Bega Valley Shire Council CEO, Anthony McMahon says as property owners are now receiving their Notice of Valuation letter from the NSW Valuer General, it is timely to explain how land revaluations impact general rates.
"The land values in these notices will be used to calculate rates for the 2025-26 and 2026-27 financial years," Mr McMahon said.
"Council does not determine these land values, nor do we have any role in notifying the values. Any objections or queries regarding the notices should be directed to the Valuer General's office at 1800 110 038.
"Council is still permitted to increase the total rates income by the 4.9% rate peg, which may result in a higher ad valorem rate to achieve the necessary income."
Mr McMahon said there is a misconception that if your land value doubles, then your rates must also double and that is not the case
"An increase in land value does not result in an increase in rates income for Council and conversely a decrease in land value does not result in a decrease in rates," he said.
"Land values impact the share of rates across ratepayers, not the total amount of rates Council collects.
"The only way Council can increase what it collects in general rates income overall is through the annual rate peg increase the NSW Government permits, or through a Special Rate Variation.
"These add a percentage increase on top of the overall general rates income Council can collect which is then distributed across all ratepayers."
General rates are made up of two key components:
- The base rate, which applies equally to all ratepayers within a category (residential, farmland, business or mining).
- The ad valorem, which is the component that is relative to the unimproved (or undeveloped) land value of the property.
Within each rating category, rates are made up of a mixture of base rate and ad valorem. Council can collect up to 50% of the rates from the base rate, with the remainder being the ad valorem.
Focusing on the ad valorem component, what you pay will depend not only on your land valuation but on all land valuations across the shire in relation to each other.
For example, if every property in the shire doubled in land value, everyone's rates would remain the same because everyone's land value increased by the same relative amount.
Similarly, if every property in the shire halved in value, everyone's rates would remain the same because everyone's land value decreased by the same relative amount.
However, if land values change relative to each other, then the ad valorem amounts for each ratepayer will also change, although the total amount Council receives will not change – this just means the total amount of rates is shared differently by ratepayers.
"I often use a pie analogy when explaining rates. Think of Council general rates as a pie. The size of the pie can only be increased by the annual rate peg or an SRV," Mr McMahon said.
"Each year once the increase in the size of the pie has been determined, which is typically the rate peg set by the NSW Government, Council then seeks to distribute that pie among all ratepayers. Everyone in the same category (for example business or residential) gets a standard size slice, the base-rate amount. The remainder of the pie is shared based on the unimproved capital value of your property. So, the higher the value of your property relative to all other properties in the shire, the bigger the slice of pie you will receive.
"In the context of recent land revaluations by the Valuer General, the changes to land values will not change the amount of rates income Council receives overall."
For further information regarding land values, please visit the Valuer General's website: Why and how the NSW Government values land: https://www.nsw.gov.au/housing-and-construction/land-values-nsw/why-land-values
