Council Rates: Who Pays More? The land speculator or family home?

Under Capital Improved Valuation (CIV)/ Net Annual Value (NAV) the land speculator typically gets a 30% discount in rates over the family home.

Capital Improved Valuation penalises homeowners for improvements to their house.

Look at your rating notice to see what percentage your improvements account for. That is the subsidy you are giving your neighbouring land banker – making it cheaper for them to sit and wait for easy profits. See how many empty properties are in your suburb (PDF) – you’d be surprised!

Land speculation pushes up the price of living and leads to sprawl, putting pressure on council rates to build more infrastructure.

No wonder people are mad – CIV/ NAV penalises home owners for putting in a new kitchen or water tank.

A return to Site Value Rating (SVR) would see both blocks of land (the family home and idle land) paying the same amount in rates (for a given land size).

The property lobby want to remove this tax they can’t avoid and replace it with a higher GST. GST is regressive – a person on $20,000 pays the same as someone on $20 million. Don’t fall for it! The same principle applies to flat garbage fees and the growth of ‘user pays’.

SVR is fairer because those who live in better locations pay a little more than those living next to the freeway. Prime locations sell for a higher capital gain. Those closest to a new playground will benefit in rising land values. It makes sense they pay a little more of this windfall back to the community over 20 years via SVR than making those next to the freeway pay the same amount.

The centuries old Site Value Rating rating system is based on common sense. Yearly land valuations are needed to curtail property valuation surprises.

Instead, there is a dangerous trend towards user pays. User pays is a sneaky way for the wealthy to pass the buck. We all benefit – just some more than others according to their location. Is that a skill or a privilege?

This document is part of a Council candidate survey we are conducting to assist voters in their decision making. Which candidate reflects your values? Results to be published mid-October.

Further Reading:

Feel free to ask any questions via our survey email or call 03 9670 2754.