A Case Study Concerning Land Valuation In Australia (Case Study Sample)

LAND VALUATION
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We can define the site value of land as the worth of the land, if an estate holds it in fee simple without acquiring it by means of a mortgage, lease, or other forms of credit, during valuation before the owner sells it to an interested party on fair terms and conditions. The site value also considers the improvements the occupier made on the land (Valuation of Land Act 1960, 2017).
We can estimate the site value of a parcel of land by considering all ongoing operations on the piece of land and materials that were necessary for the development of the land. Moreover, all the tasks that an owner does on the land and the relevant materials should be used to improve the state of the land, not to cause the degeneration of the piece of land in any way (Valuation of Land Act 1960, 2017). Additionally, the benefits that result from the work various entities perform on the land should still be in existence when the valuers initiate the valuation process. However, the site value of the land is not influenced by material or labour that a statutory public organization or the crown sourced using its resources to develop the land (Valuation of Land Act 1960, 2017).
Even though structural improvements do not influence the site value, we must consider other factors when calculating the land value. First, the destruction or eradication of vegetation on the land or the extraction of earth, stone, rocks, or timber from the land (COUNCIL RATES EXPLAINED, 2015). Secondly, projects that involve filling of water in the land with the aid of structures that the occupier erected to retain the water or drainage of a pool of water from the piece of land in question. Thirdly, measures that a developer takes to control soil erosion or the modification of a waterway passing through the land (COUNCIL RATES EXPLAINED, 2015).
The occupiers or the owners of any piece of land must prove that any improvements, that the valuers deem worthy of consideration in the estimation of site value, were made by the titleholder or they financed the efforts. Additionally, the time since the implementation of the improvements should not exceed fifteen years (COUNCIL RATES EXPLAINED, 2015).
The capital improved value of land is the price of the land and capital improvements that the occupier has made on the land since its purchase and buildings on the property. We can also describe it as the total market value of the land. The CIV is useful in the computation of vacant residential land tax because the tax authorities multiply it with the prevailing tax rate(Valuation of Land Act 1960, 2017).
It might be important to determine the capital improved value and site value of a portion of land, which is part of a larger property, which belongs to the person who is liable to rates. In, this case, the Site Value, and the Capital Improved value of the smaller part of the land should be directly proportional to the Site Value and the Capital Improved value of the entire property (Valuation of Land Act 1960, 2017). Moreover, it might be necessary to calculate the site value or the capital improved value of land, which is non-ratable and leviable before the authorities impose a fire services levy, but the area of the land is a fraction of a greater property. To achieve this, we estimate the site value and the capital improved values while ensuring that they are proportional to the corresponding site value and the capital improved values of the entire land (COUNCIL RATES EXPLAINED, 2015).
Furthermore, it might be necessary to calculate the site value or the capital improved value of land, which is non-ratable and non-leviable before the authorities impose a land tax under the Land Tax Act 2005(COUNCIL RATES EXPLAINED, 2015), but the area of the land is a fraction of a greater property. To achieve this, we estimate the site value and the capital improved values while ensuring that they are proportional to the corresponding site value and the capital improved values of the entire land (COUNCIL RATES EXPLAINED, 2015).
The net annual value of a piece of land implies the approximate annual worth of the land of five percent of the capital improved value of the land (COUNCIL RATES EXPLAINED, 2015). We assume that five percent of the capital improved value of the land is the net annual value if the rateable land is: farmland, unit, a house apart from a boarding house, lodging house and an apartment house, that the owner exclusively occupies and uses as a residence; a house, flat or unit (other than an apartment house, lodging house or boarding house) that a tenant exclusively occupies and uses as residence; a residential house that is in a retirement village(Valuation of Land Act 1960, 2017). For lands, reserves and parklands that belong to the crown or are under the ownership of a statutory authority and serve as pastoral zones, the net annual value is the estimated annual worth of the land (Valuation of Land Act 1960, 2017).
TASK 2 (worth 40 marks): PART A
1 Calculation of site value.
The site value of land is the worth of the land without structural improvements but including improvements such as the destruction or eradication of vegetation on the land or the extraction of earth, stone, rocks, or timber from the land. Secondly, projects that involve filling of water in the land with the aid of structures that the occupier erected to retain the water or drainage of a pool of water from the piece of land in question. Thirdly, measures that a developer takes to control soil erosion or the modification of a waterway passing through the land (Valuation of Land Act 1960, 2017).
Therefore, in calculating site value, we consider the site works and the land value.
Site Works (filling & drainage): $50,000
Land Values (from similar vacant land transactions): $2,000 per square meter
Thus, site value = 50000 +(2000×300)= $650000
2 Calculation of capital improved value.
The capital improved value of land is the price of the land and capital improvements that the occupier has made on the land since its purchase and buildings on the property.
Therefore, the CIV is the sum of the site value and the cost of building on the land (Valuation of Land Act 1960, 2017).
=$650000+$1,000,000= $1,600,000.
3 Calculation of the Net annual value.
The net annual value is five percent of the capital improved value (Valuation of Land Act 1960, 2017), therefore:
NAV= 0.05×$1,600,000. = $80000
4 Calculation of the estimated annual value.
The EAV is the reasonable rent that the land can let annually with the exclusion of maintenance expenses, the tenant rates, tenant taxes and the land tax that the landowner is liable for (Valuation of Land Act 1960, 2017).
capitilization rate=Net operating incomeValue(Noradarealestate.com, 2018).
The net operating income is the sum of the passing rent and the rental value of the land
=Passing Rent pa: $100,000+600×175=205000
capitilization rate=Net operating incomeValue
0.06=205000Value
Therefore,
value=2050000.06= 3,416,666.67.
To obtain EAV we subtract the maintenance expenses from the value.
Annual Expenses/Outgoings
Council Rates: $4,000

