Quake valuations to hit homeowners
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Homeowners in Wellington could be left facing bigger rates bills as earthquake strengthening costs hit commercial property values.
Many commercial buildings will have their values cut by more than 20 per cent in the latest round of rating valuations, to be sent out to property owners next week.
That could result in a drop in rates being collected from the commercial sector - leaving residential ratepayers to make up the balance. It is one of many consequences of the Christchurch earthquakes that are having to be tackled by councils across the country.
"This is not something that can be fixed in two or three years, it's much longer term," Local Government New Zealand president Lawrence Yule said last night.
The commercial property problem was likely to be most pronounced in Wellington, as CBD buildings made up a large proportion of its rating base, he said.
Wellington City Council will be notifying property owners of their new rateable values in the post next week.
The three-yearly valuations by Quotable Value look at capital value, and help determine what proportion of rates owners should pay.
The average value of the city's 5105 commercial buildings dropped only 1.5 per cent, but 455 of them have dropped by more than 20 per cent, and two by more than 80 per cent, because of looming earthquake strengthening bills.
The falling values could mean a drop in the rates received from the commercial sector, city council financial planning manager Martin Read said.
"There would be a slight shift towards the residential sector, so the residents pay 0.4 per cent cent more rates than they do now."
QV Wellington operations manager David Nagel said that, generally, there had been only small changes across the commercial and residential sectors. "Certainly with the residential sector it's steady as she goes."
The average house value in Wellington rose 0.7 per cent to $550,000.
The biggest increase was in Melrose, up 4.9 per cent to $522,000, largely driven by the film industry.
The affordability of houses in central Tawa, and its appeal for young families, led to a 4.6 per cent increase to $373,000.
The biggest decrease was in central Wellington, down 5.1 per cent to $418,000.
Mr Read said this year's rates were already set, so would not be affected, but "hypothetically" next year's could be hit by the new valuations.
Councillors consider the rates split each year and, if it was the same next year, anyone whose house value had changed by more or less than the 0.7 per cent average could have their rates altered.
"If their house price individually has increased by more than the average . . . they will be paying a slightly larger proportion of the rates."
Mr Nagel said the drop in some commercial property values was driven by the buildings being less appealing as office space.
Property developer Ian Cassels said the fall in value would benefit owners facing hefty strengthening and insurance bills and struggling to find tenants. "It means less rate payment, which is a fantastically good thing . . . It assists the owners that have got these buildings."
But Tawa Residents and Ratepayers Association president Ray Lindsay said residents should not have to pick up the bill. Businesses had ups and downs, and it was not the job of residents to bail them out in the down times.
When rating valuations are due:
Kapiti Coast District Council: Mid-2014
Masterton District Council: Late 2014
South Wairarapa District Council: Late 2014
Carterton District Council: Late 2014
- © Fairfax NZ News
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