Level Playing Field for Rates
09 July, 2008
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LUXURY apartment owners in Brisbane will soon have to pay their fair share of council rates under changes to Brisbane’s rating system in the budget.
Lord Mayor Campbell Newman has introduced a new rating system for Community Title Schemes (CTS), otherwise known as units, apartments and townhouses.
Cr Newman said the changes were prompted by evidence that luxury unit owners – particularly those in the CBD – were paying less general rates than some battlers in Brisbane’s outer-lying suburbs.
That was because the general rates component of the overall rates bill was traditionally calculated on annual land valuations set by the State Government, which did not take into account the value of any buildings on the land.
In the case of CTS properties, the number of units or apartments in the block would be divided into the Unimproved Capital Value of the land to determine the general rate of each unit, apartment or townhouse.
That usually resulted in apartment blocks with multiple units receiving a general rates figure that was much lower than more modest properties.
In one situation a $2 million highrise riverside unit in Brisbane’s CBD was charged the same general rate ($391) as a $295,000 house in Inala, and a $340,000 unit in Annerley.
Similarly a $1.3 million rented penthouse suite in Brisbane’s CBD was charged less general rates than a $339,000 rented house at Acacia Ridge.
“The old method of calculating CTS resulted in extremely low valuations for individual units because their share of the land value is so small,” Cr Newman said.
“General rates are based upon the principal of the owners ‘capacity to contribute’.
“They represent the contribution ratepayers make towards the basic services that all residents enjoy such as parkland, bikeways, libraries, cultural events and maintenance and infrastructure.”
Brisbane has experienced rapid growth in the number of CTS developments – with residential units in the CBD growing exponentially in recent years.
Cr Newman said Council needed a new method of calculating general rates for CTS units which would be based on the underlying ‘parent value’ of a property but also apply a general rates loading in cases where the valuation was far lower than the average.
The loading would be known as a ‘parity factor’, he said.
“The parity factor will be based on the ratio of individual unit value to land value and it will increase as the land value increases,” he said.
“However we have put in safeguards to ensure it has no impact on units built on land worth less than $1 million.”
“This method is deliberately designed to protect properties at the lower end of the market while ensuring that units at the very top end of the market pay their fair share.”
Rates increases under CTS (inc State Government’s 30 cents a kilolitre water charge):
Owner occupied properties
Parent value of less than $1 million – 7.9 per cent
Parent value of $1 million but less than $5 million – 9 per cent.
Parent value of $5 million but less than $10 million – 16.3 per cent
Parent Value greater than $10 million – 60 per cent
Mixed residential (investment properties)
Parent value of less than $1 million – 14.45 per cent
Parent value of $1 million but less than $5 million – 15.83 per cent
Parent value of $5 million but less than $10 million – 21.83 per cent
Parent value greater than $10 million – 69.36 per cent