Water Rates: $2,000

Land Tax:$2,000

Insurance:$2,000

Electricity:$2,000

Security:$1,000

Cleaning:$1,000

Maintenance: $1,500

Depreciation:$ 500

EAV =3,416,666.67- (4000+2000+2000+2000+2000+1000+1000+1500+500)
= $3400,666.67
PART B
An individual who has received a notice of valuation is free to lodge an objection to the valuation if they perceive the valuation, which is essential for determining the tax that the authorities should levy to the landowner, to be unfair. The land valuation act gives a procedure and conditions that the owner should satisfy when lodging the objection (Celebrating 25 years of the Land Acquisition and Compensation Act 1986, 2011).
When a valuation notice distresses a person, the individual should present a written complaint to the valuation authority that is responsible for giving the valuation notice (Valuation of Land Act 1960, 2017). The objection must state clearly the grounds for objection which include: the value that the notice specifies is either too low or too high ; separate valuation was performed on parcels of land that should have been valued as a single piece of land ; inaccurate apportionment of valuation; incorrect apportionment of interests that separate entities hold on the piece of land; the notice of valuation identifies the wrong person as the owner of the land and the notice specifies incorrect dimensions of the area of the land(Valuation of Land Act 1960, 2017).
After the landowner drafts the objection, they should present it within sixty days after the authorities delivered the notice. However, if the person did not receive the valuation notice from the valuation authority, the owner should file the objection within four months after getting the notice. The distressed party can lodge the objective through online means after attaching all relevant documents or by filling a form that the local authorities provide (Celebrating 25 years of the Land Acquisition and Compensation Act 1986, 2011). Within thirty days after the land owner delivers the objection, the valuer to whom the objection addresses should send the prescribed data regarding the disputed valuation. Upon receipt of the relevant information, the objector might send a written report about the valuation to the valuation authority (Valuation of Land Act 1960, 2017).
Next, the objection is determined with the guidance of the regulations. First, the valuation authority sends the objection to the land valuer. The valuer will then invite the objector ...