Difference between rateable & market value

What is rateable value?

Rateable value (RV) is the ‘value’ of a property set by the local authority for the purpose of determining and allocating rates. It is made up of three components:

• Capital Value (CV) - based on recent comparable sales in the area

• Land Value (LV) – based on recent sales of vacant section in the area

• Value of Improvements – the CV minus the LV

Auckland Council rates are based on capital value, so in the Auckland region your RV is the same as your CV.

The RV (or CV) is the value of a property at one given date, based on properties that have sold around the time of that one given date. It used to be referred to as a government valuation (GV).

The law requires all councils to revalue properties within their boundaries every three years. The last revaluation took place in June 2021 as the 2020 revaluation was delayed due to COVID-19, and The Valuer-General granted a 12-month deferral to understand how this would impact on the property market. Updated property values are available on the Council’s website: www.aucklandcouncil.govt.nz.

What are the 'value of improvements' they refer to?

Improvements refer to anything that is on or for the benefit of the land. This will typically include the home that sits on the land, the landscaping, driveway, etc, or if it's a section, any work completed, such as services installed, landscaping or driveway access.

How does the council decide on the probable price of a home?

To calculate rateable value, the Council undertakes a mass appraisal valuation exercise comparing recent sales in an area to the property being valued.

The Council holds information for each individual property such as property type, location and land size, zoning, floor area, views, consented work (such as renovations), and many other factors.

So is this the 'value' of a home...or not?

The council are very clear that the revaluation process is not done to provide values for property owners - for marketing, sales or any other purposes. It is done primarily for rating purposes and the Council are required to do this by law.

And because not all factors are considered - for example, work carried out that didn't require a consent, redecoration, chattels and appliances - the rateable value is not the best way to calculate what a home will sell for in the open market.