A RECENT court ruling in New South Wales may have an effect on land valuations in built-up Perth suburbs such as Cottesloe and Mosman Park.
A RECENT court ruling in New South Wales may have an effect on land valuations in built-up Perth suburbs such as Cottesloe and Mosman Park.
In Maurici vs Chief Commissioner of State Revenue, the Supreme Court of New South Wales unanimously found that a determination of unimproved land value based on sales of vacant land in a local area was flawed.
The case has established a precedent that vacant land within built-up areas might incorporate a scarcity factor, which inflates prices, increasing the amount of land tax paid by the owner.
In the court ruling, the valuation of Anthony Maurici’s waterfront home at Hunters Hill was ruled to be inaccurate due to the scarcity of undeveloped land in the area and buyers’ willingness to pay a premium for it.
The case has opened the door for other landowners to appeal on reasonable grounds if they believe the scarcity factor has influenced their assessed unimproved land value.
Hegney Property Group commercial manager Nathan King said unimproved land value established from scarce vacant land sales could result in a premium value, in contrast to assuming improved parcels were notionally vacant, which would remove the scarcity factor.
Mr King said the case sent a message to valuers.
“I don’t think the ruling is going to have a huge effect at this stage; we don’t have the same level of built-up areas,” he said. “However, as there is more heritage listing and less homes demolished, it may have an effect.
“Compared to the eastern States we don’t have the same level of built-up areas; Cottesloe and Mosman Park may be the only areas comparable.”
Mr King said that, when the new heritage legislation came into effect and more houses were listed, vacant land would become scarcer and it would be harder for valuers to determine unimproved land prices.
Department of Land Administration valuer general Gary Fenner said WA valuers more widely used basket sales evidence in their valuations, evidence from a variety of property sales, which was a more accurate method of land valuation.
Mr Fenner said there had been a significant amount of premium residential land released by Landcorp that had met market demands for vacant land in Perth.
The release of land would not continue forever, however, and price pressure on vacant land would increase in the future.
“We aren’t experiencing the extreme premium for vacant land, our market has not got to that fever pitch level,” he said.
Mr Fenner said the impending heritage legislation would impact on all areas and would make it more difficult for valuers to determine the fair unimproved value of land for rating purposes.
“With less properties being demolished there will be less vacant land to compare to,” he said.
