93 per cent council rates gouge

Some CBD residents are reeling from rates gouging of up to 93 per cent by the City of Melbourne.

Despite claiming to have “rate capped” rate rises this year to just 2.5 per cent, a random sample of 10 CBD residential properties tells a very different story.

The 93 per cent rise was the most extreme, but other residents have suffered 35 per cent, 24 per cent and 22 per cent rises.

The sample did reveal three with rate reductions: being -1.6 per cent; -1.7 per cent and -4.6 per cent.  Three others reported negligible rate increases.

Of course, not everyone is happy with a rates reduction either.  The resident with the -1.6 per cent drop says it is related to a $50,000 reduction in the value of his property.

“I have been trying to sell my apartment,” the resident said.  “While there has been good interest, eight out of 10 are not willing to make an offer because of the adjacent development.  All my windows will be covered.”

The couple which suffered the 93 per cent increase say it was based on a 104 per cent increase in the council’s estimated value of their home (capital improve value – CIV) since the last valuation in 2014.

But city real estate agents say this is clearly impossible.

Hocking Stuart principal Scott McElroy said:  “It’s just not fair to claim that property values have risen by that much in two years.”

He said even the most exclusive, boutique property in the best area could not have risen by more than 30 per cent in that period.

Mr McElroy said residential prices boomed in the city during 2010-11 but had been generally flat since.  He did, concede, however that some well-located, unique, owner-occupied properties would have continued to appreciate well in past two years.

The owner of the property from whom the council is demanding 35 per cent more in rates reported only $1100 between what the council valued his land and his residence.

“They value my land at $1,295,00 and my CIV at $1,296,100,” he said.

Mr McElroy said land values had risen dramatically within the CBD, but this did not necessarily make small blocks more valuable.

“The value of land has clearly risen within the CBD, but surely this has to be tempered by what it is possible to do with that land,” Mr McElroy said. “It’s not as if this bloke can put up a 40-storey tower.”

In its 2017 budget, the City of Melbourne said residential rates within the CBD would, on average, rise 5.4 per cent this year.

Finance chair Cr Stephen Mayne stood by this figure, claiming that individual rate rises would be off-set by rate reductions – averaging out at a 5.4 per cent increase.

Across the municipality, the council will be taking 7.7 per cent more from residential ratepayers this year, while non-residential ratepayers will pay just 2.2 per cent more.

The 2017 rates take will be $257.3 million – $13.6 million (5.6 per cent) more than 2016.

The couple with the 22 per cent rate increase said: “A 22 per cent increase in rates, when inflation is at record lows and wages are stagnant, is way beyond what I’d expect.”

“I’m not aware of council providing any justification or explanation for such a rate rise. I also don’t know how the hike in Melbourne’s rates compares to other councils across Melbourne.”

“I certainly don’t see any improvement in service delivery by the City of Melbourne to warrant such an increase.”

“Could it be that council needs to start recovering the costs of the contentious redevelopment proposed for the Queen Victoria Market, which senior council planning staff (i.e. Rob Adams) are already conceding in public meetings have blown out from $250 million to $300 million?”

A council spokesperson said: “Valuations shown on the 2016-17 Valuation and Rate Notice are a market assessment as at January 1, 2016 and are based on an analysis of market evidence of sales and rents.”

“The 2016 general valuation of the municipality has resulted in non-uniform rate variations for individual ratepayers.”

“The rates for an individual property may have increased or decreased by a percentage amount following the revaluation of that property relative to the valuation of other properties in the municipal district.”

“Valuations are also influenced by the broader economic framework and market activity.”

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