The 2014-15 City of Monash budget was passed by Council at the June 24 ordinary meeting and, as proposed in the draft budget, Council’s rates intake increased by 6% compared to 2013-14. Looking at page 61 of the draft budget (adopted on 24 June), one could start to become a little confused, therefore, to read that the average residential rates bill will increase by 7% rather than 6% and that if you live in Glen Waverley your bill could increase by an average of 9% (or 1.5 times the widely publicised figure).
Interestingly, although Council has made a deliberate choice to increase the total rates revenue by 6% year-on-year compared to 2013-14, the actual rates charge per dollar of Capital Improved Value for each property has fallen from 0.20051 cents to 0.19448 (a drop of 3%). So why, then, do some residents in the Glen Waverley ward expect a residential rate rise of around 11%, Mt Waverley ward about 8%, Mulgrave 7% and Oakleigh 5%?
It all has to do with a revaluation of property across the City of Monash. Rates are levied as a charge against the Capital Improved Value (crudely the value of the land and its buildings – you’d hope to get a bit more than CIV at auction!). And the “General Rate” (the 0.20051 cents per dollar charged) is calculated by dividing the sum of the CIVs of all assessed rateable properties by the number of dollars Council has decided to collect in rates.
Council is required by law (The Valuation of Land (Amendment) Act 1998, Section 4) to revalue properties every two years. As the value of one property goes up and another goes down, so too does the rate bill levied against those properties go up and down in such a manner that council still collects the planned total rates income.
Simplistically, in 2013-14, Council planned to collect $93 186 123 at a rate of 0.0020051 which valued all properties in Monash at approximately $46.5Billion. In 2014-15, with a target collect of $99 802 292 at a rate of 0.0019448, property values across the city have risen to about $51.3Billion. (The actual numbers vary slightly from those shown because there are some properties (e.g., some sports grounds) where rates are a flat charge rather than a calculated percentage of CIV.)
The question everybody wants answered is: what will this mean for my individual property? And the answer is that it all depends on what the valuer considers your property’s CIV to be in the 2014 market – you’ll have to wait for your rates notice. If your property has increased in value you will pay more (and hopefully may recoup that one day when you sell), if your rates go down, however, it either means that the capital value of your asset has gone down somewhat or the increase in CIV was so small it was offset by the 3% drop from 0.0020051 to 0.0019448 used to calculate the rates charge on the property.
Setting aside the geographic redistribution of rates, why, if the overall rate increase was 6%, are residents on average paying an extra 7% on their rates? The answer here is because the valuers determined that residential property values have increased by 11.6% across the city, commercial properties by 4.8% and industrial properties by 4.9% resulting in another kind of redistribution with the spread of CIVs shifting the burden towards residential property owners.
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