‘DON’T LOSE YOUR HEAD’
CV warning for homeowners
New Housing Minister Phil Twyford says it would be unwise for Auckland home owners to assume they’ve hit the jackpot when new valuations are revealed tomorrow, and add to their mortgage.
Provisional data shows housing values in Auckland shot up 45 per cent since the last valuation three years ago.
Owners will learn the value of their homes at 9am tomorrow when Auckland Council posts the information on its website. Interest was so high in the last valuations that the website crashed.
But Twyford says people shouldn’t go overboard if their valuation has increased.
“I think they would be unwise to get the new ratings and assume that’s the market value right now and go out and buy whatever it was they wanted, like a new car,” he said.
“I do think people lose their heads a bit. You can see in the past few years there has been a massive increase in household debt as people have seen their houses rise in value and they’ve borrowed against that. Most of that is mortgage debt.
“The problem that we have is we’ve come to see housing as an investment asset and not as a roof over our heads, or a home to raise a family in.
“When that becomes your mindset housing becomes just another commodity.”
The consequences of rising valuations were increased homelessness and lower rates of home ownership, he said.
Although the revaluation figures will be taken into account when new rates are set, officials are reminding the public that a rise in their rates will not happen overnight.
Council head of rates Debbie Acott said it would not be until next year that the true effect of the revaluation on rates would be evident.
“We won’t know until we agree our next budget in 2018, so I encourage Aucklanders to view these valuations with that in mind.”
She also said just because homeowners’ property values had increased, that did not mean there would be a corresponding increase in rates.
The rise in rates was more to do with how much the value of a property rose in comparison to others.
Acott said there was also support for those who struggled to pay their rates, such as more frequent payments.
“We also have rates rebates for people on a low income and the ability to postpone rates — and that’s not means tested.”
According to the council website the income threshold for eligibility is $24,790 a year, but
homeowners could still be eligible for a rebate depending on the rates bill and the number of dependants they have.
Late penalties can also be removed under certain circumstances, such as if people tell the council they will be late because of insufficient funds and pay within 14 days of the penalty date — though homeowners can only take this option once within two years.
Council valuations are released triennially after a region-wide revaluation of all commercial, industrial and rural properties. Every council in New Zealand is legally required to do them.
The council sets the valuation for each property and uses it to determine the proportion of rates each property owner has to pay.
Because it is based on the capital value (CV), the RV is the same as the CV.
Auckland Chamber of Commerce chief Michael Barnett has called on councils to look at cutting this link between property valuations and rates.
“Rates pay for services delivered by councils.
“If the level and cost of services provided don’t change, then it is wrong and unfair for a council to impose rate increases just because the value of the property has increased,” he said.
But Auckland Ratepayers Alliance spokeswoman Jo Holmes said the reality was that rates and valuation figures were linked.
“That’s what we have to live with, I am just hoping it’s not an excuse to put up rates much higher than was promised.”
Mayor Phil Goff, during his mayoral campaign, pledged to keep rates increases to 2.5 per cent or less this term, but has indicated this might not be possible.
Although he had achieved 2.5 per cent in his first budget this year, the council was up against its debt ceiling, putting huge financial constraints on the mayor as he heads into a new 10-year budget.
Mortgage broker Bruce Patten said any rise in rates would hit those who could least afford it first — first-home buyers and retired people — because more affordable areas had experienced growth significantly above average.