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Experience elsewhere with Site Value Rating

Land Value Rating has been successful wherever it has been tried. It is the rating system in effect in all of New South Wales and Queensland. It is in effect in some local municipalities in Western Australia, South Australia and Victoria.

Tasmania is the only State that has never used Land Value Rating. Its relative poor performance, compared to other States over the past century, bears examination in this respect.

Victoria
When ratepayers know that their council will charge them rates only on the value of the sites and not on the value of their homes or the improvements, they respond by becoming improvement-minded. This was the experience of all Victorian metropolitan cities which adopted site value rating.

Studies

  1. Camberwell: “The reformers argued that a new method of municipal taxation would accelerate the pace of Camberwell's growth and improve the quality of the suburb. Calling for a referendum, they carried the poll after a fierce campaign and Camberwell and Caulfield became the first Victorian municipalities to tax the land and not the buildings. From 1922, the new method of taxation undoubtably forced many large landowners to release vacant land for house building...” (Geoffrey Blainey, A History of Camberwell Lothian Publishers, 1980).

    In the five years prior to 1923, the total number of dwelling permits issued in Camberwell was 2051. In the following five years the number increased to 4373. Camberwell topped suburban building statistics until 1946.

  2. A.R.Hutchinson, founding director of the Land Values Research Group, pioneered the technique of grouping the municipalities into zones and correlating tax policy with economic activity within each zone. Hutchinson concluded that if all municipalities in greater Melbourne had used SV rating, the additional construction would have eliminated Victoria's housing shortage (then estimated at 40,000 dwellings)
    He also noted that there was a net interstate migration into Site Value Rating States, indicating that prospects in those States were perceived as superior.

  3. The American Institute of Economic Research conducted a study of building activity in Victoria from 1927 to 1951. All councils that had changed from NAV to Site Value Rating in the 1940s were shown to have experienced marked increases in building activity immediately after the rating change.

  4. Harry Gunnison Brown, U.S. economist, reported on South Melbourne prior to and following the adoption of site value rating In the first six months of 1965, under the newly adopted land value tax system, the value of new building permits was 2.4 times what it had averaged for the four preceding six-month periods. Expenditures for alterations and additions to houses were 2.5 times the average. Alterations and improvements on commercial buildings were about 50 per cent greater.

    On the other hand, Caulfield switched from SV rating to composite rating in 1969-70. In Caulfield, the number of building permits issued for 1969–72 was 66% below the number for 1966–69.

  5. In the years 1920 to 1986, there were 90 plebiscites in which the ratepayers of various Victorian municipalities had the opportunity to choose between two rating systems. In 70 out of 90 plebiscites, the voters chose site value.

In New South Wales, all ratepayer polls have resulted in favour of Site Value Rating.
In New Zealand, hundreds of rating polls have been held. By 1982, 90% of all municipalities had adopted Site Value Rating, by ratepayer poll.

Significantly:
• Wherever land value rating applies, it has been adopted by a poll of ratepayers, representing a lot of work and profound social concern.
• Wherever capital or annual value rating applies, it has been imposed by government or councils, contrary to the express wish of the ratepayers in almost every case.


 
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