The elusive ‘capital value’, also known as ‘rateable value’, is that magical figure which lands in your letterbox every 3 years, estimating how much your house is worth. Since our properties are often our most valuable asset, it’s no wonder homeowners take notice. But how do they calculate the magical figure, and what does it mean for buyers, sellers and rate payers? With the upcoming revaluation in Auckland, how much should we be taking notice?
How do they calculate my C.V?
Your capital value is a computer-generated figure based on recent sales in the area. The key factors taken into consideration are:
-zoning (including changes under the unitary plan)
-consented work (renovations, new build, subdivisions etc)
Factors that don’t count towards the valuation include number of bedrooms, character features, condition of the home, and any improvements which don’t require consent for example landscaping.
Do I pay more rates if my C.V increases?
Not necessarily. Rather than paying a set percentage of your capital value, rates are a way of determining your share of rates across the city. If everyone else’s values change at the same level as yours, your percentage would remain the same, although you could still be paying more based on the council’s latest budget. If the 2017 property revaluation does change your rates, it will take effect after 1 July 2018.
How much should I take notice of a C.V when buying or selling?
The council states “the aim of the general revaluation is not to provide values for property owners to use for marketing, sales or any other purposes”. But in reality, a CV is likely to have some impact on the perceived value of your property.
Since 2014, property sale prices have left their CVs for dust. In Auckland in 2017 homes have sold on average 1.4 times their capital value, some even sold for more than double. A 4 bedroom home in Papatoetoe sold for $1.45m in January, 2.2 times its valuation. Interestingly, since values are actually determined in July, they are already out of date by 4 months when they’re received in November.
How does a C.V impact my lending?
Banks will normally let you lend up to 80% of the value of your CV (60% for investment properties) so higher values can provide an opportunity to release equity against your home for renovations, another property or other purposes. Have a chat with an Apex mortgage specialist about releasing equity in your property.