Land Valuation

In reply to Ms STINSON (Badcoe) (23 November 2020). (Estimates Committee A)

The Hon. V.A. CHAPMAN (Bragg—Deputy Premier, Attorney-General, Minister for Planning and Local Government): I have been advised:

The annual general valuation is undertaken as at 1 January each year, in accordance with the Valuation of Land Act 1971 (VL Act) and Valuation of Land Regulations 2020 which inform the parameters by which the valuations are undertaken. Valuations are undertaken on the basis of highest and best use of the unencumbered estate in fee simple—except where the valuation needs to have regard to the notional value provisions of s 22A of the VL Act. Both site and capital values are the capital amount for which the land should exchange as at the Date of valuation between a willing buyer and willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgably, prudently and without compulsion—in accordance with Spencer v Commonwealth 1907. The highest and best use is what would result in the highest value for an asset and is determined by what is physically possible, financially feasible and legally allowed. In accordance with best valuation practice, there are a number of high-level assumptions in the determination of value. They include, but are not limited to, the following:

The land is capable of being separately sold.

The estate in fee simple in the land to be valued is unencumbered and the valuation is not of the taxpayer's interest in the land.

The willing buyer and willing seller are hypothetical.

As mentioned, there are parameters within the VL Act and Regulations, such as the assumption for site value that improvements on the land, which are not exhausted are assumed to have not been made, except where those improvements are in the nature of site works such as clearing of timber, scrub or other vegetation. However, it has been supposed that the subject question tends to assumptions specific to the coming 1 January 2021 general valuation. Notwithstanding these comments, there are no specific assumptions pertinent to the coming year. As research is still ongoing up to and beyond the date of valuation until gazettal in May 2021 and noting the potentially disruptive forces of COVID-19 on the property market, there is not currently a clear forecast as to the value changes expected (for residential or commercial).