"Families hit by the new land tax"

Mark Skelsey, NSW Daily Telegraph, 14 February 2005

ABOUT 300,000 property investors have been stung with soaring land tax bills despite official government valuation reports conceding the real estate market has been dead for 16 months.

An inquiry by the NSW Ombudsman's office into the state's valuation system has been extended to this year's land tax bills.

The Daily Telegraph has seen copies of official government market analysis reports, obtained under Freedom of Information laws.

They show the Carr Government's decision to remove the land tax threshold of $317,000 could not have come at a worse time for property investors.

The threshold's removal is estimated to have caused about 300,000 "mum and dad" property investors to pay land tax for the first time.

Investors are finding their properties are falling in value - but are being forced to pay land tax bills based on a delayed reaction to the real estate boom's tail in October, 2003.

In one report, covering the Waverley council area, the Crown Valuation Service market analysis report recommends that 13,157 property values should increase between 5 and 20 per cent.

The report, dated October 15, admits valuations in the area will be "contentious", because prices in the area have been falling since the spring of 2003.

"Land value recommendations for the current programs are higher than last year . . . this may prove contentious given that properties are taking longer to sell," it says.

"Prices of improved properties have fallen since November, 2003 and there have been fewer speculators in the market place.

"Interest rate increases in September and October, 2003 coincided with a weakening in the market, and by early 2004 auction clearance rates had fallen below 40 per cent.

"The increase in values over last year has been [caused] in part by compliance with statistical measures required by the procedures manual."

Each of the state's 2.4 million properties are valued at July 1 each year. This valuation is used to calculate land tax bills sent out the following February.

The Taree market analysis report, prepared on November 1 by the Government's regional valuer, tells a similar story.

"The market continued to rise from July, 2003 until around November, 2003, from which time the market has stabilised," it says.

"Real estate agents report a significant drop in inquiries and a corresponding drop in the volume of properties sold."

Land tax lawyer David Singer, who obtained the documents, says the NSW Valuer-General has ignored all property commentators by increasing residential values in the year ending July 1, 2004.

But he said years of under-valuing by the Valuer-General made it difficult to overturn such figures in court. "The valuation increases have been way too aggressive," he said.

Valuer-General Phillip Western said this year's land tax valuations were based on strong real estate growth from July to November, 2003.

"The increase in the market from July to November, 2003 was greater than the fall from November, 2003 to July, 2004," Mr Western said.

Further Information

For further information contact:

• Simon Singer
• David Singer