What is CV and why does it matter?
If you’re a homeowner, you may have been waiting on tenterhooks to hear what your property’s CV is. This rating, known as the Capital Value (CV) or the Rateable Value (RV), is determined by your Council every three years, and is used to work out how much you should be paying in rates.
If your client hasn’t been advised of their CV or is curious about one for another property, head to their Council website, such as Auckland Council’s website for example, to find out. There, you can search for an address to find out its land value and the value of any improvements.
While the CV rating of a property can be useful to know, it is also contentious - it’s believed to be an inaccurate reflection of the true market value. To understand how they determine a CV, you need to know how they are calculated.
While a more accurate appraisal of a property would require an individual visit by a valuer to each residence, resources don’t allow for this. So think of the CV as more of a snapshot of the property rather than a thorough assessment. Mass appraisal techniques are relied on, such as what type of property it is (a house or apartment, etc.), how much properties in the vicinity are going for in the market and any changes that have been since the last revaluation (such as renovations).
If a CV rating has now changed, the owner could be up for an increase or decrease in rates. If the property increases by more than the average increase, expect to pay more. But again, it’s not that clear-cut. While the CV plays an important factor in whether the rates bill will cost more, it only contributes to a third of the cost (the rest of which is made up of fixed costs). And although the CV will be of interest to potential buyers of your property, it doesn’t hold that much weight, as it reflects a past evaluation rather than a future prediction.
Homeowners do have the power to object to their CV, but only on the grounds of the valuation being incorrect in their view, rather than them being annoyed at a potential rate hike. If your client is in Auckland for example, Auckland Council is due to finalise their 10-year budget in July 2018 which will influence your clients rates and if they object to their CV they’ll need to lodge that objection on the Auckland Council website by 16th January 2018. For all other areas, check with your city Council for more information.