can expect to get at 1 August 2004 from a willing prudent purchaser. This excludes the values of any chattels such as carpets, drapes and light fittings.

Land Value
What a willing seller could expect to get if the bare land was sold at 1 August 2004, to a willing, prudent buyer. This valuation can includes more than a stretch of bare dirt however and encompasses excavation work, drainage and retaining walls

Valuation
The valuation is compiled by statute, under the Rating Valuations Act 1998, mainly as a uniform basis for levying local authority and regional council rates. They also serve as a useful guide for property owners and other interested parties, which is impartial and independently assessed. In Christchurch, valuations are issued every three years, and are carried out by State Valuation Office.

Value of Improvements
This is calculated by subtracting the land value from the capital value, and represents the extra value the buildings and other developments give to the land. For a residential property this figure would generally represent the value of the house, garage and any site development

Valuations

The Council rates are allocated to properties substantially on the basis of capital values.
Under both the Rating Valuations Act 1998 and the Local Government (Rating) Act 2002, the Christchurch City Council is required to value all properties for rating purposes.

The Council has engaged professional, independent valuers to determine capital values. This ensures an appropriate separation between value setting and rating policies. Our valuer is State Valuation Office (ph: 377 6431).

A rating valuation (also known as Capital Value) reflects the property's market value at the date of the valuation. Does not include chattels (e.g. carpets, drapes, light fittings), stock, crops, machinery or trees. This is then broken down to land and improvement value.

The value of the land is defined as the probable price that would be paid for the bare land. This includes any development work that may have been carried out (eg drainage, excavation, filling, retaining walls, clearing of vegetation).

The value of improvements is calculated by subtracting the land value from the capital value, and represents the extra value the buildings and other developments give to the land. For a residential property this figure would generally represent the value of the house, garage and any site development.

When the valuations are released, there is an opportunity to object to the valuation. This is for a set period of time, usually 6 weeks from the release of the valuation. If you require a valuation to be done earlier than this, then you would need to hire an independent valuer to do this. This valuation would not be added to our files and would not be used for rating purposes.

Changes to Valuations within the three-year valuation period
The values for a property may be amended at any time as a result of significant change to the improvements, generally as a result of a building consent or as a result of subdivision.

Below is an idea of how the Christchurch City Council would use their rates income for 2004/2005

In the 2004/2005 rating year the rates were portioned in the following way:

http://ratesinfo.ccc.govt.nz/