‘System not broke’: PROPERTY INDUSTRY split over radical RATES Proposal

Sydney councils are pushing for some owners of expensive properties to pay $500 a year more in rates … by shifting from ‘unimproved value’ to ‘capital improved value’

IS the property industry concern for their mates in business just another smokescreen?

The “overwhelming majority” of those residents would be the owners of high-value apartments, IPART said.

https://www.smh.com.au/national/nsw/sydney-councils-push-to-make-expensive-property-owners-pay-higher-rates-20190808-p52fc3.html

WHY would they stop there?

How very likely is this to impact the average homeowner whose ordinary cottage value has escalated due to the government introduced foreign competition for our domestic housing?

-from shelter to a so-called asset

 ‘The impact of such a change would mean that property owners with the same sized land would be charged different rates depending on the value of their house or apartment.’ 

Why are the developer lobbies getting involved if not for their own interests?

-the Property Council of Australia

-the Urban Taskforce

-the Urban Development Institute of Australia

IS this another manoeuvre to force homeowners esp. retirees to sell out to downsize due to increased rates?

-to enable this sector to landbank our suburbs for the medium-density housing code of terraces, townhomes, duplex, and blocks of flats

-to boost the supply for the overseas buyers

-to fill the coffers of this lobby group?

‘System not broke’: Property industry split over radical rates proposal

Jacob Saulwick
By Jacob Saulwick

9 AUGUST 2019

The property industry is split over a push to change the way council rates are calculated that would drive up costs for owners of expensive apartments, with some concerned the measures would also hike business costs.

After keeping secret a report recommending a radical change to council rates for almost three years, the NSW government recently opened those recommendations up to a public consultation process.

A majority of Sydney councils support shifting to a new system. Under the recommendations made by the Independent Pricing and Regulatory Tribunal, rates would more closely match the market value of a property.

Jane Fitzgerald says the Property Council is opposed to the suggested change to council rates.
Jane Fitzgerald says the Property Council is opposed to the suggested change to council rates.

The implication of that shift, from determining rates based on a so-called unimproved value to determining rates based on a capital improved value basis, would likely be that the owners of expensive apartments would pay more.

IPART estimates about 5 per cent of homeowners could pay more than $500 a year more under the system.

Councils have consistently complained that the present system underestimates the cost of providing services to high-density apartment blocks.

IPART does not recommend removing a cap on the overall amount of rates levied.

In theory, this would mean that any increase paid by some homeowners would be offset by smaller rates paid on less valuable properties.

But the proposal does not have unanimous support. For instance, shopping centres have warned that the overall proportion of rate revenue paid by businesses would increase if the calculation method changed.

“The current system is not broken,” said Jane Fitzgerald, the NSW executive director of the Property Council of Australia.

“This is the classic case of trying to crack a walnut with a sledgehammer. The problem that councils have identified relates to the problem of large apartment blocks – if that is the problem we should tailor a solution to that.”

Ms Fitzgerald’s concern is that the system would drive up the rates paid by the owners of commercial properties.

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Sydney councils push to make expensive property owners pay higher rates

“There’s no way to avoid office blocks or shopping centres being massively charged … the amount that you would pay as a commercial office block owner would go through the roof,” she said.

Others in the development industry, however, thought a changed system would represent a more efficient way for councils to obtain the funds to pay for community infrastructure.

“Some amendment to how rates are collected does need to be looked at, at some stage,” said Chris Johnson, the chief executive of the developer group, the Urban Taskforce. “What we’re finding is that council are finding it very difficult to make things work in a reasonable way.”

*The chief executive of the Urban Development Institute of Australia, Steve Mann, said the CIV [capital investment value] method should also allow the overall amount of rates collected by councils to expand as their areas grow.

“Adopting this new approach to rating would also resolve a funding gap related to local government growth and enable further investment into infrastructure,” Mr Mann said.

The Local Government Minister, Shelley Hancock, said the government would not rush its response.

“We must get this right, and will do so in conjunction with local government,” she said.

“IPART’s report recommends a fundamental change to the way in which council rates are calculated which would potentially affect millions of ratepayers.”

Jacob Saulwick

Jacob Saulwick is City Editor at The Sydney Morning Herald.

Some Sydney councils are pushing for rates to be calculated on a property's market value not its land value.

SOURCE: https://www.smh.com.au/national/nsw/system-not-broke-property-industry-split-over-radical-rates-proposal-20190809-p52fn1.html?fbclid=IwAR2gsP8C9vUE9zjZ1gtGYSd68r9aK4_XJ6vDxN45vt2DpB06KTSoDPKMw90

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