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Highest & Best Use: Land Tax Assessment & Resumption
Inconsistent NSW Government Approaches to Highest and Best Use
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James Bouteris, Director of Lando Valuations
James Bouteris has nearly 25 years of experience within the commercial and residential property market. He holds a Masters of Property Development (UTS), a Bachelor of Business & Property (UWS), and is a member of the API and AVI. James is an experienced Licensed Real Estate Agent, Certified Property Practitioner (API) and Certified Property Valuer (AVI)
An analysis of the NSW Government’s unfair and inconsistent approach to assessing land and property values for land tax assessment and Compulsory Acquisition under the Land Acquisition (Just Terms Compensation) Act 1991 No. 22.
The NSW Government appears to have an inconsistent and unfair approach to dealing with land and property values for land tax assessment and Compulsory Acquisition.
Land Tax Assessmen t & the Valua tion o f Tax A ct 1916
In cases where your property has flexible zoning with the potential for future development, but does not meet the criteria to be developed in its own right and has no DA Approval, the Valuer General takes the view that the maximum or premium unimproved late rate must be applied. Council rates, land tax and water rates are all impacted by this misguided view of the highest or best use. Further to this, I am of the opinion that the appeal process suffers from a lack of transparency, and the outcome is often skewed in favour of the Valuer General.
When an Acquiring Authority comes along and wants to acquire some or all of an owner’s land, they must provide you with an assessment of what your property and/or business is worth. However, changes to the Act in 2016 have resulted in dispossessed owners having fewer rights, and therefore less flexibility with compensation items under the Act. The current approach to assessing property and business values is to ignore any potential development allowance, even where zoning is flexible in nature. Whilst on one hand, the highest and best use basis of valuation is employed by the Valuer General’s office when assessing land tax (in cases where it is arguably not warranted, it is not a consideration when a property is acquired and compensation is assessed under the Just Terms Act. When property is acquired, this same basis of valuation is ignored and has no bearing on the final assessment of value unless there is DA Approval. In one situation, highest and best use must be applied, regardless of the likelihood of development, and on the other, it it is entirely ignored.
From a layman’s perspective, this appears to be the arbitrary fashioning of the law to suit the state’s objectives. Whilst avenues of appeal are available to dispossessed property owners, this means taking the matter to the Land and Environment Court after the Valuer General carries out an independent review of the Acquiring Authority’s assessment.
Conflicting & Inconsistent Government Approaches to Valuation: A Call f or R eview
In conclusion, it appears as though the NSW government have bent the rules in their favour. For me, this erosion of the dispossessed landowner’s rights is a concerning development with grave implications. Whilst it is easy to tell these aggrieved owners to appeal these decisions, this is a costly, time intensive process that is often not practical or available to everyone.
I am of the opinion that a review of these issues is long overdue, and that this is a troubling example of government hypocrisy.
